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A New Theory Of Energy & The Economy, Part 1

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Submitted by Gail Tverberg via Our Finite World blog,

How does the economy really work? In my view, there are many erroneous theories in published literature. I have been investigating this topic and have come to the conclusion that both energy and debt play an extremely important role in an economic system. Once energy supply and other aspects of the economy start hitting diminishing returns, there is a serious chance that a debt implosion will bring the whole system down. In this post, I will look at the first piece of this story, relating to how the economy is tied to energy, and how the leveraging impact of cheap energy creates economic growth.

Trying to tackle this topic is a daunting task. The subject crosses many fields of study, including anthropology, ecology, systems analysis, economics, and physics of a thermodynamically open system. It also involves reaching limits in a finite world. Most researchers have tackled the subject without understanding the many issues involved. I hope my analysis can shed some light on the subject.

I plan to add related posts later.

An Overview of a Networked Economy

The economy is a networked system of customers, businesses, and governments. It is tied together by a financial system and by many laws and customs that have grown up over the years. I represent the economic network as a child’s toy made of sticks that connect together, but that can, if disturbed in the wrong way, collapse.

Figure 1. Dome constructed using Leonardo Sticks

Figure 1. Dome constructed using Leonardo Sticks

The economy is a self-organized system. In other words, it grew up gradually over time, one piece at a time. New businesses were added and old ones disappeared. New customers were added and others left. The products sold gradually changed. Governments gradually added new laws and removed old ones. As changes were made, the system automatically re-optimized for the changes. For example, if one business raised its price on a product while others did not, some of the customers would move to the businesses selling the product at a lower price.

The economy is represented as hollow because, as products become obsolete, the economy gradually adapts to the replacement product and loses support for earlier products. An example is cars replacing horse and buggy in the United States. There are fewer horses today and many fewer buggy manufacturers. Cities generally don’t have places to leave horses while shopping. Instead, there are many gasoline stations and parking lots for cars.

Because of the way an economy adapts to a new technology, it becomes virtually impossible to “go backwards” to the old technology. Any change that is made must be small and incremental–adding a few horses at the edge of the city, for example. Trying to add very many horses would be disruptive. Horses would get in the way of cars and would leave messes on the city streets.

The Economy as a Complex Adaptive System and Dissipative Structure

Systems analysts would call a system such as the economy a complex adaptive system, because of its tendency to grow and evolve in a self-organizing manner. The fact that this system grows and self-organizes comes from the fact the economy operates in a thermodynamically open system–that is, the economy receives energy from outside sources, and because of this energy, can grow and become more complex. The name of such a system from a physics perspective is a dissipative structure. Human beings, and in fact all plants and animals, are dissipative structures. So are hurricanes, galaxies, and star formation regions. All of these dissipative systems start from small beginnings, grow, and eventually collapse and die. Often they are replaced by new similar structures that are better adapted to the changing environment.

The study of the kinds of systems that grow and self-organize is a new one. Ilya Prigogine was awarded the Nobel Prize in Chemistry in 1977 for his pioneering work on dissipative systems. One writer (in French) about the economy as a dissipative structure is François Roddier. His book, published in 2012, is called Thermodynamique de l’evolution.

Why Energy is Central to the Economy

If the economy is a dissipative system, it is clear that energy must be central to its operation. But suppose that we are coming from a step back, and trying to show that the economy is an energy-based system that grows as more external energy is added.

Let’s start even before humans came onto the scene. All plants and animals need energy of some kind so that the organism can grow, reproduce, move, and sense changes to the environment. For plants, this energy often comes from the sun and photosynthesis. For animals, it comes from food of various kinds.

All plants and animals are in competition with other species and with other members of their own species. The possible outcomes are

  1. Win and live, and have offspring who might live as well
  2. Lose out and die

Access to adequate food (a source of energy) is one key to winning this competition. Outside energy can be helpful as well. The use of tools is as approach that is used by some types of animals as well as by humans. Even if the approach is as simple as throwing a rock at a victim, the rock amplifies the effect of using the animal’s own energy. In many cases, energy is needed for making a tool. This can be human energy, as in chipping one rock with another rock, or it can be heat energy. By 70,000 years ago, humans had figured out that heat-treating rock made it easier to shape rocks into tools.

A bigger step forward for humans than learning to use tools–in fact, what seems to have set them apart from other animals–was learning to use fire. This began as early as 1 million years ago. Controlled use of fire had many benefits. With fire, food could be cooked, cutting the amount of time needed for chewing down drastically. Foods that could not be eaten previously could be cooked and eaten, and more nutrition could be obtained from the foods that were eaten. The teeth and guts of humans gradually got smaller, and brains got larger, as human bodies adapted to eating cooked food.

There were other benefits of being able to use fire. With time freed up from not needing to chew as long, there was more time available for making tools. Fire could be used to keep warm and thus expand the range where humans could live. Fire could also be used to gain an advantage over other animals, both in hunting them and in scaring them away.

Humans were incredibly successful in their competition with other species, killing off the top carnivore species in each continent as they settled it, using only simple tools and the burning of biomass. According to Paleontologist Miles Eldridge, the Sixth Mass Extinction began when humans were still hunter-gatherers, when humans first moved out of Africa 100,000 years ago. The adverse impact of humans on other species grew significantly greater, once humans became farmers and declared some plants to be “weeds,” and selected others for greater use.

In many ways, the energy-based economy humans have built up over the years is simply an approach to compensate for our own feeble abilities:

  • Need for warm temperature–clothing, houses, heat when cold, air conditioning if hot
  • Need for food–metal tools, irrigation, refrigeration, fertilizer, herbicides, pesticides
  • Knowledge/thinking ability of humans–books, schools, Internet
  • Mobility–airplanes, cars, trucks, ships, roads
  • Vulnerability to germs–medicine, sanitation

A key component in any of these types of adaptations is energy of some appropriate kind. This energy can come in various forms:

  • Embodied energy stored up in tools and other capital goods that can be reused later. Some of the energy in making these tools is human energy (including human thinking capacity), and some of this is energy from other sources, such as heat from burning wood or another fuel.
  • Human energy–Humans have many abilities they can use, including moving their arms and legs, thinking, speaking, hearing, seeing, and tasting. All of these are made possible by the energy that humans get from food.
  • Energy from animals – Dogs can help with hunting and herding; oxen can help with plowing; horses can be ridden for transportation
  • Energy from burning wood and other forms of biomass, including peat moss
  • Energy from burning fossil fuels (coal, natural gas, or oil)
  • Electricity produced in any number of ways–hydroelectric, nuclear, burning coal or natural gas, and from devices that convert wind, solar, or geothermal energy
  • Wind energy – Used in sail boats and in wind powered devices, such as windmills to pump water. Wind turbines (with significant embodied energy) also generate electricity.
  • Solar energy – Most energy from the sun is “free”. It keeps us warm, grows food, and evaporates water, without additional “help.” There are also devices such as solar PV panels and solar hot water heaters that capture energy from the sun. These should perhaps be classified as tools with significant embodied energy.

One key use of supplemental energy is to reduce the amount of human labor needed in farming, freeing-up people to work at other types of jobs. The chart below shows how the percentage of the population working in agriculture tends to drop as the amount of supplementary energy rises.

Figure 2. Percent of Workforce in Agriculture based on CIA World Factbook Data, compared to Energy Consumption Per Capita based on 2012 EIA Data.

Figure 2. Percent of Workforce in Agriculture based on CIA World Factbook Data, compared to Energy Consumption Per Capita based on 2012 EIA Data.

The energy per capita shown on Figure 2 is includes only energy sources that are bought and sold in markets, and thus that can easily be counted. These would include fossil fuel energy and electricity made from a variety of sources (fossil fuels, hydroelectric, nuclear, wind, solar PV). It does not include other sources of energy, such as

  • Embodied energy in previously made devices
  • Human energy
  • Animal energy
  • Locally gathered dung, wood, and other biomass.
  • Free solar energy, keeping people warm and growing crops

Besides reducing the proportion of the population needed to work in agriculture, the other things that “modern” sources of energy do are

  1. Allow many more people to live on earth, and
  2. Allow those people to have much more “stuff”–large, well-heated homes; cars; lighting where desired; indoor bathrooms; grocery stores filled with food; refrigeration;  telephones; television; and the Internet.

Figure 3 below shows that human population has risen remarkably since the use of modern fuels began in quantity about 200 years ago.

