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With The US Economy Sliding Back To Recession, Here Is What The Fed Will Do Next

Tyler Durden's picture


Back in May when we presented our humble and succinct analysis on what the preliminary 1.8% GDP looked like, we said "Ex the now traditional inventory build [of 1.2%], Q1 GDP growth was sub 1%" basically being the only party who said that aside for the "old faithful plug" better known as the traditional BEA fudge to get GDP to whereever the administration wants it, growth was where it ultimately ended up being: 0.4%. And the kicker? The primary cause of the downward revision was, you guessed it, Inventories, which imploded from 1.31% to 0.32% (see chart). In other words, the next time we are skeptical about government data in any format, believe us, and not "them." Which also goes for our skepticism when it comes to the predictive ability of one Goldman Sachs, most notably our take on Goldman's December 1 2010 "watershed" report in which Hatzius said: "This outlook represents a fundamental shift in the thinking that has governed our forecast for at least the last five years... Five years ago, we became very pessimistic about the US economic outlook...So why do we now expect growth to pick up?  In a nutshell, it is because underlying demand has strengthened significantly... After a deep downturn from 2007 to mid-2009 and near-stagnation from mid-2009 to mid-2010, underlying demand is now accelerating sharply.  Currently, it is on track for a 5% (annualized) growth rate in the fourth quarter." Total and utter fail. Our summary then was also rather spot on: "Much more hopium inside. This is unfortunate. Jan Hatzius used to have credibility." Indeed, after waiting for so long, the firm once again capitulated per its most recent report released last night: "Our forecasts for 3%-3.5% growth in Q4 and 2012 are under review for probable downgrade." So with apologies for the self-backpatting, this brings us to the topic of this post. As we have said for over a year, the catalyst for QE3 will be none other than Goldman. Which is convenient because the title of Goldman's report is "The Fed's Easing Options." Pretty much as subtle as it gets: a month ahead of Jackson Hole, Goldman, aka the Federal Reserve's superior, has not only also admitted the other theme was have been pounding the table on, namely that 2011 is a carbon copy of 2011, but has also listed out the entire menu of options for former Goldmanite Bill Dudley to present to his inferior, Ben Bernanke. Let's dig in.

The Fed’s Easing Options

In a remarkable parallel to last year, Fed officials head into their August meeting amidst weak growth and questions about the possibility of further monetary easing. There are of course major differences between then and now, which Chairman Bernanke has been quick to point out in public statements. Most importantly, inflation is much higher—the core CPI increased at an annualized rate of 2.5% over the last six months—and inflation expectations are at levels consistent with the Fed’s mandate.

Nevertheless, growth is running well below trend— GDP grew by just 0.8% annualized in the first half of the year—and recession risks have increased. Some measures of underlying inflation have also started to cool. If downside risks materialize, further easing might well become appropriate.

Consistent with these risks, comments from Fed officials have shifted slightly in an easing direction over the last month. For example, minutes of the June FOMC meeting reported that some participants thought “it would be appropriate to provide additional monetary policy accommodation” if growth remained slow.

Chairman Bernanke also listed easing options in  his semi-annual monetary policy testimony to Congress (formerly known as “Humphrey-Hawkins”) and Chicago Fed President Evans recently said he could support further easing if growth disappoints.

With many arrows already launched, what remains in the central bank’s quiver? Here we walk through the main easing options and our sense of the Fed’s willingness to use them. They fall into three main groups: 1) communication, 2) asset purchases, and 3) interest rate policy.

Communication: Even More Extended?

Because asset values imbed investors’ expectations about the future, monetary policy can influence current financial conditions by changing expectations. In part this is achieved by following predictable (perhaps loosely rule-based) policy over time. Today, when US activity weakens, funds rate expectations and longer-term interest rates reflexively fall, because investors have observed consistent behavior from the Fed and understand its reaction function. This in turn eases financial conditions and supports growth—monetary policy on autopilot.

