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Energy And The Economy – Twelve Basic Principles

Tyler Durden's picture


Submitted by Gail Tverberg via Our Finite World blog,

There is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. My view of how energy and the economy fit together is very different. It is based on the principle of reaching limits in a finite world. Let me explain the issues as I see them.

Twelve Basic Principles of Energy and the Economy


1. Economic models are no longer valid, as we start getting close to limits.

We live in a finite world. Because of this, the extraction of energy resources and of resources in general operates in a way that is not at all intuitive as we approach limits. Economists have put together models of how the economy can be expected to act based on how the economy acts when it is distant from limits. Unfortunately, these economic models are worse than useless as limits approach because modeled relationships no longer hold. For example:

(a) The assumption that oil prices will rise as the cost of extraction rises is not necessarily true. Instead, a finite world creates feedback loops that tend to keep oil prices too low because of its tight inter-connections with wages. We see this happening right now. The Telegraph reported recently, “Oil and gas company debt soars to danger levels to cover shortfall in cash.”

(b) The assumption that greater investment will lead to greater output becomes less and less true, as the easy to extract resources (including oil) become more depleted.

(c) The assumption that higher prices will lead to higher wages no longer holds, as the easy to extract resources (including oil) become more depleted.

(d) The assumption that substitution will be possible when there are shortages becomes less and less appropriate because of interconnections with the rest of the system. Particular problems include the huge investment required for such substitution, impacts on the financial system, and shortages developing simultaneously in many areas (oil, metals such as copper, rare earth metals, and fresh water, for example).

More information is available from my post, Why Standard Economic Models Don’t Work–Our Economy is a Network.


2. Energy and other physical resources are integral to the economy.

In order to make any type of goods suitable for human use, it takes resources of various sorts (often soil, water, wood, stones, metals, and/or petrochemicals), plus one or more forms of energy (human energy, animal energy, wind power, energy from flowing water, solar energy, burned wood or fossil fuels, and/or electricity).

Figure 1. Energy of various types is used to transform raw materials (that is resources) into finished products.

Figure 1. Energy of various types is used to transform raw materials (that is resources) into finished products.


3. As we approach limits, diminishing returns leads to growing inefficiency in production, rather than growing efficiency.

As we use resources of any sort, we use the easiest (and cheapest) to extract first. This leads to a situation of diminishing returns. In other words, as more resources are extracted, extraction becomes increasingly expensive in terms of resources required, including human and other energy requirements. These diminishing returns do not diminish in a continuous slow way. Instead, there tends to be a steep rise in costs after a long period of slowly increasing costs, as limits are approached.

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

One example of such steeply rising costs is the sharply rising cost of oil extraction since 2000 (about 12% per year for “upstream costs”). Another is the steep rise in costs that occurs when a community finds it must use desalination to obtain fresh water because deeper wells no longer work. Another example involves metals extraction. As the quality of the metal ore drops, the amount of waste material rises slowly at first, and then rapidly escalates as metal concentrations approaches 0%, as in Figure 2.

The sharp shift in the cost of extraction wreaks havoc with economic models based on a long period of very slowly rising costs. In a period of slowly rising costs, technological advances can easily offset the underlying rise in extraction costs, leading to falling total costs. Once limits are approached, technological advances can no longer completely offset underlying cost increases. The inflation-adjusted cost of extraction starts rising. The economy, in effect, starts becoming less and less efficient. This is in sharp contrast to lower costs and thus apparently greater efficiency experienced in earlier periods.


4. Energy consumption is integral to “holding our own” against other species.

All species reproduce in greater numbers than need to replace their parents. Natural selection determines which ones survive. Humans are part of this competition as well.

In the past 100,000 years, humans have been able to “win” this competition by harnessing external energy of various types–first burned biomass to cook food and keep warm, later trained dogs to help in hunting. The amount of energy harnessed by humans has grown over the years. The types of energy harnessed include human slaves, energy from animals of various sorts, solar energy, wind energy, water energy, burned wood and fossil fuels, and electricity from various sources.

Human population has soared, especially since the time fossil fuels began to be used, about 1800.

Figure 3. World population based on data from "Atlas of World History," McEvedy and Jones, Penguin Reference Books, 1978  and Wikipedia-World Population.

Figure 3. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and Wikipedia-World Population.

Even now, human population continues to grow (Figure 4), although the percentage rate of growth has slowed.

Figure 4. World population split between US, EU-27, and Japan, and the Rest of the World.

Figure 4. World population split between US, EU-27, and Japan, and the Rest of the World.

Because the world is finite, the greater use of resources by humans leads to lesser availability of resources by other species. There is evidence that the Sixth Mass Extinction of species started back in the days of hunter-gatherers, as their ability to use of fire to burn biomass and ability to train dogs to assist them in the hunt for food gave them an advantage over other species.

Also, because of the tight coupling of human population with growing energy consumption historically, even back to hunter-gatherer days, it is doubtful that decoupling of energy consumption and population growth can fully take place. Energy consumption is needed for such diverse tasks as growing food, producing fresh water, controlling microbes, and transporting goods.


5. We depend on a fragile self-organized economy that cannot be easily replaced. 

Individual humans acting on their own have very limited ability to extract and control resources, including energy resources. The only way such control can happen is through a self-organized economy that allows people, businesses, and governments to work together on common endeavors. Development of a self-organized economy started very early, as bands of hunter-gatherers learned to work together, perhaps over shared meals of cooked food. More complex economies grew up as additional functions were added. These economies have gradually merged together to form the huge international economy we have today, including international trade and international finance.

This networked economy has a tendency to grow, in part because human population tends to grow (Item 4 above), and in part because greater complexity is required to solve problems, as an economy grows. This networked economy gradually adds more businesses and consumers, each one making choices based on prices and regulations in place at the particular time.

Figure 5. Dome constructed using Leonardo Sticks

Figure 5. Dome constructed using Leonardo Sticks

This networked economy is fragile. It can grow, but it cannot easily shrink, because the economy is constantly optimized for the circumstances at the time. As new products are developed (such as cars), support for prior approaches (such as horses, buggies and buggy whips) disappears. Systems designed for the current level of usage, such as oil pipelines or Internet infrastructure, cannot easily be changed to accommodate a much lower level of usage. This is the reason why the economy is illustrated as interconnected but hollow inside.

Another reason that the economy cannot shrink is because of the large amount of debt in place. If the economy shrinks, the number of debt defaults will soar, and many banks and insurance companies will find themselves in financial difficulty. Lack of banking and insurance services will adversely affect both local and international trade.


6. Limits of a finite world exert many pressures simultaneously on an economy. 

There are a number of ways an economy can reach a situation of inadequate resources for its population. While all of these may not happen at once, the combination makes the result worse than it otherwise would be.

a. Diminishing returns (that is, rising production costs as depletion sets in) for resources such as fresh water, metals, and fossil fuels.

b. Declining soil quality due to erosion, loss of mineral content, or increased soil salinity due to poor irrigation practices.

c. Rising population relative to the amount of arable land, fresh water, forest resources, mineral resources, and other resources available.

d. A need to use an increasing share of resources to combat pollution, related to resource extraction and use.

e. A need to use an increasing share of resources to maintain built infrastructure, such as roads, pipelines, electric grids, and schools.

f. A need to use an increasing share of resources to support government activities to support an increasingly complex society.

g. Declining availability of food that is traditionally hunted (such as fish, monkeys, and elephants), because an increase in human population leads to over-hunting and loss of habitat for other species.


7. Our current problems are worryingly similar to the problems experienced by earlier civilizations before they collapsed.

In the past, there have been civilizations that were confined to a limited area that grew for a while, and then collapsed once resource availability declined or population outgrew resources. Such issues led to a situation of diminishing returns, similar to the problems we are experiencing today. We know from studies of these prior civilizations how diminishing returns manifested themselves. These include:

(a) Reduced job availability and lower wages, especially for new workers joining the workforce.

(b) Spiking food costs.

(c) Growing demands on governments for services, because of (a) and (b).

(d) Greater disparities in wealth, as newer workers find it hard to get good-paying jobs.

(e) Declining ability of governments to collect sufficient taxes from common workers who are producing less and less (because of diminishing returns) and because of this, receiving lower wages.

(f) Increased reliance on debt.

(g) Increased likelihood of resource wars, as a group with inadequate resources tries to take resources from other groups.

(h) Eventual population decline. This occurred for two reasons: As wages dropped and needed taxes rose, workers found it increasingly difficult to obtain an adequate diet. As a result, they become more susceptible to epidemics and diseases. Greater involvement in resource wars also led to higher death rates.