Figure 3. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

Figure 3. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

Besides more and better food, sanitation, and medicine, part of what allowed population to rise so greatly was a reduction in fighting, especially among nearby population groups. This reduction in violence also seems to be the result of greater energy supplies. In the animal kingdom, animals similar to humans such as chimpanzees have territorial instincts. These territorial instincts tend to keep down total population, because individual males tend to mark off large areas as territories and fight with others of their own species entering their territory.

Humans seem to have overcome much of their tendency toward territoriality. This has happened as the widespread availability of fuels increased the use of international trade and made it more advantageous for countries to cooperate with neighbors than to fight with them. Having an international monetary system was important as well.

How the System of Energy and the Economy “Works”

We trade many products, but in fact, the “value” of each of these products is very much energy related. Some that don’t seem to be energy-related, but really are energy-related, include the following:

  • Land, without buildings – The value of this land depends on (a) its location relative to other locations, (b) the amount of built infrastructure available, such as roads, fresh water, sewer, and grid electricity, and (c) the suitability of the land for growing crops. All of these characteristics are energy related. Land with good proximity to other locations takes less fuel, or less time and less human energy, to travel from one location to another. Infrastructure is capital goods, built up of embodied energy, which is already available. The suitability of the land for growing crops has to do with the type of soil, depth of the topsoil, the fertility of the soil, and the availability of fresh water, either from the sky of from irrigation.
  • Education – Education is not available to any significant extent unless workers can be freed up from farming by the use of modern energy products. Students, teachers, and those writing books all need to have their time freed up from working in agriculture, through advanced energy products that allow fewer workers to be needed in fields. Howard T. Odum in the Prosperous Way Down wrote about education reflecting a type of embodied energy.
  • Human Energy – Before the advent of modern energy sources, the value of human energy came largely from the mechanical energy provided by muscles. Mechanical energy today can be provided much more cheaply by fossil fuel energy and other cheap modern energy, bringing down the value of so-called “unskilled labor.” In today’s world, the primary value humans bring is their intellectual ability and their communication skills, both of which are enhanced by education. As discussed above, education represents a type of embodied energy.
  • Metals – Metals in quantity are only possible with today’s energy sources that power modern mining equipment and allow the huge quantities of heat needed for refining. Before the use of coal, deforestation was a huge problem for those using charcoal from wood to provide the heat needed for smelting. This was especially the case when economies tried to use wood for heating as well.

Two closely related concepts are

  • Technology – Technology is a way of bringing together physical substances (today, often metals), education, and human energy, in a way that allows the production in quantity of devices that enhance the ability of the economy to produce goods and services cheaply. As I will discuss later, “cheapness” is an important characteristic of anything that is traded in the economy. As technology makes the use of metals and other energy products cheaper, extraction of these energy-related items increases greatly.
  • Specialization – Specialization is used widely, even among insects such as bees and ants. It is often possible for a group of individuals to obtain better use of the energy at their disposal, if the various individuals in the group perform specialized tasks. This can be as simple as at the hunter-gatherer level, when men often specialized in hunting and women in childcare and plant gathering. It can occur at advanced levels as well, as advanced education (using energy) can produce specialists who can perform services that few others are able to provide.

Technology and specialization are ways of building complexity into the system. Joseph Tainter in the Collapse of Complex Societies notes that complexity is a way of solving problems. Societies, as they have more energy at their disposal, use the additional energy both to increase their populations and to move in the direction of greater complexity. In my Figure 1 (showing my representation of an economy), more nodes are added to the system as complexity is added. In a physics sense, this is the result of more energy being available to flow through the economy, perhaps through the usage of a new technology, such as irrigation, or through using another technique to increase food supply, such as cutting down trees in an area, providing more farmland.

As more energy flows through the system, increasingly specialized businesses are added. More consumers are added. Governments often play an increasingly large role, as the economy has more resources to support the government and still leave enough resources for individual citizens. An economy in its early stages is largely based on agriculture, with few energy inputs other than free solar energy, human labor, animal labor, and free energy from the sun. Extraction of useful minerals may also be done.

As modern energy products are added, the quantity of energy (particularly heat energy) available to the economy ramps up quickly, and manufacturing can be added.

Figure 4. Annual energy consumption per head (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Wrigley

Figure 4. Annual energy consumption per head (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Wrigley

As these energy products become depleted, an economy tends to shift manufacturing to cheaper locations elsewhere, and instead specialize in services, which can be provided with less use of energy. When these changes are made, an economy becomes “hollowed out” inside–it can no longer produce the basic goods and services it could at one time provide for itself.

Instead, the economy becomes dependent on other countries for manufacturing and resource extraction. Economists rejoice at an economy’s apparently lesser dependence on fossil fuels, but this is an illusion created by the fact that energy embodied in imported goods is never measured or considered. The country at the same time becomes more dependent on suppliers from around the world.

The way the economy is bound together is by a financial system. In some sense, the selling price of any product is the market value of the energy embodied in that product. There is also a cost (which is really an energy cost) of creating the product. If the selling cost is below the cost of creating the product, the market will gradually rebalance, in a way that matches goods and services that can be created at a break-even cost or greater, considering all costs, even indirect ones, such as taxes and the need for capital for reinvestment. All of these costs are energy-related, with some of this energy being human energy.

Both (a) the amount of goods and services an economy produces and (b) the number of people in an economy tends to grow over time. If (a), that is, the amount of goods and services produced, is growing faster than (b), the population, then, on average, individuals find their standard of living is increasing. If the reverse is the case, individuals find that their standard of living is decreasing.

This latter situation, one of a falling standard of living, is the situation that many people in “developed” countries find themselves in now. Because of the networked way the economy works, the primary way that this lack of goods and services is transmitted back to workers is through falling inflation-adjusted wages. Other mechanisms are used as well: fewer job openings, government deficits, and eventually debt defaults.

If the situation is reversed–that is, the economy is producing more goods and services per capita–the way this information is “telegraphed” back to the people in the economy is through a combination of increasing job availability, rising inflation adjusted-wages, availability of new inexpensive products on the market place, and government surpluses. In such a situation, debt is likely to become increasingly available because of the apparently good prospects of the economy. The availability of this debt then further leverages the growth of the economy.

External Energy Products as a Way of Leveraging Human Energy

Economists tell us that value comes from the chain of transactions that are put in place whenever one of us buys some kind of good or service. For example, if I buy an apple from a grocery store, I set up a chain of payments. The grocer pays his employees, who then buy groceries for themselves. They also purchase other consumer goods, pay income taxes, and perhaps buy oil for their vehicles. The employees pay the stores they buy from, and these payments set up new chains of transactions indirectly related to my initial purchase of an apple.

The initial purchase of an apple may help also the grocer make a payment on debt (repayment + interest) the store has, perhaps on a mortgage. The owner of the store may also put part of the money from the apple toward paying dividends on stock of the owners of the grocery story. Presumably, all of the recipients of these amounts use the amounts that initially came from the purchase of the apple to pay additional people in their spending chains as well.

How does the use of oil or coal or even the use of draft animals differ from simply creating the transaction chain outlined above? Let’s take an example that can be made with either manual labor plus some embodied energy in tools or with the use of fossil fuels: shoes.

If a cobbler makes the shoes, it will likely take him quite a long time–several hours. Somewhere along the line, a tanner will need to tan the hide in the shoe, and a farmer will need to raise the animal whose hide was used in this process. Before modern fuels were added, all of these steps were labor intensive. Buying a pair of shoes was quite expensive–say the equivalent of wages for a day or two. Boots might be the equivalent of a week’s wages.

The advantage of adding fuels such as coal and oil is that it allows shoes to be made more cheaply. The work today is performed in a factory where electricity-powered machines do much of the work that formerly was done by humans, and oil-powered vehicles transport the goods to the buyer. Coal is important in making the electricity-powered machines used in this process and may also be used in electricity generation. The use of coal and oil brings the cost of a pair of shoes down to a much lower price–say the equivalent of two or three hours’ wages. Thus, the major advantage of using modern fuels is that it allows a person’s wages to go farther. Not only can a person buy a pair of shoes, he or she has money left over for other goods.

The fact that the wage-earner can now buy additional goods with his income sets up additional payment chains–ones that would have not been available, if the person had spent a large share of his wages on shoes. This increase in “demand” (really affordability) is what allows the rest of the economy to expand, because the customer has more of his wages left to spend on other goods. This sets up the growth situation described above, where the total amount of goods and services in the economy expands faster than the population increases.

