This page has been archived and commenting is disabled.
Approaching A Global Deflationary Crisis?
Submitted by Brian Davey via CredoEconomics.com,
Anyone with any sense for global economic trends ought to be worried. The signs are everywhere of a serious deflationary crisis. It is obvious that Chinese growth is falling. The prices for energy and the raw materials that feed the growth economy keep falling. The demand for Chinese exports is down too. Stock Markets in Asia are falling, despite attempts to prop them up. Countries are being tempted to export their problems abroad – for example by competitive devaluation. In Europe its obvious that a “solution” is being cobbled together for the Euro and Greek crisis even though no one at all believes that it will work. At the same time the policy response of “quantitative easing” which has kept interest rates down very low has reached the end of the road. With interest rates at or near to zero the scope for addressing the crisis through monetary policy (low interest rates) is exhausted. Many pundits believe that low interest rates have not encouraged productive investment but speculative bubbles – the creation of capacity in fields that in the long run will not pay, or fuelled a casino style speculation, a giant bubble of bets that could soon collapse, bringing the global economy down with it.
So what is going on? How do we explain the situation? In this paper I am going to argue that there are a number of ways of understanding and addressing what is developing into a global crisis. The desire to make the crisis understandable can convert into a temptation to make it seem simpler than it is. At its most banal we have the explanations that neo liberal German politicians are prone to – like the idea that the crisis is because of a lack of confidence and trust and that this can be resolved (in Europe) purely and simply by countries following the Eurozone rules. If the confidence and trust are restored then all will be well and the market will restore prosperity.
A more adequate story is needed than this – and it is one that needs to focus on global trends not just in Europe but in the USA, the so-called developing world and above all in China. This story has a number of different plots and sub plots, not one. We need to understand how the sub plots interweave. The story is one of debt, competitive imbalances and an energy crisis and all need to be told. To make the story even more complicated we need to keep in mind too that an even more important story, that of climate change, has to be held in our minds too. If and when humanity has any chance of resolving these crises it will have to resolve that one at the same time. Will this be possible? I don’t know – what I do know is that there is a theory, by archeologist Joseph Tainter, that humanities’ problem solving capacities are limited by complexity. A friend is currently trying to get me to use twitter. However I am daunted by reducing complex situations to short simple messages. Understanding the global economy is like entering a labyrinth. As I get older I notice that some people become famous because of the clarity in the way that they write. What may not be noticed is that the apparent clarity in a political economic message is often the result of simplification. The popularity of neo-liberal economcs is like that.
So lets look at the ways of describing the crisis. In summary this can be described as the interrelationship between 4 processes.
(1) Structural policy stupidity – policy governance cannot cope with the complexity of the crisis. Politicians cannot cope with communicating complex messages to their peoples nor find the mechanisms to cope with the complexity of the issues.
(2) Problems are also caused by uneven development between countries and sectors which cannot be sustained without methods for recycling purchasing power from the more competitive countries to the less competitive ones. These imbalances become most problematic when capital export from surplus to deficit countries slows which happens when growth slows in the deficit countries.
(3) The crisis is both cause and effect of a rising amount of debt – personal, corporate, state and financial sector – which has acted as a drag on growth. As growth falls all kinds of debt become more difficult to service so the monetary authorities have tried to push interest rates down. Nevertheless the finance sector has tended to become both more speculative and more predatory as there is a “hunt for yield”. Interest rates rise when risk premiums are imposed on distressed borrowers (including states), money making occurs through financing arrangements based on “passing the risk parcel” exploiting the naivety of lenders about complex financial arrangements and by the promotion of asset price bubbles. The bigger players are rescued during crises but the smaller players (including tax payers and those who lose their state benefits) are made to pay.
(4) The crisis is the result of reaching “the limits of economic growth” and, in particular, because of resource depletion in the energy sector. This is less obvious because of currently low and falling energy and commodity prices but we need to study the experience of the energy sector over last few years, not just the immediate situation. The immediate fall in commodity and energy prices is a result of the onset of the crisis – a crisis which very high and rising energy prices up until recently helped bring on. The high energy prices have been compatible with a high level of debt only because interest rates have been so low and because there has been a “hunt for yield”, something that would pay more than leaving money on deposit paying very little.
Depletion of resources in the energy and mining sector means that it is taking more energy than before to extract energy (and other mined resources) and this has pushed up the costs of extraction of energy and other minerals. High energy costs act as a drag on the growth of the economy as a whole – because energy costs, like interest rates, enter into the production of virtually everything else. This is particularly acute problem in the energy sector itself as the energy sector is such a huge user of energy. The energy companies need a high price for energy otherwise they cannot actually make a profit. However, if energy prices are high for too long the economy wilts.
The development of unconventional oil and gas has been possible because quantitative easing has made a large amount of money to Wall Street at a low interest rate and they have been “searching for yield” – looking for somewhere to put this money to earn a high rate of interest. This funded the voracious capital expenditure needs of the industry with its high drilling intensity. However it pre-supposed that prices would remain high enough for long enough to cover costs and this has not happened. The problem is set to get a lot worse as depletion speeds up.
So, to repeat, the best way to tell the story of this crisis needs to relate ALL of these elements together – policy failure, debt, imbalances, energy. Each element is causatively connected to the others but sometimes in a time lagged way which obscures the relationships. Together these elements are bringing about what some observers are calling “secular stagnation”.
“Stanley Fischer, vice-chairman of the US Federal Reserve, has laid out the predicament that forecasters face. Half way through each year, economists have had to explain why their global growth forecasts were too optimistic, he said, and this has happened “year after year”. While growth rates have been falling across the world, it’s not yet clear whether this is all a hangover from the 2008 crash or something more fundamental.”
In my view it is “something more fundamental”. It is related to reaching the limits to growth – and this has to do with fossil fuel and materials depletion and the end of cheap energy. However, this does not exclude a partial truth in the other narratives that economists are using to explain low growth.
In the reminder of this article I run through each of these themes in more depth.
Explanation number one: “structural policy stupidity”
First of all structural policy stupidity – all politics must be sold in one way or another to the governed. Even autocrats strive to govern with ideas as well as through simple fear. The rhetoric of politicians must to some degree match the way people think about things – that means one ingredient for successful politics is where politicians succeed in appealing to popular illusions embodied in “common sense”. One such popular illusion is that states have to arrange their finances using the same principles that ordinary households use to run their personal finances. Never mind that this is not true – the politicians who pursue policies and use a rhetoric that appeals to the “person in the street” viewpoint have a head start. As a number of economists have noted these politicians work with an ultra simple (and wrong) model of economic reality – that if governments follow rules and don’t borrow excessively this will inspire confidence and trust and economies will grow, spurred on by competition. It does not matter that this idea may actually be self defeating when an economy is slipping into recession – the important point is that collective illusions persist when they fulfil a collective purpose for those that hold them. In this case a key collective purpose of “the balanced budget illusion” is that it makes communicating with electorates so much easier. It enables a message of “we cannot afford” and “being cruel to be kind” to be directed against vulnerable groups who can be more easily scapegoated.
Complex messages are not popular and don’t sell well even if they more accurately reflect reality. Please note here that I am saying something more than politicians are mistaken – my argument is that ideas like the balanced budget illusion is more than “a mistake”. It is an illusion that has a structural function in the political process. It is not an accident that this particular theme repeats itself in history again and again. There is no reason to believe that once an idea has been rejected by one generation after a bitter learning experience, that a subsequent generation that have not been through the same learning experience will not have to learn it the hard way all over again.