When collapse came, it did not come all at once. Rather a long period of growth was succeeded by a period of stagnation, before a crisis period of several years took place.

Figure 6. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.

Figure 6. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.

We began an economic growth cycle back when we began using fossil fuels to a significant extent, starting about 1800. We began a stagflation period, at least in the industrialized economies, when oil prices began to spike in the 1970s. Less industrialized countries have been able to continue growth their growth pattern longer. Our situation is likely to differ from that of early civilizations, because early civilizations were not dependent on fossil fuels. Pre-collapse skills tended to be useful post-collapse, because there was no real change in energy sources. Loss of fossil fuels would considerably change the dynamic of the outcome, because most jobs would become obsolete.

Most models put together by economists assume that the conditions of the growth period, or the growth plus stagflation period, will continue forever. Such models miss turning points.


8. Modeling underlying the book Limits to Growth shows why depletion can be expected to lead to declining economic growth. It also shows why extracting all of the resources that seem to be available is likely to be impossible.

We also know from the analysis underlying the book The Limits to Growth (by Donella Meadows and others, published in 1972) that growing demand for resources because of Items listed as 6a to 6g above will take an increasingly large share of resources produced. This dynamic makes it very difficult to produce enough additional resources so that economic growth can continue. The authors report that the behavior mode of the modeled system is overshoot and collapse.

The 1972 analysis does not model the financial system, including debt and the repayment of debt with interest. The closest it comes to economic modeling is modeling industrial capital, which it describes as factories, machines, and other physical “stuff” needed to extract resources and produce goods. It finds that inability to produce enough industrial capital is likely to be a bottleneck far before resources in the ground are exhausted.

As an example in today’s world, there seems to be a huge amount of very heavy oil that can be steamed out of the ground in many places including Canada and Venezuela. (The existence of such heavy oil is one reason the ratio of oil reserves to oil production is high.) To actually get this oil out of the ground quickly would require a huge physical investment in a very short time frame. As a practical matter, we cannot ramp up all of the physical infrastructure needed (pipelines, steaming equipment, refining equipment) without badly cutting into the resources needed to “grow” the rest of the economy. A similar problem is likely to exist if we try to ramp up world oil and gas supply using fracking.


9. Our real concern should be collapse caused by reaching limits in many ways, not the slow decline reflected in a Hubbert Curve.

One reason for being concerned about collapse is the similarity of the problems our current economy is experiencing to those of prior economies that collapsed, as discussed in Item 7. Another reason for this concern is based on the observation from physics that an economy is a dissipative structure, just as a hurricanes is, and just as a human being is. Such dissipative structures have a finite lifetime.

Concern about future collapse is very different from concern that one or another resource will decline in a symmetric Hubbert curve. The view that resources such as oil will gradually decrease in availability once 50% of the resources have been extracted reflects a best-case scenario, where a perfect replacement (both cheap and abundant) replaces the item that is depleting, so that the economy is not affected. Hubbert illustrated the kind of situation he was envisioning with the following graphic:

Figure 7. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

Figure 7. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.


10. There is a tight link between both oil consumption and total energy consumption and world economic growth. 

This tight link is evident from historical data:

Figure 8. A comparison of three year average growth in world real GDP (based on USDA values in $2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014.

Figure 8. Comparison of three-year average growth in world real GDP (based on USDA values in 2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014.

The link between energy and the economy comes both from the supply side and the demand side.

With respect to supply, it takes energy of many types to make goods and services of all types. This is discussed in Item 2 above.

With respect to demand,

(a) People who earn good wages (indirectly through the making of goods and services with energy products) can afford to buy products using energy.

(b) Because consumers pay taxes and buy goods and services, growth in demand from adequate wages flows through to governments and businesses as well.

(c) Higher wages enable higher debt, and higher debt also acts to increase demand.

(d) Increased demand increases the price of the resources needed to make the product with higher demand, making more of such resources economic to extract.


11. We need a growing supply of cheap energy to maintain economic growth.

This can be seen several ways.

(a) Today, all countries compete in a world economy. If a country’s economy uses an expensive source of energy (say high-priced oil or renewables) it must compete with other countries that use cheaper fuel sources (such as coal). The high price of energy puts the country with high-cost energy at a severe competitive disadvantage, pushing the economy toward economic contraction.

(b) Part of the world’s energy consumption comes from “free” energy from the sun. This solar energy is not evenly distributed: the warm areas of the world get considerably more than the cold areas of the world. The cold areas of the world are forced to compensate for this lack of free solar energy by building more substantial buildings and heating them more. They are also more inclined to use “closed in” transportation vehicles that are more costly than say, walking or using a bicycle.

Back in pre-fossil fuel days, the warm areas of the world predominated in economic development. The cold areas of the world “surged ahead” when their own forests ran short of the wood needed to provide the heat-energy they needed, and they learned to use coal instead. The knowledge they gained about using coal for home-heating quickly transferred to the ability to use coal to provide heat for industrial purposes. Since the warm areas of the world were not yet industrialized, the coal-using countries of the North were able to surge ahead economically. The advantage of the cold industrialized countries grew as they learned to use oil and natural gas. But once oil and natural gas became expensive, and industrialization spread around the world, the warm countries regained their advantage.

(c) Wages, (non-human) energy costs, and financing costs are all major contributors to the cost of producing goods and services. When energy costs rise, the rise in energy costs puts pressure both on wages and on interest rates (since interest rates determine financing costs), because businesses need to keep the total cost of goods and services close to “flat,” if consumers are to afford them. This occurs because wages do not rise as energy prices rise. In fact, pressure to keep the total cost of goods low creates pressure to reduce wages when oil prices are high (perhaps by sending manufacturing to a lower-cost country), just as it adds pressure to keep interest rates low.

(d) If we look at historical US data, wages have tended to rise strongly (in inflation-adjusted terms) when oil prices were less than $40 to $50 barrel, but have tended to stagnate above that oil price range.

Figure 9. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Figure 9. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.


12. Oil prices that are too low for producers should be a serious concern. Such low prices occur because oil becomes unaffordable. In the language of economists, oil demand drops too low. 

A common belief is that our concern should be oil prices that are too high, and thus strangle the economy. A much bigger concern should be that oil prices will fall too low, discouraging investment. Such low oil prices also encourage civil unrest in oil exporting nations, because the governments of these nations depend on tax revenue that is available when oil prices are high to balance their budgets.

It can easily be seen that high oil prices strangle the economies of oil importers. The salaries of consumers go “less far” in buying basics such as food (which is raised and transported using oil) and transportation to work. Higher costs for basics causes consumers cut back on discretionary expenditures, such as buying new more expensive homes, buying new cars, and going out to restaurants. These cutbacks by consumers lead to job layoffs in discretionary sectors and to falling home prices. Debt defaults are likely to rise as well, because laid-off workers have difficulty paying their loans. Our experience in the 2007-2009 period shows that these impacts quickly lead to severe recession and a drop in oil prices.

The issue we are now seeing is the reverse–too low oil prices for oil producers, including oil exporters. These low oil prices are contributing to the unrest we see in the Middle East. Low oil prices also contribute to Russia’s belligerence, since it needs high oil revenues to maintain its budget.


We seem now to be at risk in many ways of entering into the collapse scenario experienced by many civilizations before us.

One of areas of risk is that interest rates will rise, as the Quantitative Easing and Zero Interest Rate Policies held in place since 2008 erode. These ultra-low interest rates are needed to keep products affordable, since the high cost of oil (relative to consumer salaries) has not really gone away.

Another area of risk is an increase in debt defaults. One example occurs when student loan borrowers find it impossible to repay these loans on their meager wages. Another example is China with the financing of its big recent expansion by debt. A third example is the possibility that businesses extracting resources will find it impossible to repay loans with today’s (relatively) low commodity prices.

Another area of risk is natural disasters. It takes surpluses to deal with these disasters. As we reach limits, it becomes harder to mitigate the effects of a major hurricane or earthquake.

Clearly loss of oil production because of conflict in the Middle East or in other oil producing countries is a concern.

This list is by no means exhaustive. Many economies are “near the edge” now. Recent news is that Germany has slipped into recession as well as Japan. One economy failing is likely to pull others with it.


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Fri, 08/15/2014 - 19:28 | 5100253 kill switch
kill switch's picture

That's nice!!!

Fri, 08/15/2014 - 21:17 | 5100667 MalteseFalcon
MalteseFalcon's picture


Fri, 08/15/2014 - 22:05 | 5100788 0b1knob
0b1knob's picture

A chart without numbers on the vertical OR horizontal axes?