Central bankers also shape market expectations through public communication (“Fed speak”). In earlier research, then-governor Bernanke argued that managing investor expectations through communication can be a valuable tool when policy rates have reached their lower bound:

“Even with the overnight rate at zero, the central bank may be able to impart additional stimulus to the economy by persuading the public that the policy rate will remain low for a longer period than was previously expected. One means of doing so would be to shade interest-rate expectations downward by making a commitment to the public to follow a policy of extended monetary ease.”

The Fed has implemented this type of “forward guidance” a number of times (Exhibit 1), most recently through its “extended period” pledge: “The Committee continues to anticipate that economic conditions … are likely to warrant exceptionally low levels for the federal funds rate for an extended period.” Our research has found that this language has roughly the same effect on financial conditions as a 30bp funds rate cut.

Changes in official communication would likely be the first step in any renewed easing. In particular, we believe an attractive option would be the use of some kind of forward guidance for the size of the Fed’s balance sheet (“extended period” currently only refers to the level of the funds rate). Bernanke fielded a question on this issue at the June FOMC meeting press conference and responded: “It’s something we have on the table, something we’ve thought about.”

The idea came up again in his Humphrey-Hawkins testimony and in a speech by Brian Sack—head of the New York Fed’s Markets Group—last week. The purpose of this type of language would be to push back investor expectations for when the Fed will allow its balance sheet to shrink. A recent survey showed that 72% of economic forecasters expect the balance sheet to start shrinking later this year or in the first half of 20124. Therefore, announcing that the balance sheet will remain the same size “for an extended period” would likely change market expectations.

Based on New York Fed estimates, pushing back expectations for the start of the decline in the balance sheet by one year would be the equivalent of removing expectations for one 25bp rate hike (assuming all assets were allowed to run off, which amounts to a rate of about $250bn per year).

Other changes in official communication are also possible. In his Jackson Hole speech last year, Bernanke mentioned two ideas: committing to keep policy rates unchanged for a specific time (like the Bank of Canada did in 2009-2010) or tying rate changes to specific developments in the economy (like the Bank of Japan did during its quantitative easing experiment in 2001-2006). President Evans discussed similar ideas in his recent remarks.

We believe these options are on the table but that they are unlikely to be enacted. First, funds rate expectations are already extremely low, and further language changes would therefore need to be quite significant to lower market rates much further (Exhibit 2). Second, some Fed research finds that the Bank of Canada’s commitment language had a similar effect as “extended period”, implying that the Fed would gain little by moving in that direction. Third, Bernanke noted at Jackson Hole that “it may be difficult to convey the Committee’s policy intentions with sufficient precision and conditionality.”

A final set of options relate to communication about the Fed’s mandate. In particular, Fed officials have frequently raised the prospect of more clearly quantifying their inflation objective. Most committee members seem in favor of this idea, but a number of issues appear to have held back implementation, including questions about the dual mandate and uncertain benefits relative to the current system. We do not think an inflation target is around the corner but also cannot rule it out. A few officials have also raised the idea of price level targeting. We think this is a realistic prospect in a deflationary scenario, but not before that point.

Asset Purchases: Composition is Key

Asset purchases have played a major role in the Fed’s response to the recession and financial crisis and would likely be a component of any future easing. One obvious option would be a large-scale Treasury purchase program like the one just concluded. Although there is still significant debate about the impact of quantitative easing (QE) on the economy, earlier purchase programs did appear to ease financial conditions and raise inflation expectations.

If the Fed were to restart QE, our research suggests that each $1 trillion of asset purchases would be roughly equivalent to a 75bp cut in the funds rate. Fed officials appear to see a larger effect, with each $1 trillion in Treasuries purchased substituting for a 67-200bp cut in the funds rate.

One potential drawback of additional QE is that the Fed’s balance sheet is already quite large. Bernanke has expressed concern that further expansions of the
balance sheet could lead to “an undesired increase in inflation expectations”. Perhaps because of a desire to avoid further growth in the absolute size of the balance sheet, recent public comments suggest the Fed might prefer to change the composition of its assets.