Thus, the big advantage of adding coal and oil to the economy was that it allowed goods to be made cheaply, relative to making goods with only human labor. In some sense, human labor is very expensive. If a person, using a machine operated with oil or with electricity made from coal can make the same type of goods more cheaply, he has leveraged his own capabilities with the capabilities of the fuel. We can call this technology, but without the fuel (to make the metal parts used in the machine, to operate the machinery, and to transport the product to the end user), it would not have been possible to make and transport the shoes so cheaply.

All areas of the economy benefit from this external energy based approach that essentially allows human labor to be delivered more efficiently. Wages rise, reflecting the apparent efficiency of the worker (really the worker + machine + fuel for the machine). Thus, if a worker has a job in the economy affected by this improvement, he may get a double benefit–higher wages and plus the benefit of the lower price of shoes. Governments will get higher tax revenue, both on wages (because of the new value chain and well as the higher wages from “efficiency”), and on taxes paid relating to the extraction of the oil, assuming the extraction is done locally. The additional government revenue can be used on roads. These roads provide a way for shoe manufacturers to deliver their goods to more distant markets, further enhancing the process.

What happens if the price of oil rises because the cost of extraction rises? Such a rise in the cost of extraction can be expected to eventually take place, because we extract the oil that is easiest and cheapest to extract first. When additional extraction is performed later, costs are higher for a variety of reasons: the wells need to be deeper, or in more difficult to access location, or require fracking, or are in countries that need high tax revenue to keep local populations pacified. The higher costs reflect that we are using are using more workers and more resources of all kinds, to produce a barrel of oil.

Some would look at these higher costs as a “good” impact, since these higher costs result in new payment chains, for example, related to fracking sand and other products that were not previously used. But the higher cost really represents a type of diminishing returns that have a very adverse impact on the economy.

The reason why the higher cost of oil has an adverse effect on the economy is that wages don’t go up to match this new set of oil production costs. If we look back at the previous example, it is somewhat like going part way back to making shoes by hand. Economists often remark that higher oil prices hurt oil importers. This is only half of the problem, though. Higher costs of oil production result in a situation where fewer goods and services are produced worldwide(relative to what would have otherwise been produced), because the concentrated use of resources by the oil sector to produce only a tiny amount more oil than was produced in the past. When this happens, fewer resources (including workers) are left for the rest of the world to produce other products. The growing use of resources by the oil sector is sort of like a growing cancer sapping the strength of a patient. Oil importing nations take a double “hit,” because they participate in the world drop in output of goods, and because as importers, they miss out on the benefits of extracting and selling oil.

Another way of seeing the impact of higher oil prices is to look at the situation from the point of view of consumers, businesses and governments. Consumers cut back on discretionary spending to accommodate the higher price of oil, as reflected in oil and food prices. This cutback triggers whole chains of cutbacks in other buying. Businesses find that a major cost of production (oil) is higher, but wages of buyers are not. They respond in whatever ways they can–trimming wages (since these are another cost of production), outsourcing production to a cheaper part of the world, or automating processes further, cutting more of the high human wages from the process. Governments find themselves saddled with more unemployment claims and lower tax revenue.

In fact, if we look at the data, we see precisely the expected effect. Wages tend to rise when oil prices are low, and lose the ability to rise when oil prices are high (Figure 5). The cut off price of oil where wages stop rising seems to be about $40 per barrel in the United States.

Figure 5. 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 5. 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.

What if oil prices are artificially low, on a temporary basis? The catch is that not all costs of oil producing companies can be paid at such low prices. Perhaps the cost of operating oil fields still in existence will be fine, and the day-to-day expenses of extracting Middle Eastern oil can be covered. The parts of the chain that get squeezed first seem to be least essential on a day to day basis–taxes to governments, funds for new exploration, funds for debt repayments, and funds for dividends to policyholders.

Unfortunately, we cannot run the oil business on such a partial system. Businesses need to cover both their direct and indirect costs. Low oil prices create a system ready to crash, as oil production drops and the ability to leverage human labor with cheaper sources of energy decreases. Raising oil prices back to the full required level is likely to be a problem in the future, because oil companies require debt to finance new oil production. (This new production is required to offset declines in existing fields.) With low oil prices–or even with highly variable oil prices–the amount that can be borrowed drops and interest costs rise. This combination makes new investment impossible.

If the rising cost of energy products, due to diminishing returns, tends to eliminate economic growth, how do we work around the problem? In order to produce economic growth, it is necessary to produce goods in such a way that goods become cheaper and cheaper over time, relative to wages. Clearly this has not been happening recently.

The temptation businesses face in trying to produce this effect is to eliminate workers completely–just automate the process. This doesn’t work, because it is workers who need to be able to buy the products. Governments need to become huge, to manage transfer payments to all of the unemployed workers. And who will pay all of these taxes?

The popular answer to our diminishing returns problem is more efficiency, but efficiency rarely adds more than 1% to 2% to economic growth. We have been working hard on efficiency in recent years, but overall economic growth results have not been very good in the US, Europe, and Japan.

We know that dissipative systems operate by using more and more energy until they reach a point where diminishing returns finally pushes them into collapse. Thus, another solution might be to keep adding as much cheap energy as we can to the system. This approach doesn’t work very well either. Coal tends to be polluting, both from an air pollution point of view (in China) and from a carbon dioxide perspective. Nuclear has also been suggested, but it has different pollution issues and can be high-priced as well. Substituting a more expensive source of electricity production for an existing source of energy production works in the wrong direction–in the direction of higher cost of goods relative to wages, and thus more diminishing returns.

Getting along without economic growth doesn’t really work, either. This tends to bring down the debt system, which is an integral part of the whole system. But this is a topic for a different post.

 

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Wed, 01/21/2015 - 18:41 | 5690017 Jack Burton
Jack Burton's picture

This is the Neoconservative holy grail, the last great frontier, the conquest of Russia. There is even a popular song sung amoung the people of Russia now days. It goes along the line of "this land is our land, this land is not your land, from Murmansk to Sevadtopol, this land ain't America's, from Vladivostok to Karkov, this land ain't Americas, it is our land, and we will keep it, etc. etc." Actually the tune and exact wording are quite catchy.

The Washington elties think they are going to pull a Moscow Maidan and swep up Russia in a coup then step in with force to carve the nation up. Oddly enough, even the average man on the street knows this plan and is ready to prevent Washington carrying it out. If I can find the youtbe version, I'll link it.

Wed, 01/21/2015 - 18:47 | 5690034 kaiserhoff
kaiserhoff's picture

Come on guys, fess up.  Who actually read that?

Anyone..., Bueller?

Wed, 01/21/2015 - 19:03 | 5690072 ZerOhead
ZerOhead's picture

This chick has apparently JUST discovered the importance of energy to creating a strong and vibrant modern economy. There could be a Nobel Prize in it for her somewhere... look...

"In many ways, the energy-based economy humans have built up over the years is simply an approach to compensate for our own feeble abilities:..."

And to think that I had stupidly thought the industrial age was the work of geniuses...

Wed, 01/21/2015 - 19:06 | 5690110 NotApplicable
NotApplicable's picture

I came down here to the comments first to see if there was a summary of what is "New" with this theory.

Just think of all of the energy I saved!

Wed, 01/21/2015 - 19:29 | 5690189 Buckaroo Banzai
Buckaroo Banzai's picture

Yep. Badly needs a TL;dr

Wed, 01/21/2015 - 20:03 | 5690317 SafelyGraze
SafelyGraze's picture

calling srsrocco

Wed, 01/21/2015 - 20:03 | 5690304 new game
new game's picture

read first half, then rim skimed. snarc comment- congress to authorize the fed to issue oil bonds to smoothout the valleys and peaks. in essence giving oil execs power to print.

oily mess of old vs new costs. simply an investors dream and it moves slow enough to get on board at the bottom and set stops near the top. long cycles for dummies to make abuck...

Wed, 01/21/2015 - 20:26 | 5690400 Slowdrip
Slowdrip's picture

Ther goes the keyboard again....

Wed, 01/21/2015 - 20:25 | 5690409 Slowdrip
Slowdrip's picture

NA

Ditto....

Wed, 01/21/2015 - 21:28 | 5690667 KnuckleDragger-X
KnuckleDragger-X's picture

Apparently somebody gave her an Economics 101 textbook for Christmas.....