More chart abuse from Zerohedge.   Proves something.   What?  Who knows...

Sat, 08/16/2014 - 01:27 | 5101230 California Nigh...
California Nightmares's picture

Odd.  Two population charts. One shows exponential growth, the other linear. 

Or am I misinterpreting this? 

Sat, 08/16/2014 - 05:56 | 5101446 BrosephStiglitz
BrosephStiglitz's picture

You're misinterpreting.  Both linear.  Look at the time scales-


The exponential growth is human pop. growth since 200AD until present.  The other chart is the pop. growth over the last 50-something years, split between the developing and developed world.  Obviously the population growth in developing countries is far more rapid than the developed countries, where (in general) educational standards, real living costs, life expectancy and other factors have increased significantly.

The first chart is why I have, in other threads, such as the ebola articles, explained that the global human population is in for a real hammering.  That chart is pretty much what you would expect from an algal bloom in a body of water that is subject to eutrophication.  A large exponential spike followed by pop. collapse.

Sat, 08/16/2014 - 08:02 | 5101553 froze25
froze25's picture

I think magnets hold the key to free energy. Watch "Modified Howard Johnson Linear Magnet Motor Test …" on YouTube

Modified Howard Johnson Linear Magnet Motor Test …:


Sat, 08/16/2014 - 08:47 | 5101606 barre-de-rire
barre-de-rire's picture

go read meadows report


Sat, 08/16/2014 - 12:16 | 5102198 LordEffingtonTh...
LordEffingtonThreeSticks's picture

This is another lefty libtard Luddite who knows nothing about how things are really done.  She is a high priestess of global warming.   Let me review for you how a conversation with a friend of mine who thinks like she does goes:


2004: ME: We will only hit peak oil when we hit peak demand. It will not be limited by supplies.  It will be limited by the switch to other sources.  In the mean time they will keep finding new oil and methods to get the oil.

2004: Lefty Luddite Libtard friend: BUT WHERE? Where will it come from?

2004: I do not know but it will come.

2004: Lefty Luddite Libtard friend: That can't be.

---------fast forward to 2014---------

2014: ME: What about this fracking stuff? And it is a technique that can be used all over the world.

2014: Lefty Luddite Libtard friend: I did not see fracking coming.  Neither did you.

2014: ME:  That's not exactly correct.

2014: Lefty Luddite Libtard friend: I am a lefty I can't be wrong.

This person has no place on this blog unless she pays you to promote website by placing her ill conceived articles on your site.




Fri, 08/15/2014 - 19:29 | 5100258 LetThemEatRand
LetThemEatRand's picture

Based on these timelines, I'll be dead before the collapse.  Maybe the bankers have something with hookers and blow.

Sat, 08/16/2014 - 06:00 | 5101449 BrosephStiglitz
BrosephStiglitz's picture

I suspect we will be seeing the beginning of a collapse within the next 5 years.  We are already seeing the "early warning signals", playing out in slow motion year on year.  Within a decade it should be fairly evident to most.


Without major tech. development there is a serious risk of what this document talks about coming to pass.

Sat, 08/16/2014 - 11:14 | 5101986 Ident 7777 economy
Ident 7777 economy's picture



Gail - with mad charts, signifying practically nothing ...

Fri, 08/15/2014 - 19:33 | 5100262 Ignatius
Ignatius's picture

I wish it could have been less than 12 principles.  Twelve is a lot.

How about 3?  I can remember 3 things if I focus.

Fri, 08/15/2014 - 19:57 | 5100355 LetThemEatRand
LetThemEatRand's picture

Cool.  Can I ask you to remind me of the other two?  

Fri, 08/15/2014 - 20:00 | 5100357 Kirk2NCC1701
Kirk2NCC1701's picture

Gail (he, she?) lost me at Fig.1, where something called 'Work' (intellect + labor) was missing.

Call me eccentric but Fig.1 should read "Matter + Energy + Work --> Product or Service"

Fri, 08/15/2014 - 21:18 | 5100671 MalteseFalcon
MalteseFalcon's picture

Gail is a dude and his middle name is Malthus.

Sat, 08/16/2014 - 06:48 | 5101461 BrosephStiglitz
BrosephStiglitz's picture

It's true that a lot of this content is rehashed Malthus.  It still does not invalidate the core message.  I have been (trying) to explain this to my friends and family in the past, but most told me to shut the f*ck up.  Everyone is too busy trying to keep their heads above water now.

Basically the only thing which can break this particular chain of events is the advent of a new technology which provides significant low-cost energy, preferrably a stable and low-cost energy source which is easily transported.  That certainly rules out conventional nuclear (I am not all that informed on thorium reactors, although some have discussed the possibilities), and it also invalidates a lot of other renewable energy sources.

Solar might provide some kind of basic possibilities for electric cars and so on, but I have serious doubts it could be scaled to support the entirety of the developed world, let alone the developing nations.

The really interesting part of all of this "research", is that if this is true, then the first countries past the post in terms of development (US/Europe/Japan etc.), are likely to still remain more prosperous moving into the future.  Whereas China has an (over)abundance of labor which it can just exploit to build up its capital, it will become increasingly costly. Consequently the developed nations might see a slow stagnation as capital falls into gradual decline.  Most people currently expect China to be the next big thing, and if this is the case, it might be for entirely different reasons than people expect (cheaper labor costs over any kind of tech. progress.)

The most worrying implications of this whole philosophical track of thinking is that, if true, we will probably see massive migration across borders, and continents.  That will be very difficult to manage.  Even going back as far as Caesar's journals of his Gaulish campaign, we can see, that large-scale migration is terribly disruptive leads to civil unrest/conflict.  This was true back then, when entire tribes were trying to shift to more "prosperous" lands.  It is true now when populations do so.

Sat, 08/16/2014 - 06:54 | 5101485 waterwitch
waterwitch's picture

The recent massive downturn in oil output from Mexico due to the twighlight era of the Cantarell field is a major contributor to the mass exodus of Mexicans into America.

Also, a major energy source still remains in the many forms of conservation. China gets this.  Economic incentives can help here. 

Can't get around EROEI either.  There are no free lunches.

Sat, 08/16/2014 - 07:48 | 5101542 MalteseFalcon
MalteseFalcon's picture

The recent exodus from Mexico into the US is because Mexico is a shithole, the US border is wide open and there is no penalty for employing ILLEGAL immigrants.

Let's greatly increase the number of high consuming Americans and see if that helps things any.

Sat, 08/16/2014 - 11:16 | 5101994 Ident 7777 economy
Ident 7777 economy's picture

Appreciate the finely tuned sarcasm that 3 others missed completely ...

Sat, 08/16/2014 - 07:38 | 5101520 daemon
daemon's picture

" Solar might provide some kind of basic possibilities for electric cars and so on, but I have serious doubts it could be scaled to support the entirety of the developed world, let alone the developing nations. "

Don't forget that between the first gasoline motor prototype and the first operational vehicle, a lot of time passed, a lot of trials and errors.

With solar energy that will also be the case. It is simply a question of some combination of efficiency / cost / durability threshold. And given the problems raised by fossil energy, we can reasonably expect solutions to be found in a not so distant future.

Sat, 08/16/2014 - 07:52 | 5101543 MalteseFalcon
MalteseFalcon's picture

"With solar energy [...] It is simply a question of some combination of efficiency / cost / durability threshold."

It is also a question of overcoming the 'energy' companies i.e. some of the most powerful 'folks' on the planet.

Sat, 08/16/2014 - 08:00 | 5101552 daemon
daemon's picture

" It is also a question of overcoming the 'energy' companies i.e. some of the most powerful 'folks' on the planet. "

Yes, you are right, let's not forget that essential part of the problem .

Sat, 08/16/2014 - 11:18 | 5101999 Ident 7777 economy
Ident 7777 economy's picture

BOTH you guys are idiots and certainly not engineers. A word of advice: Innumeracy is not a positive attribute.

Sat, 08/16/2014 - 17:22 | 5102778 daemon
daemon's picture

" BOTH you guys are idiots and certainly not engineers. A word of advice: Innumeracy is not a positive attribute. "

Impressed by the depth of the comment ...... really . Of course, not in a positive sense.

I suggest you take a look at this :

to simply get a tiny glimpse to the fact that, probably a lot of people are thinking out of the box to solve problems, other seriously pavloved people, like you, deem unsolvable.

And yes, unless WW3 or ebola or something similar sends us (what will be left of us) back to stone age, we will use solar energy, among other renewable energies, to do an awful lot of things and we will replace fossil fuels.