One of the sayings of the management theorist Stafford Beer was that “the purpose of a system is what it does”. I really like this because it cuts through all the rhetorical justifications and excuses. If a system like the Eurozone is ruining its less competitive members in favour of the more competitive ones then this is the purpose of the system. Were it not the purpose of the system most powerful players in it would change it.
In this regard the very structure of the Eurozone has proved ideal for putting the banking and financial elite of Europe out of reach of democratic political processes. The currency is managed at a level out of the reach of any one state with the finances of each state disciplined by a set of rules that enforces close to a balanced budget. Given the inevitable crises each government that becomes vulnerable then has to cede more and more economic policy to financial interests who are free to impose neo-liberal policies like privatisation quasi automatically. The “coup” against Greece was a design feature of the Euro and delivers the primacy of finance over any pretence of democratic politics.
Given the complexity of eurozone governance, in which every state is supposed to have a say and decisions must be passed back to all of these governments, it seems as if governance requires a set of rules that governments adhere to, otherwise there would be endless re-negotiations for each new situation, and for each state, that would go on forever. In an interview in the New Statesman Yanis Varoufakis explained this when he described the viewpoint of Wolfgang Schaueble.
“Schäuble was consistent throughout. His view was ‘I’m not discussing the programme – this was accepted by the previous government and we can’t possibly allow an election to change anything. Because we have elections all the time, there are 19 of us, if every time there was an election and something changed, the contracts between us wouldn’t mean anything.’”
If you think about it this is not only a recipe for the negation of democracy it is the negation of any kind of economic policy discussion or policy variability. A common currency zone cannot work in these circumstances because it is paralysed by its complexity into ever being unable to adapt its economic policy. The default is then to a neo-liberal assumption of a balanced budget (or budget surplus, free market rules and privatisation). All it can do is to follow a set of pre-determined rules. In this case the policy that destroys economies like that of Greece appears as the price paid to avoid endless renegotiations.
The problem for the Eurozone and the global economy is that this is leading to a massive deflation….or maybe from an elite viewpoint this is not so negative. Maybe this is not “policy stupidity” but a cunning plan???
In a massive crisis in which only the super elite are rescued and everyone else ruined there would be a further massive concentration of wealth and power. Perhaps members of the super elite – the 1% of the 1% – think in this way. Or maybe I am paranoid.
Explanation number two – too much debt
Some economists think that that somehow debt doesn’t matter since, supposedly, debt transfers purchasing power from debtors to creditors who will spent it instead so debt is not supposed to affect “aggregate demand”. Alas this misunderstands the mechanisms of bank credit creation. In order for money creation and demand expansion to occur in the current system there is a requirement that more bank credit creation – i.e. more borrowing from banks – takes place. If individuals and companies are maxed out (“peak debt”) and if they are reluctant to take on more debt then aggregate demand cannot be increased. In fact, even if the central bank pumps out more money through “quantitative easing” this will do little or nothing to increase demand. The central bank will create money to buy bonds from banks but the money created and paid over will remain unused by the banks and the velocity of circulation will fall. The single demand expansion influence is that interest rates are lower and this is supposed to encourage investment – something that does not happen if the conditions for expansion do not otherwise exist. What happens instead is that money goes into speculation.
Meanwhile if companies and individuals are maxed out they will be making an effort to pay back their debts to the banks. When this happens money is destroyed and goes out of circulation. More particularly chain reactions from defaults and collapsing confidence destroys the trust and confidence on which the financial system works and leads to massive deflation. Now this situation of collapsing purchasing power in the private economy could in theory be balanced out by government spending leading to the governments running deficits – but that’s against the eurozone rules.
Explanation number three – global imbalances/failing mechanisms to recycle purchasing power
Another explanation for current stagnation is the breakdown of mechanisms for dealing with international trade and financial imbalances. In his book The Global Minotaur Yanis Varoufakis, describes the history of the post war economy by focusing on the story of how trade and financial imbalances were managed – particularly the imbalances between the USA and the rest of the world, but also imbalances in the Eurozone. As he explains, unless there is a mechanism for recycling surpluses from countries in trade surplus back to countries in trade deficit then purchasing power drains away from the deficit countries who are put in a deflationary squeeze as is happening to Greece currently. In the initial period after world war two the USA was dominant in the global economy and was in trade surplus to the rest of the world. It used the financial flows into America that were generated by its surplus of exports over imports by investing back into the rebuilding of countries like Germany and Japan and more generally into the American design for the postwar economy as bulwark against communism. The recycling of surpluses back into deficit countries kept the boom going. But you won’t catch Germany recycling its surpluses back into Greece now.
The answer to an export surplus in one country which occurs over and against import surpluses in other countries is for the countries with the export surplus to use the money that they earn in capital export back to the deficit countries. They invest in those countries. However, that implies that there is something in the deficit countries that is an attractive focus for investment. It implies that those countries are growing – which brings the argument round full circle. For decades the USA was the largest economy in the world and a growing economy. This meant that when the US first went into what was to be a long running trade deficit it was still worth Germans, Japanese or Chinese parking their dollar earnings as deposits into Wall Street banks or using them to lend to the US government. The dollars earned by Germany, Japan and later by China could be invested in the US economy or they could be used to buy oil. This was also because, by agreement with countries like Saudi Arabia, oil had to be purchased in dollars. This arrangement partly broke down however when Wall Street crashed in 2007 – in large part because it was operating a criminal business model. Loans were made to people who it was known would never be able to pay them back and packaged up with other assets and then sold on across the world to pension funds and other financial institutions who picked up the risk parcel, misled by ratings agencies. The ratings agencies were paid to say that the “toxic trash” was AAA grade.
Turning the finance explanation upside down
So, to come back to the story – yes the current problems are due to too much debt. Yes, mechanisms for recycling global financial flows arising out of trade imbalances no longer work so well after Wall Street and other banksters in London and Frankfurt are seen to be run by crooks….but one can argue that these two phenomena are also the result of the failure to grow, as much as the cause. You can turn at least a part of the argument on its head.
What I mean by that is that a rising amount of debt in general and troubled debt in particular is not just a cause of faltering growth – the faltering growth is a cause of the increasing amount of troubled debt.
Debt is not usually seen to be a problem for companies and individuals where their income is rising and sufficiently secure for people to pay the interest. It is when people find that their real income is stagnating or falling that more debt becomes distressed debt and distressed debt becomes the lender business model. Prudential lending pays in a growing economy with growing investment opportunities – but the temptation to resort to predatory lending occurs when there is an awareness of, even a decision to exploit, the desperation of people in trouble. This becomes part of the model. What happens when a country, or a company, or an individual, cannot pay? The answer is that the interest rate that they are supposed to pay for any new credit rises dramatically because they are now supposed to pay the lender “a risk premium”. This is the last stage of a process of debt accumulation. When a debt pyramid comes crashing down it does so because, just before it crashes, debt servicing costs get dramatically worse as “risk premiums” are loaded onto borrowers.