Wed, 01/21/2015 - 19:48 | 5690231 Ignatius
Ignatius's picture

"This chick has apparently JUST discovered the importance of energy to creating a strong and vibrant modern economy."

Well, consider... "Figure 1. Dome constructed using Leonardo Sticks"

As a kid we just called 'em sticksWho knew I owed Leonardo a royalty?

Wed, 01/21/2015 - 19:49 | 5690268 cornflakesdisease
cornflakesdisease's picture

I like the stick thingy.  Good repersentation of the world economy.

Wed, 01/21/2015 - 20:15 | 5690370 DaveyJones
DaveyJones's picture

I prefer cards

Wed, 01/21/2015 - 21:26 | 5690662 KnuckleDragger-X
KnuckleDragger-X's picture

Tarot anyone?

Thu, 01/22/2015 - 16:37 | 5693578 MeelionDollerBogus
MeelionDollerBogus's picture

So if I get 3 Jamie Dimons holding poison cups and one Pope Blankfein card above them...

is that bad?

Wed, 01/21/2015 - 23:53 | 5690586 Hobo Sapien
Hobo Sapien's picture

Kaiserhoff - I read it. Quick read, too, because it made sense and didn't have me gagging like a SOTU transcript.

It's basically an iteration of Rifkin and Howard's "Entropy: A New World View" 1980 Viking Press, with more details and complexity theory, but lacking one of the core ideas of Rifkin's book: substitution in the face of scarcity, the ratchet effect of growing populations having to move to ever more concentrated energy sources - wood fires to coal to oil/natgas to nuclear - that in turn require ever more effort, organization, and government/corporate control to extract. (edit: That's where the complexity comes from.) It's a good read, I recommend it. I'm interested to see where the author here goes with this in the next part.

Thu, 01/22/2015 - 03:25 | 5691362 Matt
Matt's picture

I think you have it backwards, the concentrated energy is what enables the larger population, not the other way around.

Thu, 01/22/2015 - 04:34 | 5691414 Hobo Sapien
Hobo Sapien's picture

I just gave a one sentence summary of other's work, which you might do well to read.

Also: ratchet

Thu, 01/22/2015 - 07:15 | 5691517 Matt
Matt's picture

"a device made up of a wheel or bar with many teeth along its edge in between which a piece fits so that the wheel or bar can move only in one direction"

Until the tension exceeds the device's catastrophic failure point, in which case it moves in the other direction extremely quickly. Which is a pretty fitting analogy. 

Thu, 01/22/2015 - 07:12 | 5691505 Hobo Sapien
Hobo Sapien's picture

What the hell; it's late and Rubycon is piped in; so I'll play.

I wrote, "growing populations having to move to ever more concentrated energy sources," and you say that, "concentrated energy is what enables the larger population".

I don't see any disagreement here. Correct me and I'll smile. Some more.

Rifkin et al's point is that each step up the ladder is more expensive, with worse side effects. Nobody brings coal to burn on a camping trip, when a few dead branches work beautifully and doesn't require digging a hole in the ground.

Wed, 01/21/2015 - 18:47 | 5690038 no more banksters
no more banksters's picture

The war on the energy fields would be decisive. But it's not only a war on energy, it's also a war on the ideological field. Russia defends its existence against the neoliberal globalization driven by the global oligarchy.

Wed, 01/21/2015 - 19:45 | 5690039 Radical Marijuana
Radical Marijuana's picture
Jack Burton, this article confirms your view: Peculiarities of Russian National Character
Wed, 01/21/2015 - 20:39 | 5690461 new game
new game's picture

article-exc. read...

chat to a russian i know-explains much-sold many new homes to russians.

Wed, 01/21/2015 - 18:34 | 5689988 LawsofPhysics
LawsofPhysics's picture

Don't overthink this.  Some people will have access to the consumable calories they need to live well and prosper, most will not.

same as it ever was.

 

p.s. It's easy to "win" when you control the rules of the game-  hugs,  Jamie Dimon

Wed, 01/21/2015 - 19:18 | 5690117 Radical Marijuana
Radical Marijuana's picture

LawsofPhysyics:

It is NOT the "same as it ever was" because people never before had weapons of mass destruction to fight over natural resources.

Throughout previous human history,

it was possible to fight and win ...

Today, everyone would ultimately lose.

So far, we are NOT adapting to that!!!

The first generation to be born into that situation is still alive today: MAD Money As Debt, backed by MAD Mutual Assured Destruction. It is NOT the "same as it ever was" because that MADNESS is runaway criminal insanity! In that context, I have the same attitude towards Gail Tverberg's article above as I do towards all her articles:

SHE RELIES WAY TOO MUCH ON PRESUMPTIONS BASED ON ON HANLON'S RAZOR!

While I tend to agree with everything she actually writes, I regard all of that as manifesting within a context of much more severe LIES BY OMISSION. As typical on Zero Hedge, she tends to underestimate the degree to which the real world is controlled by lies backed by violence, which situation is headed towards Peak Insanities, along with Peak Everything Else.

P.S.

I get a similar impression from most of your flippant posts, LawsofPhysyics, as I recently detailed in my reply to your comment here: This Is How The US Government Convinces A Newspaper To Kill A Story

It appears to me that most people find it convenient to pretend that they still have a rational view of the world, despite that most of them do not have a clue how electronic fiat frauds, backed by the force of atomic bombs, actually WORK, nor what it means that those are trillions of times bigger than anything that previously existed in known human history, while that is rushing towards becoming quadrillions of times, IF that technoligical civilization is able to survive its contradictions, of being based on backing up lies with violence, AFTER that gets amplified to almost unimaginable astronomical SIZES by progress in science and techology, that the vast majority of people do not understand, but rather, tend to deliberately ignore, as they continue to believe in various old-fashioned religions and ideologies.

THE STRUGGLE FOR SURVIVAL IS NOT THE SAME AS IT EVER WAS, AFTER PROGRESS IN SCIENCE IS SO PRODIGIOUS! The only ways that we might survive are IF our political science also progressed. However, one of the things that reading Zero Hedge articles and comments tends to underscore is that there is NOT ENOUGH of that kind of political progress!

P.S.

The banksters, like Jamie Dimon, no longer actually control the systems that they made and maintained in the past. NOBODY controls the runaway systems of globalized electronic frauds, backed by the force of atomic bombs.

It does not matter if the banksters, who fashioned the established systems of legalized lies, backed by legalized violence, could continue to change the rules of the game.

They are NO longer in control of the game!

 

Wed, 01/21/2015 - 19:21 | 5690150 ZerOhead
ZerOhead's picture

When Henry Kissinger disses Obama's 'Pivot to Asia' as a 'Pivot to Insanity' you know there are likely storm clouds on the horizon.

P.S.  I like flippant posts. Call it a coping mechanism in an insane world...

Wed, 01/21/2015 - 19:52 | 5690275 Radical Marijuana
Radical Marijuana's picture

Yes, Zer0head, I previously agreed with you regarding that point:

http://www.zerohedge.com/news/2015-01-09/mikhail-gorbachev-warns-major-n...

P.S.

Regarding flippant posts, my macabre sense of humour has become worn out from over use ...

Wed, 01/21/2015 - 20:16 | 5690359 new game
new game's picture

r m with all the due respect you deserve, sometimes a good laugh and walk and talking simple shit is good therapy. my wife has tonnes of common sense and fulfills that void of lightening me up. do as you may. but i do understand the urgency of your thesis and we should not be flippant cause it's our lives that are being fucked with. my son is soon to be laid off from drilling and the root cause is the fed(and world cb s) fucking with peoples lives through their policies...

Fri, 01/23/2015 - 00:43 | 5691161 Radical Marijuana
Radical Marijuana's picture

Yeah, new game, it is a delicate balancing act between being too serious, versus not serious enough. Each individual may make their own choices regarding how serious is serious enough for them ... As I said, my previous ability to have a more macabre sense of humour has gotten worn out from overuse. Therefore, at the present time, I tend to become too serious, because I find it harder and harder to laugh at the evils, even though they are also absurd, from a more sublime point of view.

It is NOT so much a personal thing, since my own individual life is fine. However, what bothers me is that the things that Gail Tverberg discusses are hitting younger and poorer people the hardest, which will certainly become much worse in the foreseeable future. I already had a great life, full of wonderful adventures and good friends. I am not too serious regarding my own story, which, after all, is just another story.