And no, it's not "innumeracy", it's simply knowledge of what science is, and isn't.

Sat, 08/16/2014 - 21:00 | 5103518 BrosephStiglitz
BrosephStiglitz's picture

The issue then becomes other commodity resources.  Particularly those used in high-end electronics with low resistivities.  Silver, gold, etc.  Silver would be in particularly short supply in the event we switched to solar in a big way.


The Japanese and other major electronic manufacturers are trying to eliminate the need for silver based on its highly volatile prices.  They are working on replacement compounds.  Whether they are successful, or not, is anyone's guess.

You also have Rare Earth Elements, which (unlike their name suggests) are not so rare in the earth's crust, but are virtually impossible to extract from regular soil in large quantities.  Thus, you must find mineral deposits.  These might also be scarce, plus China controls a huge share of the market, because nobody can compete with them sending peasants down into mud-caked uranium mines where they will inevitably die a horrible death, just to mine the shit at low cost.

NB: In addition to the energy situation, you also have dwindling phosphate rock reserves (used to create fertilizers, and explosives).  This could impact the global food supply and Grantham certainly seems to think it is worth worrying about.  I read a 200 page report on Scribd about the phosphate rock situation written by a Dutch researcher, it seems okay for now, but moving forward at this current population? No dice.  If in the worst case scenario that energy prices go up AND phosphate rock goes up substantially, we could quite easily see the onset of starvation.

Sun, 08/17/2014 - 07:14 | 5104406 daemon
daemon's picture

" The issue then becomes other commodity resources. "

Yes. And not only the scarcity/rarefaction of some, but the way we use them and don't recycle them even when there are clearly possibilities to do so.

 You mention the, apparently crucial, dwindling phosphate problem. Take a look at this :

and after that, think about the fact that a large proportion of world population lives in cities where there is no such recycling. Some people are working on it.

Then think about how we build cars, The divine car. On average a car weighs about 1000 kgs. And when you look at this :

and realize that, in most cases, probably about 80% of its operational life will be spent transporting a person weighing about 100 kg, most of the time in urban cycle, and not in necessarily flat regions, you understand that we are still not used to think in terms of efficiency/durability.

Of course there are other examples you can think about. The fact is, when you look at the situation globally, that clearly, we have a habit of spoiling resources outrageously.

There is no doubt that we have a lot lot of problems to solve, and particularly in the way we perceive and use our environment, and our lives. I guess there will be serious shocks and lots of casualties before we change our behaviours.

Sat, 08/16/2014 - 08:54 | 5101621 barre-de-rire
barre-de-rire's picture

funny part is nobody understand still why israel is making its way to sea.

nobody get why usa push kiev to fuck russia.


but all in all, of sure, no... " bla bla no axis "  of course this is all BS... keep going, no problem,

that was announced in 72. you all spited on the information.

you pushed the NAFTA in 90' before europ did maastrich...


result ? same, all went east...


now you wanna merge usa with europ do the same shit named TTIP ... ?

you think you can go over 20 years this way, change 2 - 5 times presidents ? you are more dangerous than any religion believer then.


red fish in a bocal  has the mankind, 30sec of memory, as one wrote above to make joke & show himself smart... " i got only 3 thing i can memorize if i focus. "

don't worry darling, when your .gov will start nuke dancing in the sky, the only thing you will memorize is the 1st letter of the word Fuck before u gone vaporized.



Sat, 08/16/2014 - 12:19 | 5102218 LordEffingtonTh...
LordEffingtonThreeSticks's picture

Never the less her message IS invalid either way.  She's an actuary. Please don't ask her to show imagination.  That would be a mistake.

Sat, 08/16/2014 - 08:46 | 5101506 daemon
daemon's picture

" Call me eccentric but Fig.1 should read "Matter + Energy + Work --> Product or Service" "

Technically, in physics, work and energy are 2 words describing the same quantity. And when you think about it, in this particular case, what you call work : (intellect + labor), effectively is simply part of the energy you have to put in the system, even if you aren't used to see it as such .

Fri, 08/15/2014 - 22:34 | 5100528 Duffminster
Duffminster's picture

This post gets around to energy towards the end.  I'll put in a compelling video on energy first:

The Reality of Free Energy & Free Energy Devices

and this

The Truth Behind The Energy Lie(What The Energy Cartels Don't Want You To See) full movie

What I believe is not well understood is that economic growth is a result of cash flow.  When the 1% (corporations included) are putting trillions away in secret hiding places from the Caymans to Switzerland to inversion of their companies to foreign nations that money is not circulating.  Fed monetary policies do nothing to increase the velocity of money or in simpler terms net societal cash flow.  While CPE is at about 2.1% the real inflation that has occured and is most obvious is in asset prices.  Yes, QE does cause inflation, massive inflation.  The problem with asset inflation is that it doesn't generate cash flow to the broader economy but serves as a form of socialism for the investing class with the bulk going to the top 5% and concentrated mostly in the top 1%. Fed policy generates a massive increase wealth and income inequality, while concurrently setting up potentially very large financial and social instability, neither of which provide what the broader economy requires, money in the hands of the broader economy that can generate cash flow, consumer spending, economic growth. The system attempts to compensate by increasing consumer credit but that has reached a limit.  Ultra low interest rates also encourage ever greater sovereign debt creation.  The problem with that such policies lock nations and central banks into a policy of always super low interest rates, which discourages savings and drives up asset bubbles to the breaking point.  If interest rates were to revert to their long term mean for US sovereign debt payments in the range of 5% or more, the US would likely default on its debt obligations and likely suffer some kind of social revolution and vast instability.  More likely, those with the most control would seek to enter into a large scale conflageration as they have in the past when power was so highly concentrated among a few and empires were threatened by the corruption that the elite brought upon themselves.  What else is possible? Fed policy has driven a massive bubble in corporate bonds and high yield (junk) bonds as treasuries in many cases are paying next to or below nothing in inflation adjusted yield, depending on you calculate inflation.  This has driven even junk yields below 6%, which is hardly "high yield" by any historical metric and yet that debt is accompanied by far greater risk.  This is coupled with massive liquidity problems in the high yield bonds, which have grown to $1.4 Trillion with dealer liquidity having dropped as low as $6 Billion laterly.  Prior to Lehman dealer liquidity was in the range of 15% of the total bond market and is now down in the range of 1.5% and this sets up massive risk potential if there is any large run on bond ETFs.

The truth is that there are solutions and none of them have to do with monetary policy, but they are certainly not going to be adopted by the existing elite ruled government representation. Tax code is the first place to start. We need a tax system closer to what we had in 1960 than what we have now and it needs to be simpler. We need to use tax code to put as much money into consumers pockets as possible because they create economic cash flow because they spend there money when they receive it.  For households up to $100 thousand I'd say to pretty much cut taxes.  I'd raise the top rate to closer to 70% and have the brackets move as high as $10 Billion with a fairly steep drop off.  As far as corporate taxes, I'd basically cut the top rate dramatically, close virtually every special interest tax loopehole and provide a repatriation holiday to bring existing overseas money back.  I would level capital gains taxes at the same rate as that of the federal income tax rate, so if you were making under $100 thousand and made it all through capital gains, you would pay nothing.  This gets smaller invetors into the capital markets and investing.  However if you were in tax braked paying 20%, say at $300 thousand under a new tax code, you would pay 30% on capital gains. The few loopholes I would leave would be designed to stop outsourcing alltogether through incentives and to continue to ecourage capital spending but more virorously and I would do the same for domestic hiring, training and R&D. 

Beyond tax code there is the better solution that can free the human race and that is free energy technology.  If such technology is allowed to come to market it can resolve almost every woe that ails the human race.  That is a big if.   Tesla was the first to show that energy can be generated simply from the ambient flux within the electromagnetic field of the Universe.  This technology has arisen and been shut down many times by those who live in the constant fear of obsessive need to dominate and control via resource scarcity.  Wherever there is flux there is the ability to extract energy.  It has proven over and over again that torroidal systems can extract electricty from the large flux that is constantly occuring in the surrounding fields.  Every time this technology is brought forward that powers that be confiscate or worse. While there are a lot of scams out there in regard to free energy, there are resources and evidence validating the designs that can deliver energy at the cost of simply building related devices. By simply doing an internet search on a phrase like "free energy info" you can find the working designs and patent references for many of these.  Currency can be translated into energy and if we can deliver currency to the economy via free energy, most of the problems of the world and the suffering of humanity can be eliminated.  Unfortunately the current sociopathic elite live in a state of perpetual fear and thus a need to control dominate and eliminate anything that would keep them from their nightmare, which they seek to impose on everyone else.  Once we overcome all fear of death, then we realize that we have absolute power to change the dream from their nightmare to a world which is based in infinite abundance, peace and prosperity for all.  What else is possible?  How does it get better than that?