This “risk premium” might lead one to suppose that lenders actually are tolerating a higher level of risk for which they must be compensated – however this is only partly true for the biggest players. When the biggest players are deemed “too big to fail” they get backed by politicians so the “risk” is taken off – that is, after all, what happened to the German and French banks that lent to Greece. The deal stitched up by the IMF and the ECB meant that they got bailed out and the debt loaded onto the Greek people. So while risk premiums allow banks to increase their take the real risks do not rise commensurately.
The temptation to borrow under increasingly unfavourable conditions is not like borrowing to invest or to buy an asset with the secure expectation of a rising income. As debt increases the business model for lenders becomes more and more making money with distressed debt, vulture funds, passing the risk parcel and toxic trash. It occurs because borrowing states, institutions and individuals resort to what becomes a kind of gambling considered as a last resort, as an attempt at a way out of a desperate situation. That’s one of the ideas of Prospect Theory. Normally people are risk averse, they don’t risk what little they still have if they have anything left – however they do gamble when all of their other options seem hopeless anyway. Underlying all of this is that the rising incomes are no longer there. By way of contrast the institutions lending are not taking real risks because they have friends in very high places.
Turning the imbalance argument around
One can turn the idea about imbalances the other way round too. In one way of looking at the situation it seems that growth falters because the mechanisms to handle imbalances by recycling surpluses break down. No doubt there is truth in this but you can turn that idea round – i.e. it is when growth falters that the mechanisms to handle imbalances by recycling surpluses dry up. As we have argued the way to recycle surpluses is through capital export – the purchasing power flows back to the deficit countries not as money to purchase their goods as imports into the surplus countries but rather as money to buy into the industries and economies of the deficit countries, as investment. But who is going to invest into a stagnant or contracting economy?
Look what happened to the German privatisation of East Germany. The institution that was entrusted to sell off East German industry, the Treuehand, made a big loss. How could that be? When the East German economy was merged with the West German economy it was at the rate of one East German mark for one West German mark. This was an early lesson of what would happen in the eurozone except that it all happened inside Germany itself. The East Germans could not compete after reunification, just like the Greeks cannot compete now. So most East German businesses were making huge losses. However, if you want to sell off companies then you have to sell them as going concerns. You have to keep them going before you sell them….which often meant making huge losses. What they got for the sale of these companies never covered these losses.
Wolfgang Schaueble knows this – he was involved. They will not make any money selling Greek assets either. When the Austrian Railways considered a takeover of the Greek railways they said they would only do this if the Greek railways were given away. Unless Greece is growing and prospering there will be very little capital export into Greece to actually buy privatised assets.
So, to summarise the argument so far: slowing growth can be explained by increasing debt reaching its limits and the breakdown of mechanisms to even imbalances by recycling purchasing power from surplus to deficit countries. On the other hand the fact that debt is reaching its limits and surplus recycling limits are breaking down can be explained by slowing growth. Both are true in both directions of causation and what we are seeing here is a “vicious cycle” in operation.
Explanation number four – the energy crisis
Now let’s add the fourth way of looking at the issues. Let us start by making a distinction between growth of production and growth of production capacity. Growth of production can occur if there is spare capacity in an economy in the form of unemployed resources which can be brought back into utilisation – but for growth to be long term there must be a growth of the capacity of an economy.
This depends upon expenditure in capital formation – the creation of buildings, equipment and infrastructure. Capital formation is an energy intensive business because infrastructure, buildings and equipment require energy in their production – plus they require an energy throughput for their utilisation. The point about energy is that it is required for every good or service purchased. Even a haircut requires electric light or warmth in the barbers shop and to run electric clippers. Anything that enters into the production of all goods and services is a cost of production that all share. So if the cost of energy rises so does the cost of producing everything.
The nearest comparable example of a cost that enters into the production of all goods and services is interest rates. Virtually all individuals and companies must borrow so the interest rate enters into the cost of all production and into many everyday living expenses too. You can argue therefore that the real reason that interest rates have been driven down so low by central bankers is that energy costs have been so high. It is has not been possible for the economy to sustain BOTH high interest rates AND the higher energy prices. This is the reason for the stagnation.
Most energy intensive of all is investment in the energy and mining sector. The amount of energy required to tap and process energy is rising as it becomes harder to find, extract, process and transport oil, gas and coal from smaller, deeper, more remote, and harder to tap geological sources.
Slowing growth of global productive capacity is the result of the global economy running up against ecological system limits. This is particularly apparent in the climate crisis and the costs that occur as a result of this but, more immediately too, in the economics of extracting fossil fuels. The long run trend is towards rising energy costs which acts as a drag upon the growth of the productive capacity of the global economic system. The most energy intensive sector of all is the energy sector itself. We can see that if we compare the amount of energy used per hour of human activity in the energy and mining sector compared to the amount of energy used per hour of human activity in other economic sectors. (This is the so called exosomatic metabolic rate). These figures are for Catalonia in 2005 because the academics who have studied this issue are mainly at the University of Barcelona but one can expect comparable figures in other places. The rates are 2,000 Megajoules per hour of human activity devoted to energy and mining. This compares to 2.8 Megajoules per hour outside of paid work in households, 75 Megajoules per hour in services and government, 331 Megajoules per hour in the building and manufacturing sector (not including energy and mining) and 175 MJ/h in agriculture. As a matter of fact 11% of the energy throughput of society was taken by the energy sector itself – even though only 0.0945% of the time of everyone in Catalonia was devoted to energy and mining.
With energy and mining being the most energy intensive sector one would expect the impact of rising energy costs to be felt initially and most powerfully in the energy and mining sector itself. This has indeed been the case. In a presentation by Steve Kopits of the Douglas Westwood Consultancy he shows this graph (CAGR = compound annual growth rate).
As can be seen the capital expenditure required per barrel of oil in the exploration and production sector has increased enormously. To extract oil is requiring greater and greater amounts of investment in exploration and production.
We can see very clearly what is happening if we look at the statistics for fracking for shale oil in the USA. The fact that the US oil and gas industry has had to resort to fracking is a sign that American oil and gas fields are highly depleted and near to exhaustion. As an analyst called Arthur Berman puts it, fracking is the “retirement party” of the oil and gas industry. It is not a new beginning. As a matter of fact the USA, Russia and Saudi Arabia almost produce an identical amount of oil but look at the difference in the way that they produce it:
USA = 11.7 MMBl/d, 35,669 wells, 297 million feet
Russia = 10.9 MMbls/d, 8688 wells, 83 million feet
Saudi Arabia = 11.4 MMBls/d, 399 wells, 3 million feet [2]
In order to extract a roughly equivalent amount of oil the US industry has to drill almost 100 times the footage in wells and drill 90 times the number of wells. It is obvious that that will require an enormous amount of energy to get out an equivalent amount of oil (and gas) and that the cost will be a lot higher. But is this investment actually profitable? The answer is that it is only profitable at higher and higher oil prices. Different oil and gas companies require different prices to break even but, according to Kopits most of the oil companies require an oil price of at least $100 for new investment in conventional oil production to be profitable. High prices are needed in the unconventional sector too and most of the fracking companies in the USA have not been making money for several years. In the last year the price has fallen even lower.
So how come that they are still around? How come they have not gone bust? There are several kinds of reply to this.