In the Fed’s view as well as ours, QE works through a portfolio rebalancing channel: by buying securities and issuing reserves, the Fed reduces the overall supply of risky assets available for the private sector and thereby raises the equilibrium price of those assets. In the specific case of Treasury purchases, the Fed removes duration (interest rate) risk from the aggregate private sector portfolio and takes it on its balance sheet.

If the portfolio rebalancing framework is correct, then what matters is not the face value of the Fed’s balance sheet but the amount of duration risk it holds. Exhibit 3 demonstrates the difference for the Fed’s holdings of Treasury notes and bonds (the Fed’s total portfolio also includes Treasury bills, agency debt and agency MBS). The chart shows the face value of the Fed’s holdings and our estimate of its holdings in 10-year equivalent terms—that is, the amount of 10-year
Treasuries that would equate to the same duration risk.

At present the Fed owns $1.6 trillion in Treasury notes and bonds and around $1 trillion in 10-year equivalent duration. The estimate for 10-year equivalents is significantly lower because the weighted-average duration of the Fed’s Treasury portfolio (roughly 5 years) is lower than the current duration of a 10-year Treasury note (about 8.5 years).

One idea—mentioned in Brian Sack’s recent remarks—would be to keep the overall size of the Fed’s portfolio unchanged, but to increase its duration risk by buying longer-term securities. The Fed is already buying Treasuries regularly in order to reinvest paydowns from its MBS holdings (a policy in place since August 2010). A simple way to lean policy in a slightly easier direction would be to weight those purchases toward longer maturities. Currently the Fed allocates 6% of its purchases to nominal Treasuries with 10-30 years remaining maturity. By increasing this share, it could raise the amount of duration risk it is taking on its balance sheet with the flow of purchases. Even if the total face value of the Fed’s portfolio remains unchanged, an increase in its aggregate duration risk should be considered an easing of monetary policy.

Currently the flow of purchases for MBS reinvestment is relatively low—just $14bn per month according to the latest schedule—and the incremental duration risk the Fed could add to its portfolio through these purchases is relatively small. Therefore, as a more aggressive step, the committee could consider changing its reinvestment policy for the Treasury portfolio. For example, we believe the Fed has the authority to rebalance its reinvestment of maturing securities at Treasury auctions toward longer-duration securities (e.g. 10-year notes instead of 3-year notes).

Beyond additional purchases of Treasuries or changing the composition of its holdings, the Fed’s choices are limited. Agency MBS is one option, but the Fed appears inclined to move toward a Treasuries-only portfolio over time. We doubt the committee would move back to MBS purchases without signs of significant distress in the mortgage market. Purchases of private sector assets could be more effective from a portfolio rebalancing perspective, but the scope for these types of purchases is limited by the Federal Reserve Act (Exhibit 4).

Interest Rate Policy: A Dry Well

A final easing option often listed by Fed officials is a cut in the interest on excess reserves (IOER) rate—the rate that banks earn on deposits held at the Fed above  levels mandated by regulation. The IOER rate is to zero (or perhaps even a negative value).

We see little merit in this option, and continue to believe that the Fed is unlikely to use it. First, the benefits are likely to be very small. While the IOER rate is 0.25%, the effective federal funds rate is only 0.08% (Exhibit 5). Thus, the maximum impact from cutting the IOER rate to zero is just 8bp.

Second, cutting the IOER rate down to zero could be harmful to market institutions. Chairman Bernanke made this argument himself in Q&A at the July 2010 Humphrey-Hawkins testimony:

“The rationale for not going all the way to zero has been that we want the short-term money markets like the Federal funds market to continue to function in a reasonable way, because if rates go to zero, there will be no incentive for buying and selling Federal funds overnight money in the banking system. And if that market shuts down, people don’t operate in that market, it will be more difficult to manage short-term interest rates when the Federal Reserve begins to tighten policy at some point in the future.”