Here is just one of several sites that deal in this subject of free energy generation.

Sat, 08/16/2014 - 09:03 | 5101627 barre-de-rire
barre-de-rire's picture

telsa, next biggest scam after 21/12/2012


only fucking americans can believe that you can got free energy...


go back school... you seriously need it.


the only thing you got for free, mostly genetically because of your fucking GMO,  is free mental illness... this is totally pathological relevant.


nobody has any plan,scheme, blu print of any shit of this most 21th century scam.

for only one reason, once they published,   ppl realize it is utter BS :)


but one thing would be true, you paid for the blue prints HAHAHAHAHAHAHA HOHOHOHOHOHOH HIHIHIHIHIHHIHI....

fuck you, morron dumbfucks. u not deserve to live. suck nigger ebola cock   %====> 




Sat, 08/16/2014 - 11:22 | 5102015 Ident 7777 economy
Ident 7777 economy's picture

The innumerate non-engineers do not understand they are getting 'hosed' and the are they real 'product' behind these hoaxes ... if I had _no_ conscience I would be tempted to 'clip' these sheep too and make a few easy (and fun) bucks.

Sat, 08/16/2014 - 11:33 | 5102062 Milestones
Milestones's picture

Interesting, well thought out post; also well presented.

Thanks for the heads up on the energy link.

Enjoyed reading your comments .  A small tip of the hat to the late Mike Ruppert who was searching for answers.               Milestones

Sat, 08/16/2014 - 20:55 | 5103498 Seeing Red
Seeing Red's picture

What's more likely -- an "inventor" breaks the known laws of physics, or it's a scam?  I've researched a few of these (as a hobby) and they've all been complete scams so far.  Think I'm wrong?   Most of these guys are happy to take your money.  Bad science abounds in the USA -- look at the number of moon-landing deniers (FYI, figuring out where they screwed up in their "proof" arguments is often entertaining and a good way to practice high-school-level physics again).

Fri, 08/15/2014 - 19:33 | 5100272 christiangustafson
christiangustafson's picture

I love you, Gail.

Also, I love you, Gail.

Fri, 08/15/2014 - 20:06 | 5100386 DaveyJones
DaveyJones's picture

like this site, the oil drum will hold an interesting place in history 

Sat, 08/16/2014 - 08:04 | 5101554 MalteseFalcon
MalteseFalcon's picture

The Oil Drum is history.  The funding, which came from 'Oh, I don't know where', was withdrawn.  Vaya con Dios, Oil Drum.

Fri, 08/15/2014 - 19:45 | 5100316 kaiserhoff
kaiserhoff's picture


Sat, 08/16/2014 - 06:29 | 5101469 BrosephStiglitz
BrosephStiglitz's picture

Not at all actually.  This article bridges the gap between physics and economics.  Even if the physics knowledge detailed within is rudimentary at best (and probably subject to some inaccuracies- a physics graduate could say better.)  Nobody on this earth can escape the realities of physics.  That's an immutable fact.

Sat, 08/16/2014 - 08:07 | 5101555 MalteseFalcon
MalteseFalcon's picture

Yes, Einstein's physics stayed strictly within the bounds of Newton's physics.  That's why no one knows Einstein today.

Sat, 08/16/2014 - 16:06 | 5102823 BrosephStiglitz
BrosephStiglitz's picture

Except we're not talking about the theory of relativity, or quantum mechanics, or string theory.  The energy situation can merely be reduced down to the mechanical work equation.  Any higschooler over the age of 15, in any developed country should be able to explain that.  It is one of the most basic physical concepts around.

A glut of relatively abundant energy makes mechanical work much easier to do.  That is the fundamental reason behind a rather epic population hockey-stick when, for millennia, the global population increased at a much more stable rate.

Edit:  Well, sorry, I am talking like an economist now.  That is one of the main reasons, along with capital accumulation and technological progress.  However, a large part of that came from freely available energy.

Sun, 08/17/2014 - 07:55 | 5104578 MalteseFalcon
MalteseFalcon's picture

Oh wait.  They just "discovered" a new large oil deposit in the North Sea off of Scotland.  So it isn't physics, it's geography or is it geology?

Damn, the oil just about runs out and then some clown finds more.  Was this find in the "official" reserves figure? I guess any analysis is bullshit if the input data is bullshit.

Fri, 08/15/2014 - 19:46 | 5100318 Captain Obvious.
Captain Obvious.'s picture

All perfectly true and based upon the assumption that we have reached the end of the scientific endevour.

"All that is left is to dot the "ts" and cross the "is"." When did we hear those famous words last? Oh yes. Lord Kelvin, 1900.

Which are you going to trust, Your cultural beliefs or the empirical data?

Not meaty enough for you? Get your teeth into this then.

Or not.

The other option is to bend over for Mr Darwin.

Fri, 08/15/2014 - 19:51 | 5100339 christiangustafson
christiangustafson's picture

Maybe for the survivors.

First we have some serious culling of the herd ahead.

Sat, 08/16/2014 - 07:10 | 5101504 saveandsound
saveandsound's picture

Unfortunately, LENR doesn't work.

Fri, 08/15/2014 - 19:45 | 5100321 kevinearick
kevinearick's picture

Intermittent Learning:   Fire Creates Its Own Weather

Short cut efficiencies ‘work’ under zero variability, so the system seeks zero variability, until it blows up, which physics tells you is going to happen, but that doesn’t tell you when. If there’s a 90% probability that your distributor circuit is failing, a 9% probability that your fuel pump circuit is failing, and other, a thousand different possibilities, is 1%, are you going to swap out your distributor and/or your fuel pump, or buy another car? (no, no, & no)

If you accept higher education, forming a committee to solve a problem from the past, created by higher education, to propose a plan for the future, buying consensus with printed money, while a thousand other outcomes occur, you get what you get, war. At the beginning of each empire cycle, this stuff is common sense, because Goliath just got his a* kicked, again. Labor is in the business of cleaning up the mess and rebooting the system.

The vast majority of critters will accept derivative civil marriage compliance by age two, and confirm compliance to a particular peer pressure event horizon, usually their parent’s FILO placement, by age sixteen. The vast majority of the rest will join the futile peer pressure resistance event horizon, employed as an example to the remainder, who will be hunted down by process of elimination.

Capitalism simply exploits the resulting demographic boom bust cycle of socialism, in what it chooses to call a market. When the boom started was the time to consider demographic stabilization, and when the capitalists lost control was the time to implement developments. In 2008, the price tag was $2T. Now that the critters have demonstrated complete incompetence, bidding against themselves to the tune of $50T, and demographic collapse has taken hold within the majorities, war is escalating out of control.

The FILO ‘first-ins’ are given every advantage – free money, technology, extortion, military and information advantage, within the closed system they create for the purpose, but the committee gets beat by a kid every single time, which is the point of public education. Don’t get upset because your children tell you school is stupid; tell them to teach themselves, to focus on the relationship between life and gravity, because timing gravity to turn on itself is everything.

Waiting for God’s time, unknown recognition, is not about sitting on you’re a*, reading the bible, re-reading empire History, gossiping at the office, building a more efficient rat trap, or coming up with yet another theory on the Internet, to maintain the status quo of false assumptions. It’s about preparing to be successful until you are, practicing faith, by seeking and finding what others do not, acquiring physical and mental skills in the process of developing your talent.

The economy is always being rebuilt, from the bottom up, hidden only by false assumptions accepted by the majority, through kindness of a stranger, because no one can f* you like your family, copying feudalism more efficiently. In a nutshell, regardless of job, which is always fubared, you clean up the mess on Friday so the critters can start on Monday, until you don’t, by walking through gravity to alter the outcome data, making stupid obvious for those who have not accepted the false assumptions.

If you happen to be assigned to the homeless event horizon with kids, and you figure out how to feed and cloth them, get them off to school with a good attitude, and get yourself to that $10/hr job, when 1st, last and deposit is $2500, without accepting the assumptions of your station, whether you are advantaged or disadvantaged is a matter of perspective. Regardless, your role is a helleva lot more important to the economy than which quarterback supposedly won the superbowl, not that you can’t enjoy a football game.

The morons, paying $100/barrel for oil, increasing rent on falling income, and bombing impoverished children along with their parents’ industry, to get cheaper crap at higher prices, are their own worst enemies. Regardless of answer proffered by the socialists, it should be obvious that queuing people up as bait for capitalist predators, to secure FILO entitlement, doesn’t work.