Firstly, in economics things happen if people take a view of the future in which they believe that they will be profitable – even if subsequent experience shows this not to be the case. No one can know the future exactly so every investment is to some degree a gamble. A whole economic sector can share the same gamble and invest on the assumption that they will make money even if this turns out not to the case – and indeed they can be encouraged to. An oil sector drilling 90 times the number of wells and 100 times the footage is going to be immensely profitable for the companies selling and/or hiring out the drilling rigs, pipelines, tankers and other equipment. As the saying goes – in a gold rush sell shovels. A coalition can form around illusions that are profitable to some powerful players who make a lot of money even while others lose. A vested interest coalition pursuing a delusion is called a Granfalloon. It is important to realise that it is in the interests of the Granfalloon to keep on hyping their message in order to keep the money flowing. (This does not mean that the members of a Granfalloon are intentionally misleading – it means that there is an element of confirmation bias in the way that they interpret and describe things. We all do this to some degree – it is very difficult not to select and interpret available information in a way that confirms ones existing preconceptions, one’s faiths).
Secondly, at this time with interest rates very low there have been very few places where businesses in the finance sector can make much money. There is a temptation to make money on a gamble and the oil and gas industry has been a place for Wall Street to make another gamble. This is especially the case as the collateral for the industry is in the ground. However, when the sub-prime mortgage boom went bust after 2007 banks were left with a lot of houses. Shifting them was not so easy – finding a use for the assets of insolvent fracking companies is likely to prove even more of a problem. How many banks have the expertise to run fracking companies?
Thirdly in economics things happen with a time lag. Even if companies are making a loss they do not immediately go bust. They and their creditors may take the view that the unfavourable conditions are temporary and more credit may be extended to bridge them over what are assumed to be temporary hard times. If oil and gas prices have fallen they may still be able to sell at a higher price because they have insured themselves by selling their oil and gas already on the futures market. To respond to soon would be to lay off workers, and break up teams that would be difficult to reassemble. The temptation is to hang on, assume that difficulties are temporary and to tell the world that there are no problems, that everything is just fine, that the latest technologies make it possible to produce at a profit at even lower prices. If one looks at the figure however this does not appear to be what is happening. That part of the oil and gas pursuing new development, and particularly in countries where depletion is already advanced, are caught in a dilemma that unconventional oil and gas is expensive oil and gas – and the market cannot be made to pay these high prices over a long enough period to make the development of their part of the industry profitable.
In conclusion
The story thus described is one in which the world economy could be heading into a massive economic meltdown. The authors of the famous Limits to Growth, writing in 1972, thought it likely that unless humanity could adjust to the limits that there would be an overshoot and collapse sometime in the future. The crisis of 2007-2008 gave a preliminary taste of what that kind of collapse might look like. The after shocks in the Eurozone and what has been happening in Greece likewise give us a picture of what the future might be like for all of us.
What this does not mean however is that there will be some general realisation, some mass epiphany or “Aha” moment when everyone realises in a blinding flash of insight that humanity has reached the limits of growth. There are also limits to the extent to which people change their basic faiths about the world. Such flashes of insight about their real situation do sometimes happen when people are thrown into troubled times and circumstances that challenge all that they believe. However, even then most people are reluctant to abandon their faiths as that could leave them even more disorientated and fearful – living in a world that suddenly appears a lot less secure, and facing a future that is a lot less rosy, than they previously believed.
Most mainstream economists and politicians will continue to believe that the task at hand is “get growth going again” and, in the vast tangle of connected events, will privilege those connections and processes for their mental attention that confirm their viewpoint on what is wrong, the other people who are responsible for what has gone wrong – and what must be done to remove these people. To drum up support for themselves elite politicians of this type will no doubt identify favourite scapegoats and enemies to demonise.
The worst futures would be where these kind of politicians get a mass following, sponsored financially by the elite, and lead emerging fascist movements.
The best of all futures would be where these kind of political leaders drift into irrelevance because a popular majority gravitate to those who have positive community level responses of sharing, mutual aid and re-localisation connected to ecological design – and link this to a new approach to politics that supports the transformation at the base of society. This would go together with a new politics of finance to replace the debt based money system and a new politics of energy that keeps the carbon in the ground. A politics of this type would not be about “getting growth going again”. It would be about creating economic arrangements that create security for communities while conserving resource use. This would involve a revival of the commons and a solidarity economy, making growth unnecessary for a good life.
- 61388 reads
- Printer-friendly version
- Send to friend
- advertisements -




Quit reading at climate change. Don't need any pseudo science and I don't want to read pseudo economics either.
Time to leverage up and buy derivatives?
So all that money printing is going to result in deflation? What am I missing here?
...Edit: OK I got it now. He has his head in his ass and is just reporting on what he sees.
97 percent of money is loaned into existance in the form of loans and credit. It is these loans and credit which expand the money supply , which is what creates inflation. Therefore , if demand for credit and loans decrease , because people can no longer afford these loans and to take on more credit , means that less money will come into circulation. The end game of this process is either deflation or hyperinflation.
Crazytec - You almost had it there but if all money is loaned into existance we can't have hyperinflation unless massive amounts of money is borrowed. Not even .Gov can borrow that much and then there is the little stickler that all that borrowed money would have to be distributed out to the general population in order to show up as inflation.
Splain that one to me huh?
Do not underestimate how much money .gov or derivative products can borrow .. But really I think that deflation is the order of the day. Fiat money has been expanding for around 100 years an there is a hard mathematical limit to how much it can be expanded. Knowing that mathematical limit is the real genuine genius trick knowledge... This can could get kicked for another few years .. It;'s all really down to derivitave products which hide the newly created credit on hard drives...But the inflationary system is well finished because people can no longer service their own consumprion let alone accumulating more debt. We do live in interesting times , grab some bitcoin ....
doesn't have to be an "either" situation. We could have both, deflation first followed by big inflation from the mountains of money yet to printed. Which is what i think will play out.
@crazy technician
You are correct about the process however, the end game is deflation. When defaults on bonds start it will be deflationary. If the FED decided to monetize a frozen debt market, it could create an even bigger panic.
test
Time to BTFD!!
Approaching?
deflation hurts profits
http://cdn2.vox-cdn.com/uploads/chorus_asset/file/680036/heroin_price.0.png
This article and author still doesn't seem to get it...it still misses the foundational shift of why central banks stepped in and will have no reprieve...core populations are declining globally and organic public debt as the substitute for failing organic growth is maxxed out. It's only gov printing and QE of everything from here to attempt and fail to maintain centrally determined demand.
I try to offer the details showing why China and likewise the US have met the same fate...and seemingly have formed like answers just as Japan did a decade earlier.
http://econimica.blogspot.com/2015/08/chinas-collapse-is-last-straw-of-global.html
btw - chart 5 and 6 are the money shots in the link...
All fiat money is loaned into existance which creates inflation.But global demand for credit has been negative since 2009. Thus the money supply has been shrinking since 2009 , this explains why Interest Rate trends are low and set to become negative. Bail-In;s BTChezz , stack up on physical cash in matress and bitcoins bitchez 'cos your PM , commodity prices and bank deposits are going to be flushed right down the shitter BTCchez
That's the Mish-ionary position. I'm a big fan.
Ahh , As in Shedlock ? Big hand shake follows ....
Mish is from Illinois, that explains alot. My brother is the same way, dyed in the wool union retired, sucks every penny he can out of the system and bitches likje hell about taxes, gets subsidized for growing weeds (really) believes in the 2nd amendment, anti homo agenda, and votes straight ticket dem without blinking an eye. Mish is good economics but falls off the map with his climate change bullshit.