We expect that Fed officials would hold the same view about cutting the IOER rate today. Finally, as we argued in a recent article, calls for cutting the IOER rate are partly motivated by the premise that banks are holding excess reserves because of an unwillingness to lend. In fact, the level of reserves is controlled entirely by the size and composition of the Fed’s balance sheet, and says nothing about banks’ incentives or their willingness to lend. Cutting the IOER could theoretically stimulate activity by easing financial conditions and boosting loan demand, but it would not affect the quantity of reserves in the banking system.

Where We Stand

In recent remarks Fed officials have not appeared ready to ease policy. As Bernanke said on the second day of his Humphrey-Hawkins testimony: “we’re not prepared at this point to take further action”. He listed three reasons: 1) inflation is higher than last year, 2) inflation expectations are close to the Fed’s target, and 3) the Fed is forecasting a rebound in growth, whereas last year “the recovery looked like it was stalling.” For the Fed to ease it would likely need to see: 1) significant risks of recession or 2) continued soft growth, lower core inflation and perhaps falling inflation expectations. President Evans said that Q3 growth will be critical to his thinking:

“It’s obvious that the third quarter has to show improvement and it ought to show a high likelihood of sustained improvement … If we continue to have weakness in the third quarter, it’s going to be harder to plausibly sustain this idea, ‘The next six months is going to get better.’ We’ve been saying that for quite some time now.”

If the Fed were to shift its policy stance, we believe the process would start with a change in communication—most likely related to the timeline over which the balance sheet would shrink—and be followed by changes in the composition of its assets. In our view these options already have reasonably high odds. An expansion of the balance sheet (QE3) looks less likely unless the outlook deteriorates significantly further.

Changing communication or the composition of the balance sheet would largely be symbolic. Our quantitative estimates suggest the benefits to growth would likely be small.




And as for the strawman that the US economy will be weak, Goldman conveniently provides the following report in the second part of its analysis explaining the horrible Q2 numbers. Also, for the record, we are confident, Goldman's Q3 GDP target of 2.5% will absolutely not be met.


Forecast Highlights

1. We forecast that real GDP will pick up modestly from its anemic pace in the first half of the year to 2.5% (annualized) in Q3. Our forecasts for 3%-3.5% growth in Q4 and 2012 are under review for probable downgrade. Although oil prices have stabilized somewhat after their surge earlier this year, they are likely to remain a meaningful drag on consumer spending and business investment. And fiscal tightening—already more substantial in H1 than we expected—is apt to increase in 2012. The inability of policymakers to agree on a measure to lift the federal debt ceiling has damaged consumer confidence, not to mention our own confidence in a broader-based normalization in the economy.

2. Continued high unemployment, with only a marginal drop in the jobless rate to 8.8% by year-end 2012. Our forecast is for second-half growth roughly at trend, so we expect the unemployment rate to end the year at its current level of 9.2%. Growth of 3¼% in 2012 would bring it down, but only slightly.

3. Core inflation peaks around the end of the year. We expect the core PCE price index to accelerate further to 1.9% yoy by the fourth quarter, from 1.2% now. Two factors contributing to the recent acceleration—a surge in vehicle prices and pass-through from higher commodity inflation—should begin to ease later in the year. Rising rent inflation—caused in part by a decline in homeownership and surge in demand for apartments—is likely to remain a source of inflation pressure in the major price indexes. Overall, however, we see headline and core inflation decelerating throughout 2012.

4. No Fed rate hikes before 2013. Data disappointments have clinched our longstanding call for 2011 and made it even more likely for 2012 than we previously thought. With the jobless rate far above the Federal Open Market Committee’s “mandate-consistent” 5%-6% range and drifting higher, and core inflation still below the comparable “2% or a bit less” standard, the near-term question is how seriously the Fed will consider the easing options discussed on the previous pages.

5. Yields on 10-year Treasury notes reach 3¾% by year-end 2011 and 4¼% by year-end 2012. This forecast presumes recent weakness in US activity proves temporary; in that case, we believe that many participants in the financial markets will turn their attention back to higher inflation.




And for those who really want to know the specifics, including the dirty secrets, of the Fed's next steps, we once again present the June 24-25, 2003 Vince Reinhart FOMC Minutes Appendix 1 which has all you need to know and more.