But nevertheless, it bothers me most to think that younger, poorer, people, who were not responsible for creating the civilization that surrounds them, are surely going to have to pay for the final consequences of older, richer, people's actions.

Wed, 01/21/2015 - 20:19 | 5690379 DaveyJones
DaveyJones's picture

what's the difference between flippant posts and flipoff posts?

the number of digits?

Thu, 01/22/2015 - 00:09 | 5691163 Radical Marijuana
Radical Marijuana's picture

Hah! LOL, Davey Jones!

Wed, 01/21/2015 - 20:06 | 5690331 cornflakesdisease
cornflakesdisease's picture

The world still has the same CEO it has had for 6,000 years; Satan.

 

Luke 4:5 - 7

Wed, 01/21/2015 - 20:11 | 5690345 cornflakesdisease
cornflakesdisease's picture

The world still has the same CEO it has had for 6,000 years; Satan.

 

Luke 4:5 - 7

Thu, 01/22/2015 - 00:11 | 5691165 Radical Marijuana
Radical Marijuana's picture

If one defines "Satan" as the Prince of Lies, then it certaioly looks that way, (and you can say that again!)

Thu, 01/22/2015 - 09:39 | 5691821 Sparkey
Sparkey's picture

They are NO longer in control of the game!

Absolutely right Radical, the idea that "THEY" were ever in control of the game is delusional hubris, life is self organizing, Humans are life, we adapt to change until we meet the challenge we can't adapt to, when we can no longer adapt we die, (eg. old age, the, so far, unbeatable challenge).

 

Thu, 01/22/2015 - 15:12 | 5693198 Livermore Legend
Livermore Legend's picture

"....the idea that "THEY" were ever in control of the game is DELUSIONAL HUBRIS......"

Along with the IGNORANCE of those who believe so......

Wed, 01/21/2015 - 18:35 | 5689993 agent default
agent default's picture

How about  we leave people alone to go about their business and stop trying to come up with new economic theories we try to shove down their throats.  New economic theory:  End central planing.  Also end economists.

Thu, 01/22/2015 - 00:30 | 5691201 Radical Marijuana
Radical Marijuana's picture

Central planning, and their intellectual mercenaries, known as economists, are due to the triumph of organized crime being able to dominate other people. Sorry, agent default, but there are no ways to stop organized crime from existing. The only things which actually exist are the dynamic equilibria of different systems of organized lies operating robberis. Those who were the biggest and best at that became governments controlled by the banksters.

Money is measurement backed by murder. Money exists because measurement and murder exists. WISHING that was not so does not matter. The existential problems have always been the the biggest and best organized gangs of bullies beat the shit out others, and thereby enslaved them.

Governments that are democratic republics operating through the rule of law are ideally supposed to be ways that the powers of bullies are limited by the people. Too bad, so sad, but that tends to transform into runaway systems where the bullies go out of control, to the degree that they become criminally insane.

The basic problem throughout history is that the only way to deal with other gangs of bullies was either beat them at their own game, or get conquered and assimilated into their bullshit-based systems. From the pecking orders of different animals, to social hierarchies, there have always been chronic political problems inherent in the nature of life. The rise and fall of empires I tend to describe as the processes whereby systems of organized lies operating robberies go through stages where what originally made then strong, finally weakens and destroys them.

Where one is born into the cycle of life matters to the individual. Also it matters whether there is any relative frontier, or place to live, which can relatively avoid the biggest concentrations of bullies, and their bullshit-based systems. At present, it is clear that there are fewer and fewer such places left in the world!

Personally, I would love to be able to find some place where I could be left alone, to go about my own business. However, I have discovered that there is practically nowhere left that is actually like that anymore. Therefore, I have been playing at registered politics, as pathetic as that has so far been, I keep on coming to the conclusions, that the only genuine solutions require that we try to develop better systems of organized crime, in order to have better governments.

So far, that is a dismal failure, because most of the controlled opposition groups continue to promote the same sorts of old-fashioned impossible ideals which you promoted above, in your comment, agent default. As the problems identified by Gail Tverberg intensify dramatically in the next few decades (as also discussed similarly by guys like Chris Martenson), the pressures placed on people by criminally insane governments running amok are surely going to get WORSE, FASTER!

Central planning may only end by its own mad self-destruction.

Thu, 01/22/2015 - 02:08 | 5691308 MEAN BUSINESS
MEAN BUSINESS's picture

What has been the central plan from Day 1 ? It can be summed up with these words, and it existed before words were ever needed:

"go forth and multiply"

Yeah, that plan, central to everyone, really has to end now. Militarism is the only way we know, so what's the new plan?

Funny how central planning and family planning both have the word "planning" in them. Must be a pre-frontal cortex (human) thing...

p.s. read ebworthen reply, thanks : )

Fri, 01/23/2015 - 00:52 | 5695306 Radical Marijuana
Radical Marijuana's picture

MEAN BUSINESS, off topic, however, speaking about "going forth," since you have mentioned the band RUSH and linked some of their music before, I guess you already know that they are doing a 40th Anniversary Tour. (Boy, that dates us!)

http://music.cbc.ca/#!/blogs/2015/1/Rush-announces-massive-40th-anniversary-tour

Fri, 01/23/2015 - 23:50 | 5697443 MEAN BUSINESS
MEAN BUSINESS's picture

 

Mean Business is the title of a Jimmy Page/Paul Rogers project in the early '80s by the name The Firm. I thought it was an appropriate user name for Zero Hedge with the double entendre and all, LOL, hence the JP (Jimmy Page) avatar. Just missed seeing Led Zeppelin but saw Robert Plant's first solo tour (Pictures At Eleven) with Phil Collins on drums and finally saw Page in 1995 with Plant. Jokingly used to say I could die a happy man. Had to update that after the kids came along so now, after having taken my kids to see Jon Anderson (solo) at The Festival Of Friends in 2011 and RUSH in 2013 in Halifax with The Clockwork Angels String Ensemble and a cameo appearance by The Trailer Park Boys, I can now say again I would die a happy man !

RUSH tour, a federal election, and COP21??? gonna be a busy year LOL!

New avatar says:

                             RUSH

                 PRESENTED BY

            CHUM    &    CHUM FM

        SUN  SEP  2  1979  7:00 PM

            RAIN   OR   SHINE

             VARSITY  STADIUM

 

                                      ADULT $12.50

 

------------------

Thanks for the link B! (Plant once referred to John Henry Bonham as The Big B)

 

Wed, 01/21/2015 - 18:36 | 5689996 nuubee
nuubee's picture

This is also a good reason to suspect *anyone* who fundamentally opposes new energy research of being a collaborator with TPTB.

Just look at history...

1) First, we burned wood. With wood we could barely make steel, barely.

2) Then, we discovered charcoal, and we could make good steel.

3) Then, we discovered coal deposits, and the industrial revolution began.

4) Then, we discovered oil deposits, and the commercial revolution began.

5) next we.... oh right, we haven't funded the proper development of safe nuclear power. In fact we pulled the plug after financing the least reliable, most expensive, and most-dependent-on-nuclear-weapon-fuel type of reactor... And a whole industry grew up around preventing new research into safe nuclear. Wow... I wonder why that happened...

Wed, 01/21/2015 - 18:38 | 5690009 Romney Wordsworth
Romney Wordsworth's picture

6) Then, everything went tits up and we forgot how to even make fire.

 

Prometheus has left the building.

Wed, 01/21/2015 - 18:52 | 5690053 nuubee
nuubee's picture

With unlimited energy in the hands of the common man, there is absolutely no reason for him to ever get into debt.

With unlimited energy and 5 acres of land, you can probably extract enough natural resources just from the common dirt/rocks that sit on your land to make whatever you need, including electronics. And if he doesn't have enough of some rare earth, the guy down the block probably does.

Energy is your limiting factor to a far greater degree than money ever was.

Wed, 01/21/2015 - 19:00 | 5690087 El Vaquero
El Vaquero's picture

Fundamentally unlimited energy is in many respects the basis of a lot of science fiction.

Wed, 01/21/2015 - 19:09 | 5690120 ZerOhead
ZerOhead's picture

You never dated a cheerleader in college did you?...

Wed, 01/21/2015 - 19:17 | 5690146 El Vaquero
El Vaquero's picture

And I don't watch football either.

Wed, 01/21/2015 - 20:20 | 5690394 DaveyJones
DaveyJones's picture
  • I know, lately it leaves me feeling...deflated
Thu, 01/22/2015 - 01:42 | 5691285 noben
noben's picture

Which is why Energy is the true and universal reference frame for money.