He's excessively anti-war, IMHO. War does solve things when chosen and executed well, and solves it things better than alternatives.
Killing people is a great solution. Solves just aboiut any thing that may arise. Of course, depends on your definition of thing.
Is it possible that we are missing something here.
I think the money supply has not gone down but another component has: velocity
If you look at MV=PQ (I know its the original Fischer which has since been modified)
then its possible that M can actually go up ( with QE) but no real change because V is actually going down.
I've seen charts that show V over the last 30 years and its cratering
Someone with more heft in econimics should chime in.
When the velocity of money craters and you increase the money supply by more than 400% since 2008 this is indicative of most or all of that money going to a few people. If it's distributed among the masses, the velocity of money is guaranteed to rise as more people spend (as well as inflation). Since most of the money was used to bail out the banksters, the velocity of money (and inflation) have been muted. In effect, through dilution of the currency, we have empowered the very people who caused the financial collapse. With derivatives risk exposure at an exponentially higher amount than 2008, it's not a question of if it will happen again, it's a question of when. M and V are just two of the warning signs. Act accordingly.
I'm with these guys: http://www.nipccreport.org/about/about.html
Stopped reading at "climate change".
Not bad. I quit at "Deflationary Crisis".
deflationary climate
change crisis..
Me too.
I don't care who it is or how reasonable he sounds, the moment I read "climate change" and realize the author is buying into the scam, I stop reading. Life is too short to waste my time with the tree-huggers.
So why the fuck are you wastng your time by commenting ?
Usually the presenters are not buying into the scam, they are selling it
Just like when they conveniently ignore talking about the Fed and then act all surprised when the evidence points right at them
Climate change and peak oil are different subjects. You don't have to agree with all content.
2 sides of the same counterfeit coin. CC is a smoke screen for tax increases onto the slaves. Pay penance for enviro. abuse / chicks dig this. Peak oil is a distraction from the peak debt, that pulled consumption forward, used to justify tax-payer subsidized alternate boondoggles.
Wow. So many words but not much said, if you know what I mean.
I'm still try to figure out how they get CO2 as a pollutant. Carbon is the building block of life. CO2 is what we breathe out and what plants use to make lunch. Only .04 of our atmosphere. In the short span of 40 years this same crowd has went from we are going to freeze....to we are going to burn up....to now we are just changing. Wish they would just settle on one end of world scenario and stick with it.
As soon as one fraud is exposed, then the next fraud (already tested) is put into place. After all, who can argue against "climate change"? Look up WHY Carl Sagan was a global coolist while living in Ithaca. Had nothing to do with cooling.
All kindz'a splinter groups, like the 350 gang, all aimed at the same sheeple outcome. It is a religion for the non-religious. It has rites, sacrifices, indulgences (aka "Carbon Credits"). If you believe in nothing, you'll believe anything (don't know who to credit, not me).
- Ned
Look.
I'm in mining. Physical mining. We have multiple quarries.
The biggest cost to our bottom line is, and always has been, labor.
The second biggest cost to our bottom line is, and always has been, fuel.
The third biggest cost to our bottom line is, and always has been, power (electric).
The fourth biggest cost is, and always has been, equipment maintenance.
While our labor cost has remained pretty much stable over that last seven years.
Our fuel have cratered. And power has dipped a bit.
We don't mine gold and silver, we mine rock and sand to use in ready mix cement or in roadbase or drought friendly landscaping.
Our cost of production has actually dropped during these times.
Read what you want, here on Zero Hedge, but some of these articles are full of shit.
Pseudo science?
Perhaps you meant to dispute Anthropogenic Climate Change ?
Because basically if you can look out of a fucking window it is pretty obvious that the climate is changing - whatever the cause - and if we don't take some measures to mitigate the projected changes we are
a) stoopid and
b) going to suffer more.
It is quite funny, albeit sad, that hoomans think that they can change the weather through behavior modification. Huberis and ignorance combine to make super stoopid claims.
I am not going to argue the science because I am not a climate scientist. But it is not huberis - humans are adding 35 billion metric tons of CO2 to the atmosphere every year of a KNOWN greenhouse gas - for scale - compare this to global iron ore production - which is about 2.8 billion metric tons per year. To understand that this has been going on for decades and then to try to argue 'there would be no consequences' to this would be huberis and ignorance.
But I will argue the data. Which was my orginal point. Changing rainfall patterns, changing heat patterns, changing storm patterns, changing fire patterns. These will increasingly impact things like agriculture and industry. You don't have to care whether it is anthropogenic or not, you just have to care about things like rain decreasing rapidly in the places where we grow food and what this will mean as our population continues to grow.
That 35 Billion tonnes of CO2 is not accumulating in the atmosphere. Look around at all the vegetation, that is what is swallowing up most of the CO2 along with plankton in the oceans. As long as we do not kill off the oceans or block the sunlight or kill too much forest then photosynthesis will do what it has been doing for billions of years and convert that CO2 into vegetation. All of the oil and gas that is now trapped underground was once either free in our atmosophere or locked up in vegetation. There was a time when none of that carbon was underground.
LOL
Wow. It is hard to know how to respond, except to just enjoy your good humour for what it is.
You cannot respond with a rational objective answer to my rational objective explanation of exactly what happens to CO2 in our atmosphere ? Photosynthethesis is what happens. I repeat: CO2 does not accumulate in our atmosphere due to plant photosynthesis. The more CO2 that exists in the atmosphere the faster plants photosynthesise this into oxygen.
I don't mean to be rude. My apologies. I really thought you were trying to be funny. I thought perhaps you were doing a 'MillionDollarBonus' type of response.
I won't spend a lot of time searching for the best links - but will grab the first Google hits I get.
More CO2 is not necessarily a good thing for plants - all kinds of bad stuff starts to happen - and this will be especially concerning regarding food crops :
http://www.skepticalscience.com/Increasing-Carbon-Dioxide-is-not-good-for-plants.html
Yes, natural forces absorb the builk of C02 in the atmosphere - but this is not the problem - the problem is that the relatively small addition of 35B tons extra per year is not being absorbed - and it is accumulating in the atmosphere (400ppm and rising http://www.esrl.noaa.gov/gmd/ccgg/trends/) and traps additionally energy in our climate system in the form of heat. The real danger is that this now appears to be impacting on the systems that do absorb C02 and - far more dangerously is starting to initiate the release of other greenhouse gasses - starting a positive feedback loop. (such as increased rate of methane release in the high artic etc)
re killing forests - ummm - just Google that - we are (and the danger and projection at this time - is increased wild-fires all across the world - which will add to CO2 and reduce forest etc)
re killing oceans - just Google that - we are
re blocking sunlight - Google that too. - this is actually a cooling effect. The good news is that the Max Planck Institute recently put out a paper that demonstrates that the IPCC has over-estimated the radiative forcing of pollution. But the bad news is that it is still there, and if we suddenly switched away from polluting technologies, the earth temperature would jump significantly because the CO2 will be there for hundreds of years, but the pollution would clear within a few years. The pollution is 'shading' us somewhat.
EDIT : if you are really interested in this stuff - check out Youtube : Paul Beckwith's channel. He is a Canadian physicist whom I really enjoy listening to because he explains the physics of the climate as a global system in layman's terms.