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Sat, 07/30/2011 - 10:45 | 1507610 Seasmoke
Seasmoke's picture

= Stagflation

Sat, 07/30/2011 - 10:50 | 1507615 quasimodo
quasimodo's picture

How about stangnantNATION--to infinity and beyond

Sat, 07/30/2011 - 11:45 | 1507702 Thomas
Thomas's picture

As Mauldin recently stated, "Momentum has broken". (He used all caps.)

Sat, 07/30/2011 - 14:43 | 1508004 66Sexy
66Sexy's picture

Could the fed be enabling the US to sell off its gold or "transfer" it to the IMF, so they can sell at the high? TPTB covering shorts to get the price up, its all the same to the fed, w/e price the gold is at, its all freely acquired assets purchased with created debt money.

Sat, 07/30/2011 - 15:28 | 1508078 wanklord
wanklord's picture

Americans are a bunch of stupid animals easy to manipulate and subdue.The sooner the US economy collapses the better, so these brutes will finally learn NOT to live beyond their means.

Time for Barry to govern by decree: suspend the Constitution and declare Martial Law.

Sat, 07/30/2011 - 18:18 | 1508298 Raymond_K_Hessel
Raymond_K_Hessel's picture

For those of you who wish to be able to download this to PDF without having to pay for it via Scribd:

Pick up from page 163.

Sat, 07/30/2011 - 18:48 | 1508351 Raymond_K_Hessel
Raymond_K_Hessel's picture

Oops, wrong link.  This is it:

FOMC Meeting Presentation Materials June 24-25, 2003 (Appendix 1)

Sat, 07/30/2011 - 18:58 | 1508374 snowball777
snowball777's picture

So repititive; you need a new line.

Sat, 07/30/2011 - 22:34 | 1508779 Stares straight...
Stares straight ahead's picture

Cant you just abbreviate this and save us a lot of time? : AaabosaetmasTstUectbstbwflNtlbtm"


Sat, 07/30/2011 - 15:28 | 1508079 wanklord
wanklord's picture


Sat, 07/30/2011 - 15:30 | 1508084 Use of Weapons
Use of Weapons's picture

Re-evaluating the book value of IMF gold holdings is quite complicated, is opposed by many governments, and has red tape all over it. The IMF also (officially) only has 3k tonnes or so.

Thinking back to June's wedding, beautification and assassination, there's two possibilities - serious crash, or the Big O wins through, holds hands with the IMF and launches a world-wide (UN / BRIC / EU backed) economic re-evaluation and 'G20' club reworking. (Operation 'Romance'). The Big O loves the bite at the end of a joke - Trump knows that well enough.


It is a gloomy world when even the bad guys losing ends up in ruin... but I suppose that's how the game is rigged.

Sat, 07/30/2011 - 10:58 | 1507624 trav7777
trav7777's picture

yep...inflationary recession

Sat, 07/30/2011 - 11:56 | 1507721 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Inflationary depression.

Sat, 07/30/2011 - 12:38 | 1507804 Oh regional Indian
Oh regional Indian's picture

India just tightened by 50 basis points. market swooned 700-800 points. Lowest open interest in all future markets since end 2005 (India had a humungous crash in 2006).


I think you guys must have mostly missed it, but a lot of hot money sloshign around in India right now, in Fixed Income and the market through FII routes.

It's all happenign together now, tightening, one more notch, breathe in, one more, ufffffffff.........

I guess we can take it like sheep or break it like men.



Sat, 07/30/2011 - 13:15 | 1507872 A Man without Q...
A Man without Qualities's picture

Coffin Corner

Doesn't matter whether you increase money supply or reduce it, there is nothing the Fed can do to generate real growth.  They'll still reach for the printers, because it is what preserves the banking system.  The Tea Party will find that taxes have gone up, via inflation, but let's face it, "the business of America is business" - however sensible most of the ideas of the Tea Party may be, they're about 10 years too late.