On a scale of 100, parenting is 100. Anything you do at a public, private or non-profit corporation is a 1. Finding an effective spouse and having children, as real demand becomes obvious, is your top priority. Next is a job and a landlord to adjust your income to rent ratio. What you actually do for an empire job is irrelevant, as is the empire. For every Joe Montana, there were a thousand better quarterbacks who didn’t go to the NFL, because the false assumptions of the majority simply weren’t a priority.

We have 2000 firefighters up here creating economic activity, fighting nature, while their boss ships redwoods through San Francisco to Asia, and replaces it with pot, playing last to lose in a drought. It’s always a food war, but you’ll have that. The critters are going to do what they are going to do, following the laws of gravity. Don’t step in front of that train expecting them to stop. You can see everything you need to see at the station.

Fri, 08/15/2014 - 19:52 | 5100343 magnetosphere
magnetosphere's picture

this author has repeatedly demonstrated a profound ignorance of how and why the steam engine was invented, and likely does not understand what the benefits of a heat engine even are

Sat, 08/16/2014 - 04:37 | 5101401 HughK
HughK's picture

She understands steam power and internal combustion, which is why she - and the rest of us - should care about the relationship between energy and the economy.

Sat, 08/16/2014 - 11:22 | 5102021 Ident 7777 economy
Ident 7777 economy's picture

Boy misses the point; -1

Fri, 08/15/2014 - 20:04 | 5100380 Temerity Trader
Temerity Trader's picture

WTF? Who f***ing cares? The Economy. ONE basic Principle! The Fed!

All that matters is will the Fed print moar money?  Oil doesn’t matter, so long as people can borrow cheap Fed dollars to buy it. There are ONLY two things that matter, consumerism and debt. Forget about everything else. They are selling more giant SUVs than ever! Why? Because consumers can borrow cheap Fed dollars and use plastic to fill the tank; then default and Uncle Sugar bails out the banks.  Rinse, repeat. Duh! What part of this don’t the ZH perma-bears understand? NOTHING f***ing matters but consumerism and debt. If energy prices soar, QE infinity is guaranteed. Loan forgiveness is next.

The Fed will support the stock market because they believe 100% in the trickle-down wealth effect. And it works. You can see it every day, penniless unemployed people driving brand new sheet metal with the newest I-Phone in their ear. Houses selling to cash buyers, bidding wars=cheap Fed $$. There is so much “liquidity” out there, it is unreal. It is all chasing the same assets. If things turn ugly, Fed announces another QE and trillions more $ to be created.  Bears are gored again and again.  “But, but, if oil prices rise!” LMAO.

Sat, 08/16/2014 - 06:52 | 5101484 BrosephStiglitz
BrosephStiglitz's picture

Unfortunately for most of the Fed. policy makers (and for people like you), who do not understand the realities of physics, the paper/electronic games are going to stop at some point.  At that point the reality of the situation is going to be ripped wide open and will be bare for all to see.

BTFD today, hell BTFD until the end of time, but just remember that you cannot escape physics.

Fri, 08/15/2014 - 20:08 | 5100391 Kirk2NCC1701
Kirk2NCC1701's picture

And " Net Energy per unit Currency" (Watts per Honest_Currency) also matter.

In the world of physics, this would translate into the timeless universal version of:  Watts per Gram of Gold, since Banksters could not fudge either one.

As I've sarcastically suggested to the ZH blogger Krugman, "Dilithium Crystals + Latinum" baby!  IOW...

Universal Money is indexed to Precious Energy + Precious Matter.  What a radical concept!

Fri, 08/15/2014 - 20:06 | 5100392 buzzsaw99
buzzsaw99's picture

i can write the same flawed premise twelve different ways without offering a shred of evidence.

Fri, 08/15/2014 - 20:32 | 5100410 Yen Cross
Yen Cross's picture

 You're missed Buzz.

  Things move pretty fast in the Z/H . Winter is coming, and I have to listen to " bless his soul" (no names)

  Diatribe me all farking winter.

 The maximum core temperature of a common nuclear reactor is 2600 celcius. The cores from FUCK -U Shima aren't 200 feet below sea level!

  The remnants of the cores are below 500 Fahrenhiet, and leaking through the containment structure. The reactor complex was built on a slope.

  Ground water will NEVER be contained!

Fri, 08/15/2014 - 20:47 | 5100561 q99x2
q99x2's picture

My concern are the Arabs that the Queens gave money and weapons to.

Fri, 08/15/2014 - 20:59 | 5100608 TrustWho
TrustWho's picture

Malthus was right. He did not appreciate the "can kicking" possibilities, but his basic concept was correct.

Fri, 08/15/2014 - 21:06 | 5100626 El Vaquero
El Vaquero's picture

Malthus was right.  He just got the timing wrong.  

Sat, 08/16/2014 - 04:04 | 5101252 Radical Marijuana
Radical Marijuana's picture

Malthus was an optimist!

Idiots think he is wrong.

The first line in point 4 of that article above stated the primary premise, which was one of the 2 basic assumptions which Malthus made in order to present his argument:

"All species reproduce in greater numbers than need to replace their parents. Natural selection determines which ones survive. Humans are part of this competition as well."

NO NEW TECHNOLOGY AND/OR NEW RESOURCES CHANGES THE MALTHUSIAN DILEMMA, WHICH IS INHERENT TO THE NATURE OF LIFE. However, the combination of new technologies and/or new resources can temporarily allow the Malthusian dilemma to be postponed, but at the cost of an exponential growth thereby enabled to Overshoot in a nutshell...

Some of the comments above were idiotic. There is no doubt that there are an abundance of possible creative alternatives, however none of those change the basic Malthusian dilemma, which is innate to the nature of life, because it comes as a package deal with the ability to reproduce. Despite that concept being plainly obvious, a lot of people have developed ideologies which enabled them to deliberately ignore that basic biological fact.

When was one born into that Secular Cycles chart?

The answer to that question explains a lot about the different attitudes that may people have! My attitudes are directly related to me being born in 1950. My life was wonderful when I was a child, up until the time indicated in that chart, around 1971, when the "Stagflation Years" began, which I became well aware of happening then. I became intellectually aware of the approach of the times of possible "Crises." SINCE THEN I HAVE WORKED TO TRY TO MITIGATE THOSE CRISES, TO NO APPARENT AVAIL.

Malthus was an optimist because he did not foresee society being able to OVERSHOOT so fantastically, instead of more quickly reaching some equilibria between the birth and death rates. What we have done is enable the human population to double and double, BUT with the probable result that it could catastrophically collapse.

Malthus was even more of an optimist because he did not foresee that exponentially developed technology, operated through an economic system based on enforced frauds, that was able to maintain attitudes of evil deliberate ignorance, would result in the destruction of the natural world, to the degree that the collapse of the human population would happen simultaneously with the collapse of almost all other forms of life in the planet.

To be frank, I kind of envy the idiots that can not understand the Malthusian dilemma, or are amazingly able to deny that it even exists, because they are then also able to not begin to imagine the ways in which Malthus was actually wildly optimistic, regarding the ways that he thought the basic biological problems would balance themselves out. It now looks like adding advancing science and technology into social pyramid systems that developed through the history of warfare, whose success was based on backing up deceits with destruction, which then enabled a political economy in which success was based on enforced frauds, has created a human ecology which is most probably going to go through the biggest boom/bust cycle there has ever been, which will simultaneously cause mass extinctions of lots of other life forms.

Most of the people who pretend to propose better resolutions of the Malthusian dilemma by Alternative Energies & Society Adapted to Them nevertheless still tend to deliberately ignore the BASIC biological problems which ARE the source of the Malthusian dilemma. However, within a society dominated by enforced frauds, believing in bullshit is often paradoxical, in that those beliefs enable people to rationalize the systems of organized lies and robberies that they benefit from in the short-term. In some social circumstances, being deliberately ignorant is personally beneficial, because it enables some people to rationalize the robberies that enable them to live the way that they want do. Overall, our entire society is like that! We operate our real death controls through the maximum possible deceits, and our real debt controls through the maximum possible frauds. Inside that situation, the vast majority of people are able to continue to deliberately ignore the Malthusian dilemma.

Sat, 08/16/2014 - 15:14 | 5102722 blunderdog
blunderdog's picture

The catch with the Malthusian perspective (at least as formulated in the above article) is that the economic malady concerns the relationship between the monetary system and LABOR.

It's simple to replace the LABOR concept with the ENERGY concept, but it's wrong.  Labor is far more abstract than energy.  Labor is not inherently a limited or finite resource, but energy is.