EDIT 2 : the really scary thing is the climate scientists might be right - we can only hope this is not the case - because it will be apocalyptic if they are ; this Youtube clip is from Aaron Sorkin's, 'The Newsroom'. It is a fictional show, but my understanding is that the climate stuff in this segment is accurate based on what is currently known/understood : https://www.youtube.com/watch?v=XM0uZ9mfOUI
Yo:Not as Shovel Ready as We Expected
Yep, this winter we had 3 meters of snow and since March, every single day, the snow melted until last month the final pile finished melting in Boston.
Since the global coolists had the same recipe for cure as the global warmists and the same recipe is being used for the climate chageists, one can determine whether it is "science."
I'll raise you one Popper and two Kuhns.
Perhaps you could enlighten us as to what is, in fact, "science".
But I don't think u are ready!
- Ned
I am sorry. If you were making a point I missed it.
.......even more important story, that of climate change, has to be held in our minds too........
Ditto.
Anyone espousing the climate change hoax is a tool.
No mention of the fact that the fiat currency system is controlled by a handful of private bankers who loan governments "money" at interest. Fail.
We are reaching peak growth. Daytrading and praying is a thing of the past.
Didn't you notice?
Yes, mvsjcl, that was view too, after I carefully read through that article. I thought that is was overall relatively good, despite being typically superficial. Of course, the most important point is that our current political economy is based upon governments ENFORCING FRAUDS by privately controlled banks. Therefore, our political economy is actually based upon the principles and methods of organized crime, whereby "money" made out of nothing as debts was used to "pay" for strip-mining the planet's natural resources. (Kudos to that article for recognizing the overriding importance of the diminishing returns from being able to continue to strip-mine the planet's natural resources.)
There is a general trend I find in the comments posted on Zero Hedge of cynicism pushed to the point of stupidity when it comes to any overall environmental issues being raised. The cynical attitudes towards the banksters, and the economists that are their intellectual mercenaries, is well-founded. However, I find that the cynicism towards environmental issues, in way too many comments, as well as the voting patterns upon those comments, tends to become way too over-generalized, and too extreme. E.g., climate change turns out to be way more hyper-complicated, while the cases of fraudulent science with respect to that have tended to be wildly blown out of proportion, i.e., throwing the baby out with the bath water.
My overview continues to be that the few people who face the basic facts that the existing political economy is almost totally dominated by the established systems wherein governments ENFORCE FRAUDS by privately controlled banks continue to then STILL treat that issue from their perspective of taking for granted the DUALITIES, based upon false fundamental dichotomies, and the related impossible ideals, and therefore, then to promote bogus "solutions," STILL based upon those impossible ideals, which suggest that it would be possible to STOP ENFORCED FRAUDS from being the foundation of the real political economy.
In my view, the article above was a sign of the times, inasmuch as the author IS observing the facts getting worse, faster, and so, is motivated to come up with interesting perspectives, which can be regarded in opposite ways, about how and why those are the facts. However, of course, I do not think he has done enough of deeper analysis regarding that, because of what I will again quote from Cognitive Dissonance, as being previously published on Zero Hedge: "The absolute best controlled opposition is one that doesn't know they are controlled."
Since the social pyramid systems of Neolithic Civilizations have been based on being able to back up lies with violence for thousands of years, the biggest bullies' bullshit world views regarding that were built into the dominate natural languages and philosophy of science, that people use to think with, and communicate through. In particular, the banksters' bullshit about the economy, as promoted by their intellectual mercenaries, continues to be overwhelmingly dominate. Hence, there continue to be attitudes of evil deliberate ignorance towards the most important social facts, that governments are ENFORCING FRAUDS by privately controlled banks.
However, that kind of deliberate ignorance goes much more profound than that, since the few who do notice and discuss that continue too much to STILL take for granted the degree to which the language that they use to think through, as well as the basic philosophy of science that they presume is correct, despite those actually being as absurdly backwards as possible.
I REPEAT, it is relatively way more common in the comments posted on Zero Hedge, as well as manifested in the voting patterns regarding those comments, to find that the majority have appropriately cynical attitudes towards the banksters' bullshit. However, I find that cynicism to be often pushed to the point of stupidity when it comes to the general environmental issues, that go beyond the more immediate areas of political economy, that are more under human control, than the environmental factors, which are either beyond human control, or which may be pushed by humans to go beyond human control.
Of course, I can somewhat sympathize with that, since it is clear that Neolithic Civilization, based upon social pyramids of integrated systems of legalized lies, backed by legalized violence, have also significantly corrupted the scientific enterprises, similarly to how everything else is now INSIDE ENFORCED FRAUDS. But nevertheless, there is some relatively scientific truths that should be respected, but which tend to be summarily dismissed by those whose excessive cynicism has driven them to become stupid, in the degree to which they over-generalize their attitudes that because some science was fraudulently biased, therefore, no science exists in those domains at all.
Anyway, mvsjcl, I AGREED with your basic point that the article above did not focus upon the degree to which our political economy became based upon governments ENFORCING FRAUDS by privately controlled banks. However, what I would try to add to that the deeper peering perspectives, that are indications regarding how EXTREME is the degree to which we are living inside Wonderland Matrix Bizarro Worlds, due to social successfulness having been based on ENFORCING FRAUDS so much, for so long.
In extremely profound ways, our civilization is based upon deliberately ignoring the principle of the conservation of energy as much as possible, while understanding the concept of entropy in the most absurdly backward ways possible, BECAUSE THAT WAS WHAT WAS SOCIALLY NECESSARY TO ENABLE ENFORCED FRAUDS TO CONTINUE WORKING!
The upshot of that becomes how the article above continues to presume and take for granted perceiving and discussing the political economy in superficial ways, that are superficially correct, but otherwise profoundly wrong. Of course, I also would assert the same things about some of the comments already posted. Overall, I continue to think that the most important features are that there has been prodigious progress in physical science, without that being surpassed by progress in political science. The primary reasons for that being civilization is necessarily operating according to the principles and methods of organized crime, due to the death control systems being the central core of all other systems.
While the basic social pyramid systems are now governments ENFORCING FRAUDS by privately controlled banks, the publicly significant opposition to that continues to mostly be controlled, although they may not understand that, due to the languages and philosophies that they continue to use to think with and communicate through. In turn, that is how and why the generally expressed cynicism towards the banksters tends to be well-placed, BUT, the cynicism towards the overarching environmental issues tend to be pushed to the point of being stupidity.
Understanding the degree to which civilization is controlled by a long history of backing up lies with violence, which has become the currently existing political economy based upon ENFORCED FRAUDS, indeed is relevant to taking various environmental claims with a salt shaker of skepticism and cynicism. However, I find it relatively tragic that, too often, that has been pushed too far ...
Excellent RM, thanks.
You are welcome!
Seconded!
Climate change. The other day one of my Progressive buds was talking about political correctness and the need for more of it. I must say, another of his favorite topics, climate change happened instantly. The room got real cold.
I am just appalled at the number of memes that the masses have been bought into, like climate change and the number they completely ignore and ever so related, like geoengineering that's taking place right in front of their noses.
Absolutely startling.
The room got cold, you say? I am certain the climate wonks in the room blamed it on variations in eccentricity, axial tilt, and precession of the Earth's orbit determining climatic patterns of that particular room through orbital forcing.
:-)
More funding is demanded. And more caring.
And less time, don't forget the less time.
Sincere caring.
So climate change doesn't exist because of geoengineering? How does that make any sense? Isn't it technologically created climate change?