As some here have pointed out. Joules and Watts, baby.

Wed, 01/21/2015 - 18:59 | 5690078 El Vaquero
El Vaquero's picture

Whaaaaat!  I know how to make fire without matches, lighters, etc...Softer woods are generally better (softer, in terms of hardness, not deciduous vs conifers,) and the bow drill is the easiest of the primitive methods to master. (Well, the pump drill is probably easier, but I've not tried that.)

 

If you want to see a guy who has some serious paleo-skills, check out Jim Winn:  https://www.youtube.com/user/paleomanjim/videos

 

And if you think that your survival might depend on starting a fire using primitive tools, learn how to do it before you're in an emergency situation.  It's easy once you've figured out the little quirks that may or may not be mentioned in a tutorial, but figuring those quirks out can be a real bitch. 

Wed, 01/21/2015 - 19:11 | 5690119 Romney Wordsworth
Romney Wordsworth's picture

Fuck all that. When the time comes, there will probably be enough discarded cell phone batteries. Keep some steel wool handy.

Wed, 01/21/2015 - 19:12 | 5690132 ZerOhead
ZerOhead's picture

Magnifying glasses and a case of cheap Chinese lighters...

Wed, 01/21/2015 - 18:40 | 5690014 LibertyBear
LibertyBear's picture

Check out permanent magnet motors. The technology is being suppressed currently, but it will replace nuclear, solar, wind, coal, oil, and gas, eventually.

 

https://www.youtube.com/watch?v=jiAhiu6UqXQ

 

Think about everything that could run on electricity: cars, stoves, freights, trains, lights to grow food in any condition, distillers to clean water, etc. etc.

 

 

Wed, 01/21/2015 - 19:07 | 5690056 deeply indebted
deeply indebted's picture

That video is shit. "Free" energy is against ALL laws of physics. Repeat after me, "perpetual motion does NOT exist, it NEVER existed, and it WILL NOT exist in the future." Again, just to be clear, perpetual motion contradicts ALL laws of physics!

Wed, 01/21/2015 - 19:29 | 5690187 ZerOhead
ZerOhead's picture

Walking on (unfrozen) water, feeding thousands with (rehypothecated?) fish and bread and raising the dead are ALL against the laws of physics and yet Jesus did it.

You just have to believe.

 

We are all doomed...

Thu, 01/22/2015 - 16:27 | 5693533 MeelionDollerBogus
MeelionDollerBogus's picture

No... Jesus didn't and no one else did or will either.

Wed, 01/21/2015 - 19:38 | 5690218 Buckaroo Banzai
Buckaroo Banzai's picture

First, it isn't "perpetual motion". Energy is conserved, you just haven't fully defined the boundaries within which the energy is measured. Second, it only violates the laws of physics THAT WE KNOW ABOUT.

Maxwell's equations are laws of physics, yet we only use two of them. What if the answers you seek lay in further exploration of the other two?

People like Tom Bearden have done this work, but it is woefully incomplete, and as far as the PTB are concerned, it is absolutely not in their interest that these areas be explored further. Since they control the money, the education system, and the necessary human resources, you can rest assured that nothing will be done, except by determined people at the fringes-- and the PTB will do everything possible to minimize, marginalize, ridicule, and if necessary, destroy those people.

Wed, 01/21/2015 - 20:15 | 5690363 cornflakesdisease
cornflakesdisease's picture

Gravity is just a form of energy spilling off into another dimension.  Try research "the electric unifverse".  Hawking is a theoretical idiot.

Thu, 01/22/2015 - 13:23 | 5692622 LibertyBear
LibertyBear's picture

?

!


Wed, 01/21/2015 - 18:58 | 5690073 CHX
CHX's picture

6) Thorium, but it was shelfed for nuclear since it was too good, and you could not make weapons with it.

Wed, 01/21/2015 - 19:02 | 5690092 deeply indebted
deeply indebted's picture

"Shelfed"...yeah, and we can only speculate why I suppose...

Interestingly, China doesn't seem to have a problem with thorium:

http://www.nucnet.org/all-the-news/2014/06/19/china-to-begin-work-on-exp...

Neither does Russia:

http://energyfromthorium.com/2014/06/29/russian-molten-salt-reactor-prog...

Wed, 01/21/2015 - 19:07 | 5690112 El Vaquero
El Vaquero's picture

It was probably shelved for a variety of reasons.  We built a working reactor, so the proof of concept was there, but there is/was still a lot of work to do to get good, solid commercial designs.  No, it was not the best for weapons, as U232 was/is difficult to separate from the U233, and U232 poisons the kinds of reactions needed for a nuclear explosive.  We tested one bomb that used a core with some U233 (and implicitly some U232) and some plutonium.  It should have yielded 33kt, but instead was 22kt.  It probably would have been much lower had they used no PU239 and all Uranium.

 

Another issue is sunk costs.  As I said above, there is/was still work to do for commercial reactor design.  Uranium reactors already had designs avaliable.  The costs were already sunk, and call me crazy, but I don't think that engineering a safe and practical nuclear reactor is exactly cheap.  Could we have done it?  Yes.  Did we do it?  No.  IMO, there was probably a lot of institutional momentum at work here.

Wed, 01/21/2015 - 19:20 | 5690160 nuubee
nuubee's picture

Institutional momentum is one thing.

An entire industry of special interest groups whose only purpose is to oppose private-sector or public-sector nuclear research is quite another.

Wed, 01/21/2015 - 19:26 | 5690177 El Vaquero
El Vaquero's picture

Yes, and people profiting from the then current technology as well may not have wanted competition.  But you have to remember that the working thorium reactor was built in the 1960s, well before Chernobyl.  There was time to spin things up before that event really turned people against nuclear.  There was even time before TMI hit. 

Wed, 01/21/2015 - 19:30 | 5690186 nuubee
nuubee's picture

It's not clear to me how well we agree or disagree... so I choose to believe that we fundamentally agree that energy research is like planting seeds for future economies. When you stop planting, you're dooming the next generation to an economy that cannot meet it's population or technological needs.

Wed, 01/21/2015 - 19:46 | 5690258 El Vaquero
El Vaquero's picture

I think that all of the above reasons probably played a role to some degree or another.  And yes, I think that we should have fully developed the thorium technology, and also we should have fully developed the technologies necessary for reverse combustion.  We should have also developed uranium fuel cycles that burn everything up as well. 

Wed, 01/21/2015 - 19:44 | 5690244 Radical Marijuana
Radical Marijuana's picture

nuubee:

Any successful "new energy research" would have some flip side application as a weapon. You are correct in your point 5, that atomic energy was developed in ways which were directed by those who were more interested in weapons. The BASIC ISSUES BEHIND Alternative Energies & Society Adapted to Them are the death control systems, which control everything else, since the death controls back up the debt controls.

Authors like Gail Tverberg tend to deliberately underestimate the significance of those issues. Therefore, in my view, her "New Theory of Energy and the Economy" has a glaring deliberate blind spot toward the ways that general energy systems actually manifest through human beings, which are as the principles and methods of organized crime.

If one is serious about any alternative energies, then one should ask the most serious questions about those, which are how are they going to influence the death control systems. There are no realistic ways to integrate systems of alternatives without alternative death control systems being the central feature, keystone to those systems. Since the actual, historically developed, death controls were most successfully done through the maximum possible deceits and treacheries, around which developed controlled opposition groups to those thereby established systems, which agreed to stay within the same basically deceitful, bullshit-based, frame of reference regarding the actual death controls, our civilization has become runaway criminally insanities, which are only being pumped up and UP by any progress in physical sciences, because all of those continue to be channeled through political systems based on being able to back up lies with violence.

Therefore, nuubee, you are quite right that TPTB have been deliberately suppressing alternatives. However, the reasons that they have done so made sense to them, within their frame of reference of placing a priority upon continuing to be the dominate organized crime gangs, which could thereby continue to control civilization.

P.S.

In case you have not already seen it already, one documentary that discusses that history is THRIVE: http://www.thrivemovement.com/

Wed, 01/21/2015 - 19:46 | 5690255 emersonreturn
emersonreturn's picture

alrighteethen,

thank you for the links.  can anyone please explain how exxon and rosneft are scurrying around the arctic again?  when exxon had to leave rosneft and exxon both said they would continue to work together at some future date---but sanctions haven't been lifted---my rosneft account is frozen.  does washington know, or london...are BP and exxon simply ignoring obama?   