Sat, 08/16/2014 - 16:11 | 5102784 Radical Marijuana
Radical Marijuana's picture

That makes no sense to me, blunderdog, since I regard "labor" as being human energy. Yet, since the ability of human beings to labor includes their ability to be conscious, and consciousness is the value creating element, I agree that view of labor is much bigger than the merely materialistic view of energy.

However, I regard information as a form of energy. Moreover, I think of Energy as Spirit. But nevertheless, human beings live as bodies, that need air, water, food and shelter. Therefore, the basic laws of material energy apply to human bodies. Meanwhile, the relationship between human bodies and human consciousness remain relatively mysterious.

I am presuming that you are implying something like that when you propose that human labor is far more abstract than material energy? For sure, developing new sciences and technologies is a special form of human labor, that can transcend the previous limits to some degree. However, so far, human beings still need to breathe, drink and eat, and since they can reproduce at an exponential rate, there are chronic political problems inherent in the nature of life, such as those which we now refer to as the Malthusian dilemma.

Politics is supposed to be the ways that human beings may resolve those problems. However, through history that has primarily been done through deceits and frauds, which makes resolving any real problems regarding real limits extremely problematic, which is typified by the ways that many people deny that the basic issues regarding the Malthusian dilemma even exist!

The core of natural selection are differential death controls, affecting reproductive rates. The core of human ecology is its death controls, within which history warfare developed as the murder system which human beings operated through backing up deceits with destruction, in order to make the societies that we are surrounded by today. Since the actual death controls were done through the maximum possible deceits, while the controlled opposition groups operated within the same frame of reference, of total bullshit about the death controls, the established systems, and most of their controlled opposition groups, operate through systems of understanding based on bullshit, which tend to deliberately ignore and deny the ways that the Malthusian dilemma MUST exist, and HAD been resolved, so far.

The production of destruction controls production. The same energy flows through the productive prey as flows through their parasitical predators. Human labor includes human beings killing each other! Clearly that is a much more abstract concept than merely material energy. The crucial ability of human beings to kill each other, and the questions of who kills whom, and how, has controlled human history, and created the economic systems that now exist, and how they developed the uses of energy resources.

The crux of the Malthusian dilemma is found in the ways that human labor power includes the power to rob, with the limit case of that being the power to kill. It is for that reason, that military activities are the controlling aspects of human labor, that the Malthusian dilemma is so totally buried under the biggest bullies' bullshit social stories, while their controlled opposition tends to promote the impossible ideals that the Malthusian dilemma should not even exist. At the present time, all of the most significant politicians, including the range of controlled opposition groups to the established systems, operate out of the frame of reference of the maximum possible deceits regarding the death controls. Generally, they get away with not stating what their death control policies are, but rather blabbering on in the established bullshit ways of avoiding those issues.

As long as growth was more possible, then the death controls were less acute. However, as the limits of the environment to provide air, water, food, and fuel, etc., to more and more people, are reaching the kinds of diminishing returns from investments, as this article above outlines, then, BY DEFINITION, THE LIMITS TO GROWTH PRIMARILY MANIFEST IN THE FORMS OF THE DEATH CONTROLS. Therefore, the Malthusian dilemma returns with a vengeance, and the most important, and the most abstract, of the forms of human labor are the ways that human beings operate death controls against themselves!

Sat, 08/16/2014 - 18:50 | 5103236 blunderdog
blunderdog's picture

I think my point is a bit simpler than that.

What constitutes/qualifies as "labor" is in a state of constant change, because there's ongoing emergence of the "capability" of capital with technological development.

Robots are a simple example.  Welding the chassis of a car together used to be a function solely of labor, but now capital is able to perform much of the work previously requiring human interaction.

"Money" is dead labor.  Dead labor cannot be reduced to the same underlying ingredients as energy, because labor a hundred years ago was profoundly more limited in expression than it is today, but a joule has always been (and likely always will be) a joule.

"The economy" is not merely the interaction of energy/material inputs, it is actually primarily constructed out of our IDEAS of how to value the various inputs, and our ideas are not ultimately bounded by any physical constraints.  This is why speculative bubbles are possible.  If it weren't for the dominance of human emotion in the collective definition of things like value and utility, reduction of the operation of "the economy" into a set of physics equations would work.

But it doesn't.

Knowing the limitations of the physical constraints is necessary to intelligently discuss "the economy," but can never approach being sufficient.

Sat, 08/16/2014 - 20:46 | 5103484 Radical Marijuana
Radical Marijuana's picture

It is certainly possible that there could be more basic breakthroughs in science, which would enable currently unimaginable technologies to be realized. However, I continue to think that even IF there were some technological miracles, without even greater political miracles, then nothing worthwhile would be accomplished, but rather, things might become even worse, because those new technologies would primarily be applied to create even worse weapons!

Sat, 08/16/2014 - 15:24 | 5102744 malek
malek's picture

Such a long-worded post and still beating around the bush.

Get to the point:
Do you believe it is impossible for earth to carry 7 (or 10 or 15) billion humans on a permanent basis?

I don't.

Sat, 08/16/2014 - 16:09 | 5102828 Radical Marijuana
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Well, Malek, IF human beings could miraculously start to cooperate with each other, and develop better overall, integrated human, industrial and natural ecologies, in which things like recycling were maximized, THEN it would be theoretically possible for the Earth to sustain a large human population. However, NOTHING could sustain endless exponential growth of the human population and total human economic activities. The core concept is the one that I developed just above: THE DEATH CONTROL SYSTEMS. With better death controls, then it is possible there could be better human, industrial and natural ecologies, which could sustain more life and consciousness, as energy was recycled more in nonlinear ways. However, without those, then we are still on the runaway paths towards mad self-destruction that we on are right now.

My realistic view is that, despite that it is theoretically possible there could be more than 10 billion people alive in 2100, what I actually expect will happen is that were will be less than 1 billion people alive in 2100. The primary reasons I believe that is that our current death controls are operated through the maximum possible deceits, while our political economy is based on a foundation of enforced frauds, which makes saner human, industrial and natural ecologies practically impossible to have any rational public debates about.

It would take a prodigious series of political miracles for enough people to go through enough intellectual scientific revolutions to be able to operate a society that could be more enlightened about itself. While it would take nothing but the default to the established systems to drive the destruction of the world as we now know it. If I had to bet on it, I would bet that human civilization will destroy itself by going through psychotic breakdowns, because its real death controls are operated through the maximum possible deceits, to the degree that rational public discussions of better death control systems are practically impossible. Instead, we have runaway insane wars, started by deceits, spinning out of control, while the economic systems are based on strip-mining the Earth's natural resources, on an apparently one-way express trip to hell.

I believe it is theoretically possible for billions of people to live in a sustainable way, but that it is practically impossible for the established political processes to enable that to happen. Instead, I believe we are headed towards mass murders, spinning insanely out of control, as civilization collapses into chaos ... after which it is impossible to predict what might survive through that, and thereby maybe have learned from those experiences.

Sat, 08/16/2014 - 17:16 | 5102979 malek
malek's picture

 endless exponential growth

The world population growth's increase has started slowing already some years ago. To point out the obvious, such a thing never happens in an exponential system.


You are going completely overboard with so-called "logic" and even keeping a straight face with it.
Read up on Robert McNamara or watch "I Robot" for f**k's sake.
We can only control the rules never the outcome over the long term in society, without complete fascism.

Are you even aware, that from today's point of view we actually had an incredible series of miracles happening to get where we are today - at least miracles if you'd ask the wisest guy at Caesar's or Aristotle's times what would happen in the future.

But I can tell you one thing: the standard answer "we need to raise education/enlightenment of all people" will not lead us there, as I have come to realize that 95% of intelligence (or intellectual capacity) these days is "wasted" on lying/deceiving better.

Sat, 08/16/2014 - 20:48 | 5103452 Radical Marijuana
Radical Marijuana's picture

"95% of intelligence (or intellectual capacity) these days is "wasted" on lying/deceiving better."


That is why it is hard to imagine any other future than one which finally ends up in the psychotic breakdown of systems based on enforced frauds, although there are theoretically better alternatives! However, none of those are actually possible to become workable systems of artificial selection without some system of death controls at their core!

The decrease in exponential population growth in SOME countries was due to SOME women not having as many children. However, all such "birth controls" were actually forms of death controls, which tend to not be admitted to be that. The basic problem with our death controls is that they are almost totally based on deceits, running through and through every different way that we talk about that!