It seems everyone is opposed to the idea of climate change because the government uses the term, but this is illogical and reactionary. Governments do not come up with the idea of climate change because they lie about every single thing (sometimes they do, sometimes they don't), rather they manipulate what exists so as to take advantage of the situation and recuperate any movement that may oppose them.
There are more than enough signs of climate change to know that it is occurring. Junk me all you want, I don't care, the arguments against climate change are just sophistry and pseudoscience to make the government look like totalitarians corrupted by UnAmerican activity or the Joos. In reality there is a deeper problem at play that goes to the foundation of this society, and many of the past ones as well. It has to do with the dual structures of society and the manipulation of production for the advance of power, the excesses of humans and their lack of self-control, the need for some sense of competition between humans, and the certainty that if a man isolates himself then nothing bad can happen/he does not participate in the fall.
People are familiar with the divide and conquer tactic, but why is this not considered when it comes to climate change? Whether climate change is caused by carbon dioxide and other pollutants/imbalances, does not exist at all, is geoengineered, is a natural fluctuation in the earth's balance, catastrophic nuclear radiation leakage, dumping of chemicals into rivers (by protection agencies even), or an act of God (or even all of these things combined) is not the key point. The core of the problem is that disaster looms for all of us, the system cannot go on as it is, nor can it go on as it was originally set up, and many parties are being set against each other in a divide and conquer strategy.
Whether you're a government agent, an environmentalist, a constitutionalist, or just an average person trying to get by, you may be participating in and accelerating this divide and conquer process. I cannot see how denying climate change outright is any different from governmental exploitation of the idea. It is just as rigid and bound for failure and corruption, simply from the other side - a myth reinforcing the ideology of eternal progress. It's funny that capitalists disparage progressives, they do not understand that capitalism is an ideology of pure progress. I guess they do not like the return of politics to the trading, or they conveniently leave it out to mystify their own political efforts.
Ask yourself this seriously, can humans cut down forests, pollute rivers, concretise the environment, emit radiation, consume endless fuel, and reduce fauna to domesticated sludge without consequence? You really cannot be serious if you say yes. Climate change is real, it always has been. The question now is whether or not humans have transitioned from environmental change to climate change (arguably forest clearing or city settlements were the first form of climate change). People just want to control the definition and narrative.
Many of us are religious in some way as well, so what about the Tower of Babel? You cannot build a tower into the heavens without consequence, without God correcting the effort.
Perhaps there is simply some confusion over disregarding the government definition of it, or the democratic socialist religion of environment. So I get that using the term itself can be a problem, but what do we call it instead?
I had the same experience recently at a house party.
We were playing Truth Or Dare and some doofus said he wanted money to reflect our carbon foot print. I burst out loud laughing so hard because I initially thought he was cracking a joke. It took me a brief while to realize that I seriously offended him.
I do not care. I can not fix evil and I can not trust stupid.
lol so climate change doesn't exist but geoengineering does? love that line of logic.
While I don't want to call you an ignorant bastard...
http://video.mit.edu/watch/using-aerosol-injections-for-geoengineering-4828/
Climate change killed the dinosaurs...we are doomed too.
What a pathetic article...ZH is going Salon.com.
Deflation in MANY Things Yes.. NOT in Many others like Food, Insurance, (Gas is $2.99 here in Michigan Right now too!)
dinopromorphic climate change
HOLY FUCK!! 2.99!!
Try paying California's $3.95/gal and see if you're entitled to bitch about any fuel cost.
2.25 in Danvers,Ma.
Geeze dude, take a breath!
Everyone is talking about deflation when the real imminent threat is a long period of stagflation (which can faciliatate hyperinflation). Deflation is now. Stagflation is what people need to be worried about. It's coming. You can only ignore the fundamentals for so long...
Trump can fix this, no worries...
we could give this guy twenty moar guesses and he still wouldn't stand a chance
The damaging fixation with capital gains and the scant attention to cash flows has created the potential for some damaging scenarios when the capital gains falter.
Anything is possible and I suspect that we will experience both inflation and deflation going forward depending on what asset class or product we are talking about and the location we are in.
Minimal or no debt provides the greatest flexibility and opportunity.
We're in hyperinflation. You just don't know it yet. Federal debt $18T and it's stopped? This should ring alarms everywhere. When the going gets tough, the lying gets easy.
...."Depletion of resources in the energy and mining sector means that it is taking more energy than before to extract energy (and other mined resources) and this has pushed up the costs of extraction of energy and other minerals".
Laughing my ass off!!! Commodity prices tell us the opposite is true.
This artical has so many logical flaws that its not worth the effort to dismantle it. Instead, let's keep it simple with the following comment.
There are no political or central government solutions, nor any solution for central governments, other than allowing them to complete their self destruction as soon as possible. Withdrawing consent to be governed and avoiding support of centralized governance to the maximum extent safely possible will help expedite this only solution. Then, when society finally experiences all of the enevitable pain to be suffered as a consequence of becoming dependent upon (enslaved by) the criminals who call themselves central government, it will be imperitive that as many as possible of those who manage to survive simply understand one thing. All of the pain will NOT be because of the loss of the government parasites and their fascist partners/owners that consumed the accumulated wealth of many generations and left society unable to sustain itself. Instead the pain will be because of all that those parasites did to weaken the host society, before they finally had no choice but to fall off, like the biggest and most engorged tick in the history of the planet.
Pass this comment along to as many as possible in preparation for the day when we will be rid of the central government parasite, so that hopefully enough survivors will understand what really happened, and prevent the return of any form of governance beyond the most local level (which they can keep under control or avoid). After all, that amount of government is really all we need to "secure these rights" of "life, liberty and the persuit of happiness." Anything more will do more than simply "secure these rights" and inherently proceed to violate them again.
What are you doing to help end the central government problem. I am personally working to get my state legislature to call for a Constitutional Convention at which they could, in the best case, terminate Washington D.C and all of it's parasites. Venting will get you nowhere unless you vent to the right people as a Citizen. And, as a plan B, work on your shooting skills, patrolling and ambush techniques.
Stormtrooper,
Please don't confuse clearly stating the bleeding obvious with "venting". You're suggestion would only exchange one large evil central state for a slightly smaller one with a different group of stormtroopers which will still enforce the benefits of some group of people over others. That is what the original US Constitution facilitated, along with ALL of the individual state constitutions. There is no historical evidence or study of human nature to support expecting anything better from any future such convention.
I accept and embrace the FACT that central governments are on the path to self destruction. This is inevitable because their path is unsustainable and they will not accept elimination of their parasitism which they benefit from.
What I am "doing to help end the central government problem" FOREVER is educate as many as possible about the reality of what central governments really are, so that when they collapse, we can prevent them from rising again in some form, from their evil pile of ashes. Only without all central forms of government and their levers of power over others, which are always used to confiscate others property and limit freedom through the use of force, can people be truly free and society achieve its potential, which few can even imagine today.
If you are looking for a solution to finding a replacement for government may I suggest this? i found it enlightening, entertaining and worthwhile.