Wed, 01/21/2015 - 20:17 | 5690374 cornflakesdisease
cornflakesdisease's picture

Perhaps they now something we don't.  After all, several of the corporate sponsors of the CFR are oil companies.

Wed, 01/21/2015 - 20:53 | 5690525 emersonreturn
emersonreturn's picture

thank you cornflakesdisease...it certainly appears to be the case.

Wed, 01/21/2015 - 18:46 | 5690006 LibertyBear
LibertyBear's picture

!

?

Wed, 01/21/2015 - 19:32 | 5690064 falak pema
falak pema's picture

this is way over your heads which are just used to watching BTFD.

Lol, where is Nidstyles to explain to us that only Von Mises can truly debunk this shit as it says NOTHING about GOLD ! 

It has the smell of Keynsianism to it and there is no mention of Marx being a shill in this whole speil.

Free invisible hand of Markets bitchezz.

Part I states the problem. Part II will probably provide the solution to the paradox. So far no mention of quality of life; aka energy dissipation which is considered an improvement in quality of life. Humans do have cultural aspirations other than just survival. That is a parameter which should also be discussed like the tradeoff between labour and energy costs. 

Wed, 01/21/2015 - 19:01 | 5690085 RaceToTheBottom
RaceToTheBottom's picture

+1 for the Leonardo stick reference!!

 

Wed, 01/21/2015 - 19:00 | 5690088 disabledvet
disabledvet's picture

"Free grazers.". Talk about a war no one has ever heard of.

 

New York City is the " height" of irony.

LOOK! THEY FIGHT OVER 300 Sq FEET!

 

Ah, but actual land....

 

That's why the USA had a gold standard.  "Growing potatos suddenly becomes very valuable.". Who cares about food when you can print money to infinity?

Of course you do have to do the math on how much money is actually available.  When it comes to dollars outside the USA...VERY FEW.

Wed, 01/21/2015 - 19:06 | 5690094 kchrisc
kchrisc's picture

"A New Theory Of Energy & The Economy, Part 1"

People produce stuff, and/or services. They trade that stuff for other stuff, and services.

Eventually the people come to adopt indirect exchange of their stuff utilizing money to facilitate more efficient trades for themselves.

People save some of their stuff for a rainy day, and to invest in new technologies that will later produce more stuff, better stuff, and new types of stuff. As a result, over time the living standards of the people grow.

Enter governmnet. Government steals the people's stuff, lowering the amount of stuff available per person--the government's theft lowers everyone's living standards. Additional destruction is wrought from governmnet "regulations" against production, and/or in benefit to favored producers.

Enter the banksters who steal the people deposits, savings, of stuff, and counterfeit the people's medium of indirect exchange, money. The banksters' thefts further destroys the living standards of the people; the people who are actually doing the producing of the stuff being stolen from them.

That is how the economy works.

The banksters need to repay us.

 

Coda: The theft, and destruction, only ends when the people begin producing guillotines.

Wed, 01/21/2015 - 19:09 | 5690115 RaceToTheBottom
RaceToTheBottom's picture

"The theft, and destruction, only ends when the people begin producing guillotines."

Use of the guillotine will be what will drive change, otherwise it is just a road to nowhere.

 

Wed, 01/21/2015 - 19:29 | 5690182 kchrisc
kchrisc's picture

Had a conversation with my kids today about violence.

I reminded them that this idea that "violence solves nothings" is bullshit. They know that if you punch a bully in the nose, the coward will move on to other prey.

Yes, violence should not be the first go to option, or in most situations a go to option at all, but "violence solves nothing" is a propaganda meme by power in an attempt to try and protect themselves from us, their victims. The meme is laughable, because power is nothing more then a violence machine of theft. They exist only to steal, and can only accomplish, and/or backup their thefts, with violence.

The dependence on theft, and violence, by governmnet ultimately requires the use of violence against them; to remove them. They must be made to pay a dear, and unbearable price in the practice of their crimes.

I support starting with non-violence, but one must prepare for violence, as that is what governmnet is, and all they have--governmnet IS violence.

Violence certainly solves tyranny.

The banksters need to repay us.

 

The Four Rs
Rejection: Stop Paying. Stop Playing. Stop Obeying.
Revolution: It is inevitable, so prepare, as they are.
Retribution: The guilty must answer for their crimes against the American people and the Constitution. “Trials and Retribution” not “Truth and Reconciliation.”
Restoration: Restore the American people, country and Constitutional republic.

 

Wed, 01/21/2015 - 19:15 | 5690139 onceinalifetime
onceinalifetime's picture

The future of cheap energy is: Humen Debt Slaves

Wed, 01/21/2015 - 19:24 | 5690166 El Vaquero
El Vaquero's picture

Yeah, but how is some Wall Street goon going to collect from me if he's in NYC and I'm in Abq when energy gets expensive and scarce?  He's not going to the first time I call his bluff.

Thu, 01/22/2015 - 16:20 | 5693505 MeelionDollerBogus
MeelionDollerBogus's picture

Knowing this in advance they'll set up collection networks for which the amounts collected exceed the costs of transport and local fiefdoms. Notice there's 7 central bank regions, for example, in the USA.

The only defense against warlords is to be one.

Wed, 01/21/2015 - 20:18 | 5690378 kchrisc
kchrisc's picture

"The future of cheap energy is: Human Debt Slaves"

Correct, however the curious thing about "debt slaves, is that the fences are the THEIR willingness to keep paying. Again: The "debt slave's" WILLINGNESS to pay on the banksters' stolen loan-money debt is the only thing making them a slave to the banksters--Paying IS the fence.

To escape from the Zionist banksters' debt plantation, all you, we, need to do is Stop--Stop paying.

The banksters need to repay us.

 

The most powerful weapon the American people have is Rejection.

The system of fraud and theft that has been built up upon the backs of the American people is dependent upon our backs. Withdraw our backs, and the whole scheme collapses. This is our greatest weapon.

Stop Paying--Put it into food, and precious metals, etc. They stole whatever "debt money" they loaned you in the first place (fractional reserve banking) and soon you won't be able to pay them anyways, so Stop Paying.
Stop Playing--Stop being a tool for them to use, mock, and call "stupid." Stop Playing.

Stop Obeying--If they are in violation of the Constitution then they are not legitimate anyways, so Stop Obeying their unlawful dictates.

The Four Rs
Rejection: Stop Paying. Stop Playing. Stop Obeying.
Revolution: It is inevitable, so prepare, as they are.
Retribution: The guilty must answer for their crimes against the American people and the Constitution. “Trials and Retribution” not “Truth and Reconciliation.”
Restoration: Restore the American people, country and Constitutional republic.

Wed, 01/21/2015 - 19:21 | 5690158 Captain Chlamydia
Captain Chlamydia's picture

Better  start working on  part 2 and 3 cause the  shit is hitting the fan as we speak. 

Wed, 01/21/2015 - 19:51 | 5690269 Imagery
Imagery's picture

What bunk.  As a 30 yr US Upstream E&P Veteran, the problem is 100% TBTF Debt-based fiat and credits, infinite rehypothecations and Off Bal Sht Deriviatives, and manipulations in the oil futures markets at 10,000 Paper Barrels to 1 Phyz Barrel when Derivatives are considered.  NO different than what has hapened in the Au Futures Markets.

We are experiencing Peak Oil but that does NOT mean running out of oil.  We are simply, jsut as in every other industry, harvesting the low-hanging fruit first.  But for TBTF taking their Taxpayer Bailouts and Financial Repression theft of savers into my industry, via Portfolio Companies of Private Equity Companies who access these ZIRPs etal, then blow their bubbles, manipulate the markets to their advantage, take those cos to BK to steal from shareholders the underlying assets, then do it all over again elsewhere.

When we indict some folks in this country, and end TBTF and the Fed, we will begin to see recovery.  Until then, fagetaboutit. 

Thu, 01/22/2015 - 03:46 | 5691383 Matt
Matt's picture

"We are experiencing Peak Oil but that does NOT mean running out of oil.  We are simply, jsut as in every other industry, harvesting the low-hanging fruit first. "

Stock, Flow, EROEI: Hubbert's Peak meets declining oil reserves.