The most efficient form of death controls are what we falsely call "birth controls."  Bullshit about "personal choice" buried the actual effects upon overall human ecology. "Birth control" should be understood within the context of militarism, because it is actually a form of murder. (The people who object to abortion because they think that is murder tend to refuse to accept the basic biological facts that some sort of murder system MUST necessarily exist.) Of course, we live in Bizarro Mirror World, where everything is seen proportionately backwards, by most people, who do not have a clue about any of that, because 95% of intelligence was invested in brainwashing people to believe in bullshit.

Sun, 08/17/2014 - 00:25 | 5104033 malek
malek's picture

I have stated before, the most efficient form of birth control turned out to be "emancipation."
(And I put this in quotes because all real world emancipation ended up with women taking the additional options but shunning the additional responsibility, as a rough general rule.)

Yeah well, I also murder by millions every day when I wash my hands with soap. Bacteria that is. No need to go Orwellian language deliberately and all by yourself

Fri, 08/15/2014 - 21:18 | 5100669 DOT
DOT's picture

Also  deployment of new technologies, stacking, flood back, horizontal drilling, as shown over the last few years leads to ore rapid depletion. Awhole shit ton of heteroskedasticity is on its way on longer term models.

Fri, 08/15/2014 - 21:30 | 5100703 joego1
joego1's picture

We could probably figure out how to solve the energy problem if we could figure out what the mission of homo sapiens is in this great universe. Meanwhile I guess it's just a bunch of monkeys with a hydro carbon addiction going bannas.

Sat, 08/16/2014 - 00:00 | 5101090 Money Squid
Money Squid's picture

"if we could figure out what the mission of homo sapiens is"

Hookers and blow

Maybe a little weed sometimes

Sat, 08/16/2014 - 01:30 | 5101233 El Vaquero
El Vaquero's picture

The basis of the technology to save industrial civilization exists.  Not the technology, but the basis for it.  I don't see it being implemented in time to save everybody and I don't see it working for 7 billion people.  Thorium + ferrous cobolt + better chemists than I = reverse combustion.  We built a working MSR that use thorium as its primary fuel source that did what it was supposed to do, and the ferrous cobolt ceramic has already been under testing for a few years for breaking CO2 down to CO, which is a necessary step for reversing the combustion process.  It also reportedly does what it is supposed to.


We haven't done any serious tinkering with thorium since the 70s, and the reverse combustion with the ceramic is only a few years old, and the building up of the longer hydrocarbon chains is not something that we've developed the technology for mass production.  In an honest world, we have until somewhere between 2020 and 2025 before this stuff really needs to be developed, the infrastructure needs to be installed, and it nees to take over.  However, we live in anything but an honest world.


The future is dim, but there are some bright spots.

Sat, 08/16/2014 - 03:44 | 5101372 HughK
HughK's picture

Yes, el vaquero.  I agree that we need to invest a lot of money and manpower in trying to make energy breakthroughs.

Sat, 08/16/2014 - 08:16 | 5101562 MalteseFalcon
MalteseFalcon's picture

We have a political, not technological problem.

Fri, 08/15/2014 - 23:23 | 5100999 limacon
limacon's picture

Utter Collapse
Probable Homo Sapiens extinction.

Fri, 08/15/2014 - 23:29 | 5101006 Oppressed In Ca...
Oppressed In California's picture

"5. We depend on a fragile self-organized economy that cannot be easily replaced. "


So the alternative is centrally planned economies? 

Sat, 08/16/2014 - 03:42 | 5101371 HughK
HughK's picture

No, oppressed, you seem to be caught in on older dichotomy.  This is not about libertarian vs. central planning.  This is about collapse down to a less global, and much less plentiful economic system as we deplete our most productive and cheapest conventional fossil fuel reserves and move to more expensive and less productive reserves.

Both free markets and centrally planned economies made the mistake of pricing oil at the cost of getting it out of the ground, instead of somewhere much closer to its energy value.  Now we've burned most of the high-quality oil  - produced over a span of the last 200 million years - in just 200 years.  That's a once-in-a-species opportunity.

Sat, 08/16/2014 - 10:28 | 5101807 Money Squid
Money Squid's picture

There always exists multiple economies. The biggest difference is between rich and poor. The rich participate in a global economy, the poor a local one. In the "developed" countries many are losing their access to the global economy and will only have access to a local one.

Sat, 08/16/2014 - 00:03 | 5101080 Money Squid
Money Squid's picture

Ifs I recall correctly Gail used to write on TheOilDrum

Rule No. 1 Energy is life

Rule No. 2 See rule No. 1.

Rule No. 3 Why are you still reading?

Sat, 08/16/2014 - 11:13 | 5101980 Ident 7777 economy
Ident 7777 economy's picture

While this is true, she could be totally wrong on every other aspect ...

Sat, 08/16/2014 - 15:18 | 5102735 malek
malek's picture

Did he forget to mention that the sun showers us with vast amounts of energy, more than we will ever need, and -to the best of our knowledge- will continue to do so for the next 1 billion years?

Sat, 08/23/2014 - 23:54 | 5136128 Money Squid
Money Squid's picture

whew... I thought the sun was only going to last one million years.

I dont see no solar powered Boeing 777 or airbus 380s, I dont see no solar powered panamx container ships. If you want solar power to play a significant role in a global economy better look at the scale available in 1600s and 1700s. Not against though.

Sat, 08/16/2014 - 01:16 | 5101212 ekm1
ekm1's picture

The writer does not understand the concept of 'cost'


Also the writer fails to acknowledge that the earth has not run out of any elements or compounds yet, and never will. We have never run out of air to breathe and we never won't.

Sat, 08/16/2014 - 03:39 | 5101367 HughK
HughK's picture


We will never run out of oil, or copper, or coltan, etc, and the author - Gail Tverberg - would agree with that.  What instead happens is that the resource gets so depleted that the remaining deposits are of such low-quality that it is not cost effective to mine them.

As conventional oil deposits deplete then non-convonentional, more expensive oil reserves are exploited (e.g. Albertan tar sands, Bakken).  But, the energy return on energy invested (EROI) falls, and at some point it will take more energy to extract the lower-grade oil deposits than is received from this extraction.  At that point, it doesn't matter how many dollars you have - the economy's real currency - energy - is too scarce to undertake more extraction.

There are new schools of economics that use energy, not currency (not even gold...) as the primary unit of account.  Sometimes you hear the term biophysical economics, or thermodynamic economics, and sometimes it's ecological economics.  In any case, money printing has very little effect on an economic system ultimately based on energy.

Sat, 08/16/2014 - 13:19 | 5102427 ekm1
ekm1's picture

Energy has been, is and will always be the only real unit of account.


Cost = hours of labor, nothing else.


Assume slavery exists now and all oil workers are slaves, what is the cost of production?


Sat, 08/16/2014 - 02:36 | 5101309 VWAndy
VWAndy's picture

Bust the energy monopoly and we can get off this rock.

Sat, 08/16/2014 - 04:32 | 5101398 Mojeaux18
Mojeaux18's picture

Peak oil is just around the corner.  It has been for more than 100 years.
We have always been at war with Eurasia. 

Sat, 08/16/2014 - 06:41 | 5101476 Nexus789
Nexus789's picture

Economic models as well as accounting conventions have never been relevant in terms of explaining our impact on the real physical world. This observation was made by political economists in the nineteenth century. This will only become apparent to the masses when civilisation collapses.

Sat, 08/16/2014 - 11:10 | 5101969 Ident 7777 economy
Ident 7777 economy's picture

NO LIMITS (practically) if you consider E=MC^2


Sat, 08/16/2014 - 15:17 | 5102726 malek
malek's picture

Typical thinking error, assuming current growth/usage/cost increase trajectories will continue ad infinitum.

Sat, 08/16/2014 - 15:52 | 5102806 Loup Kib
Loup Kib's picture

" The types of energy harnessed include human slaves, energy from animals of various sorts, solar energy, wind energy, water energy, burned wood and fossil fuels, and electricity from various sources. "

I emphasize that prâna is never mentionned in those analysis, neither as a universal, surabundant, always available at any time, almost literally no-cost source of energy, that can be tapped on the spot by individual humans, even while reading that article or that comment ..

Very good article, nonetheless.

Sat, 08/16/2014 - 19:12 | 5103291 exartizo
exartizo's picture

Your ideas do not take enough variables into consideration.

For example, one very big variable you missed in your analysis is the geopolitical climate.

The United States is committed to keeping the price of oil down, and so manipulates the price of oil to keep it lower.

Not so much for American consumers to buy cheaper gasoline, as much as to keep Russia from getting it's economy out of the doldrums.

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