Would it be worse than a global crisis of criminaly insane politicians?
your four factors of production are land, labor, capital, and entrepeneurship.
all value and growth are derived from these four factors - econ 101.
if one of the factors becomes too expensive we are taught that portions of the other three may be substituted.
what we were not taught is what would happen when the cost of one would be driven to zero - ala capital with ZIRP.
what we were not taught is what would happen when the cost of two were driven to zero - ala labor with unlimited legal+illegal immigration.
and so the oligarchs are left with land and entrepeneurship to hold value but we are taught that capital and labor can be substituted.
econ 101 says that under these conditions land and entrepeneurship MUST also be driven relentlessly to zero.
I guess I'm not in the mood to read this tome. Food, utilities, housing or rent, taxes, gas (despite what oil is doing) all continue their upward price momentum. So deflate all you want, it's not in assets I need to live and breathe. Who cares what the cost of an Apple Watch is?
"What this does not mean however is that there will be some general realisation, some mass epiphany or “Aha” moment when everyone realises in a blinding flash of insight that humanity has reached the limits of growth. There are also limits to the extent to which people change their basic faiths about the world. Such flashes of insight about their real situation do sometimes happen when people are thrown into troubled times and circumstances that challenge all that they believe. However, even then most people are reluctant to abandon their faiths as that could leave them even more disorientated and fearful – living in a world that suddenly appears a lot less secure, and facing a future that is a lot less rosy, than they previously believed."
The comments on this article are proof positive of the above.
The article is DEAD ON the money. WE ARE FUCKED
Since numbers are INFINITE - why can't all this bullshit literally go on forever?!?!
The scary thing is that in the past, having to carry a wheelbarrow of cash was the limit because who could a afford a ute or truck to carry the cash in - and even if they could what happens when a prime mover was required?
With everyone these days using credit/debit cards and fuck all of the currency being actual 'cash' then who knows.
everything that has a beginning, has an end
An over-6000 word blog post to explicate what I already know? Seriously? Denninger has outlined the liquidity trap we're in, in a little over 800. If you need more than that, please, get back on your Ritalin.
Bone-Sucking Nonsense
Mr. Byian Davey, quite a long article about how screwed up things are...in 500 words or less can you recommend what I should do to protect my family and myself in the coming years...
Liquidate everything possible, and use the proceeds to buy, not futures or any kind of paper "equivalent," but physical silver and gold. Now. They are the buys of the century, if you can find them. You've got ten days, if you're lucky. Two months at the most. Oh and by the way, don't tell anyone you've got it. That includes your wife/husband/SO. Not unless you want to wake up one fine morning being waterboarded by old Uncle Whats-His-Face, who is doing so to extract the combination to your safe from you.
Agreed.
Article poorly written.
And what about technology??????? This is such a driving force in everything why is this not thouroghly discussed????
Oil companies are closing the inefficient technology wise wells. Ever see a road being built. Not many people.
Cops using cameras with smart recognition software fewer beat cops. Autos last much longer.
Building a house is so much assembly. On and on. Change/adapt or die. To much zombie everything.
Who needs all these people in the public daycare/education system???? We need innovation
and alot of education and re-education. Get smart or get out of the way! Vote the Don.
Commenters on Zh really gone uneducated redneck pavlov dog.
Mention something like 'climate change' and the butt-hurtedness has then ignoring all else.
Give them a thought out rational dissertation in support of conclusions, and they are butt-hurt again because they had to 'read' too much.
Then there are those who pick a sentences here or there, never having read the article, to moan.
The thing that amazes is that these people get this for nothing, nobody says you have to agree with the positioin taken, but you are getting a discussion on a subject for nothing, something to engage your thinking. Soenthing that somebody has obvioulsy spent some time putting together.
I give these articles an up vote, even if I disagree with them, since I have been given a rational thought out argument to consider, that somebody has spent time on, and it has made me think, and for Free.
You would think a lot of current ZH commenters suffer from entitlement issues.
Great post Kina. I feel the same way.
Made me think, and for free. Agreed....
"Mention something like 'climate change' and the butt-hurtedness has then ignoring all else."
Climate Change, Resource Depletion.
That Butt-hurtedness stems I believe from a deep down fear that They will have to change their lifestyle.
All the arguments, complaints, sneers stem from Fear of the fact that things are going to change. It scares them to death.
No one is going to have to "change their lifestyle," first of all, because no politician could survive such a platform. I don't think anyone is worried about that.
The "scary" thing about the climate movement is not its policy recommendations, but the McCarthyist echo chamber that all discussion about climate has become. The knee-jerk reaction to mention of "climate change" comes from indignation at the nature of the discussion (or lack of it) rather than any particulars. A "denier" today is no different than a "communist sympathizer" in the 50s. Those that can't see this similarity -- or even welcome suppression of debate -- are exactly the kind of fascists that Orwell modeled. Today's political vocabulary has the same aims as Newspeak.
How's it feel to be mainstream? :) The interesting irony of our age is that the right wing is becoming the radicals and revolutionaries, and the left wing has become un-self critical, homogeneous, religiously dogmatic and boring.
We have been here before and know what happens:
1920s/2000s - high inequality, high banker pay, low regulation, low taxes for the wealthy, robber barons (CEOs), globalisation phase
1929/2008 - Wall Street crash
1930s/2010s - Global recession, currency wars, rising nationalism and extremism
1940s/? - Global war
Europe is a bit more advanced in the collpase due to the Euro, so we can see what is happening already:
Main stream politicians have too much invested in the current system and seek to maintain the status quo.
New parties are formed that are more extreme (Podemos, syriza, Golden dawn)
As people see Capitalists and finance as the problem they swing to the Left.
France and Greece have both swung to the hard Left.
The Left are often wealthy champagne socialists and have more invested in the current system than they care to admit and are afraid to make the radical decisions necessary.
The far right are the only people ready to play hardball.
Le Pen's far right in France are now doing well after the failure of the socialists.
Golden Dawn will do well after the failure of Syriza.
Looking back we can see it took Hitler and the Nazis to default on Germany's impossible debts back in 1933.
The worst future (above) has played out before and is playing out again.
There can be no such thing as "global war" in the nuclear age. After July 1945, everything is different -- forever.
There is no big crisis. These situations are thought out and the levers are pulled to make it happen. We are all going to hand over the entire world to an evil cabal of people and you will submit or die. Global empire. But the fly in the ointment is that as the so called crisis unfolds there may be a powerful blowback on them as the useless military who are more or less welfare recipients for all the good they do figure out the game.
No sir, a country is like a big family and when you live behond your means, soon or later you must cut spending or earn more, or both. You are not going to improve your situation by borrowing more, even at lower interest rates. For many years the world, and in particular the USA, have chosen to go in the wrong direction: work less and borrow more. The USA have induced other countries (most of them vassals) to do the same and now the level of debt has reached the top limit. The dollar will need to be devalued enough so that american workers will be able to produce in the USA goods at competitive level and be net exporter. To do so the USA must give up their empire and go for disarmement and world peace, before they will have to give it up anyway and suffer the worst financial crisis of all time or start a new world war with possible total earth distruction.
More academic bull shit. Unreadable.
As soon as you said "climate change," I realized you don't know what you're talking about.
Economics is not science. It is sociology. Economies are more driven by psychology than by discoverable laws. Human psychology is not governed by "laws" and this is why markets are not rational.
Economists, and American economists in particular, have a hard time with this, because it means that firstly, most of their models are bunk; and secondly, that economics in general is not nearly as important as it thinks it is.
Just like (some) religions are proxies for consideration of morals, the kook climate change religion is much easier to swallow if it is seen as a proxy for energy efficiency.