Beginning: 1 BOE invested, 100 BOE produced. 1 must be re-invested, 99 left for society to use. Rapid growth.
One-third: 20 BOE invest, 400 BOE produced. 20 re-invested, 380 left for society to use. Rapid growth.
Mid-point: 50 BOE invested, 500 BOE produced. 50 re-invested, 450 left for society to use: slow growth.
Immediatly after midpoint: 51 BOE invested, 500 BOE produced. 51 re-invested, 449 left for society to use. Collapse begins. 
second-third: 100 BOE invested, 400 BOE produced. 100 re-invested, 300 left for society to use. Rapidly shrinking economy.

Of course, if you take into account that debt requires growth to be paid, and debt tends to fund production, you may end up with a Seneca Cliff instead of a Hubbert's Curve, with rapid collapse as soon as total energy available to society starts to decline. 

Wed, 01/21/2015 - 20:30 | 5690421 Consuelo
Consuelo's picture

Gail has a way of getting wordy to put the soft-spin on population reduction.   Problem is (for people like her anyway), is that if what she wishes for comes true - and it well may, she'll be among the class that visits the theater first, much the way Edward G. Robinson did in that movie from the early 70's...

 

 

Wed, 01/21/2015 - 22:47 | 5690950 Mike in GA
Mike in GA's picture

Beware witholding - or rationing - of health care.  It serves the same purpose as "visiting the theater".

Thu, 01/22/2015 - 16:16 | 5693494 MeelionDollerBogus
MeelionDollerBogus's picture

Population reduction is normal for all species. Humans are no exception. We don't have a choice. Every human on earth can say "We refuse!" and they'll die anyhow. That's what shortages, disease & natural disasters like hurricanes do. Eliminate excess life, including but not limited to humans.

To think you have a choice is arrogance beyond belief; you can't do that any more than you can command time to move backwards so you never age.

Wed, 01/21/2015 - 20:56 | 5690452 withglee
withglee's picture

I have been investigating this topic and have come to the conclusion that both energy and debt play an extremely important role in an economic system. Once energy supply and other aspects of the economy start hitting diminishing returns, there is a serious chance that a debt implosion will bring the whole system down.

First understand what debt is: Debt is "a promise to complete a trade". Some trades take time and happen over space. Thus, all "in process trades" are debt. That's not bad. Debt will go down when traders can't achieve their trading objectives ... i.e. they quit making trading promises. In general, uncertainty causes this to happen. Governments cause uncertainty. Economists cause uncertainty ... if people listen to them. Fortunately most traders are smart enough to ignore economists.

Regarding energy: We are using less energy per capita now than we did 50 years ago, yet we are doing more things with energy consuming robots than 50 years ago. Right now we have become so efficient that most people "don't need to work". Our problem is finding a way to operate the system after it meets its objective ... total liesure.

So that's the problem we need to work. What do we do when "nobody" needs to work any longer?


Thu, 01/22/2015 - 05:01 | 5691434 Debugas
Debugas's picture

1% will control all fully automated production and trade with each other

other 99% will die off

Thu, 01/22/2015 - 16:16 | 5693483 MeelionDollerBogus
MeelionDollerBogus's picture

What? No.

With deliveries of appliances and food, with car & bus transportation, with energy used for production and plastic which itself is from an energy source (oil) which can't be used for burning for energy, we use exponentially more energy every year and have done so for the past 100 years, certainly no reduction from the past 50!

Wed, 01/21/2015 - 21:51 | 5690761 shovelhead
shovelhead's picture

Look at the bright side.

When the cheap oil disappears, so will all the plastic cheap shit and you'll be buying US made goods (US citizens) because that oil won't be wasted on transport. Localized production will return because it will be the most cost effective and profitable way to manufacture.

Wed, 01/21/2015 - 22:25 | 5690864 Psquared
Psquared's picture

Skip the scientific study. An economy runs on confidence which is tied to employment and wage growth. Those are in turn tied to consumption. Lose confidence, consumption goes down which leads to unemployment and stagnant wage growth. Those in turn lead to deflation and a spiral down. Had we managed our way through this in 2008 without TARP and ZIRP we would have bottomed by now and the return to growth would be real and organic.

Wed, 01/21/2015 - 23:15 | 5691024 palmereldritch
palmereldritch's picture

The writer fails to make the connection between energy and money (e.g. the Petro-dollar).

Doing so would have allowed an extrapolation of how cheap energy and the resultant empowerment of its liberating technology becomes hostage to debt as interest rates rise to trigger defaults and asset seizures of commodity and property built by this trojan horse ponzi called fiat currency (translation: counterfeit energy notes).

In the world of the monopolistic predatory money masters the one-horse plow upgraded to the air-conditioned tractor gives way to the hapless serf imprisoned by a yoke of debt servitude dragging the plow across a Bankster's plantation.

Cheap energy is great in an open, competitive and free market.  This energy deflation spiral is just the set-piece for the neo-feudalistic currency end-game that requires a foundation established on energy/currency-chaos/consolidation.

Maybe it's covered in Part 2.  If so, the broadstrokes should have been established early in the article.

Thu, 01/22/2015 - 00:18 | 5691146 Pullmyfinger
Pullmyfinger's picture

"Economics" is to physics, as astrology is to astronomy. To the author's credit, however, the rambling, convoluted and muddled dissertation above does circle the truth with a sort of wobbling orbit, but clearly and utterly fails to understand that every symbolic, abstract representation of "value", every industrial process, and every human action, thought and deed describes a purely energetic process.

That's why "consumers" are at the heart of every "economic" process, beginning with food, because every consumer was once a food source for another consumer... Circle of life! : ) And that's why, to this day, every macro-economic process defines a feedback loop of lesser processes. In brief, the physics of life and the physical processes of our world define the "economics" of our existence.

Note the ubiquitous common denominator in these few elements: labor, tools, factories, agriculture, oil, electricity, food, fuel, etc. etc. Each descriptor is either an energy source, or an energy-dependent process, or an abstract representation thereof (money) in which the term "value" is everywhere nothing more nor less than a covert synonym for "energy"; that is, as a term that was merely coined well before physics came along and it became more commonly understood that every event, at every moment, is purely an energy event. E=MC2 defines reality, but this news has yet to reach the third-rate mind of the modern "economist" 

 

Thu, 01/22/2015 - 05:59 | 5691471 Billy Bob101
Billy Bob101's picture

I quit reading after the first few paragraphs.  The problem is financialization - which I don't believe is mentioned - which allows a small group of people, not connected to production, to control the whole process for their personal benefit.  They are parasites.

Thu, 01/22/2015 - 21:05 | 5693474 MeelionDollerBogus
MeelionDollerBogus's picture

You should have kept reading.

The problem with financialization is the change in cost of energy and debt, the unbalancing of trade, the misrepresenting information and destruction / misallocation of tools.

Financialization is an inner, sub-topic within the much larger problem.

The article has it right. Keep reading.

EVERYONE is connected, including financiers, to production. It's very clear that good debt reduces the time (a cost) to get operational and can be repaid from future revenue (if nothing crashes in the mean time) and this is good and normal for economies, especially with international trade much less local trade. Almost every healthy business operates off credit and that's financialization. It's only when a criminogenic environment takes hold at all levels of trade, finance, reporting, quality of manufacturing and delivery (e.g. no delivery, e.g., painted lead bars = gold) that shit goes south really fast, as energy has been wasted by 1 party with no return and this compounds into many layers of interaction.

This is precisely what the article lays out but it's not just crime - it's also diminishing availability of energy and diminishing ability to compensate for an ongoing collapse which does this. Crime in financialization is just a part of it.

Water & energy - that's what it all truly boils down to. Finance is just a symbolic representation.

This article is probably one of the best posted in the last 5 years on zerohedge and if you don't think so it's because you're not smart enough to understand it.

Thu, 01/22/2015 - 06:14 | 5691483 Billy Bob101
Billy Bob101's picture

For a time, we Americans were unique because we alone had inalienable rights granted by the creator, however you define that term, and equality before the law.  We no longer have these things, so how does that enter the equation?  Can you really project forward based on a situation that no longer exists?

Thu, 01/22/2015 - 06:32 | 5691494 Ghordius
Ghordius's picture

I was under the impression that you granted yourself those rights. and I am under the impression that you are taking yourself those rights away

I'll make one simple example: student debt. Something like this was forbidden, worldwide, in each country in it's own way

now you find it's a right, and a freedom for itself. don't you? it's still forbidden in most of the world. now, is it making a new generation freer or less free?

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