Sat, 07/30/2011 - 15:04 | 1508037 HungrySeagull
HungrySeagull's picture

There is no Coffin Corner left on the edge of space above the Earth.


What you would want now is heat shielding.

Sat, 07/30/2011 - 19:23 | 1508411 Michael
Michael's picture

No more construction jobs because of the Federal Reserve and Wall Street. Millions of jobs lost in the construction industry in the past few years.

Tens of millions of jobs lost to overseas outsourcing because of US government trade agreements including NAFTA, CAFTA, GATT, etc.

I couldn't have planned the destruction of the US economy better myself, although I cheerlead it's destruction. It's a good way to starve the beast by having the money cut off from it. The best part is, I didn't have to lift a finger to cause its destruction. I just let the Fed and the Federal government lay the groundwork for their own demise. Good work guys.

Sat, 07/30/2011 - 23:28 | 1508912 RockyRacoon
RockyRacoon's picture

Your point is well illustrated by a link that JW posted about GATT.   It is apocryphal to say the least:
Ok to skip the Laura Tyson section in the middle.
Real revelations and accurate predictions of what would occur, all the way to the end of the interview.

Charlie Rose November 15 1994

Sir James Goldsmith, Member-European Parliament/ Laura D'Andrea Tyson, Chair-President's (Clinton) Council of Economic Advisers


Sun, 07/31/2011 - 05:31 | 1509344 Michael
Michael's picture

Great Video. Thanks.

Sat, 07/30/2011 - 11:57 | 1507725 PaperBugsBurn
PaperBugsBurn's picture

Nope, not any of the above.

What afflicts America and its economy is fascism, plain and simple. Call it globalization, neoliberalism, Keynesianism, etc


Sat, 07/30/2011 - 12:12 | 1507753 Ahmeexnal
Ahmeexnal's picture

don't forget socialism and neo-marxism

Sat, 07/30/2011 - 12:24 | 1507771 ThirdCoastSurfer
ThirdCoastSurfer's picture

Which publicly traded companies have failed to meet or beat revenue expectations to independently verify these figures? Autos? Retail? Tech? Are RIMM & Goldman the sole cause of stagnant growth or is government reporting negatively biased to trap and punish the Negative Nancy, Anti-Americans who cling to lies of false data in the face of reality?!?!   

Sat, 07/30/2011 - 15:34 | 1508087 Use of Weapons
Use of Weapons's picture

UPS (ok, ok, cheap shot), but Cisco shedding 10k was fairly large.


Also - GS is cutting 1k traders but re-hiring in Singapore. Never believe the devil when he pretends things are tough for him as well... they're merely moving over (like HSBC) to Singapore Dark Pools.

Sat, 07/30/2011 - 10:48 | 1507612 SilverIsKing
SilverIsKing's picture

= wearefuckedflation

Sat, 07/30/2011 - 10:53 | 1507617 Jack Burton
Jack Burton's picture

The Fed, what a pack of wankers! They still believe that financial engineering can save a fundamentally f**ked economy!

Look at fundamentals, all of them, and then come along and tell me Bernanke can create jobs and economic growth. Sure, just like the old Soviet Union could engineer economic growth. The Fed as a collection of A-holes whose only job is to preserve the banks, the bankers and wall-street equity prices. All else is just dust in the wind to them.

Sat, 07/30/2011 - 11:02 | 1507634 trav7777
trav7777's picture

yep.  The oil peak isn't a matter that can be resolved by printing.  The FUNDAMENTAL methodology of economics is flawed in that it assumes demand creates supply by some means.

The issue here is that GD1 was a huge political shitstorm.  So was the 07/08 market and economic crash.  Look at the turnover in Congress on account.  NOBODY wants that to happen again because it means significant consequences to those trying to get rich in office.

There is no outcome here other than inflation simply because the money-as-debt cannot be repaid with future growth given the macroeconomic fundamentals.  Despite the appearance of deflation in credit, the value of the debt is eroding at the same time.  While the broader SP500 may not do particularly well, and hasn't, in a price appreciation sense, there are still dividend payers and solid companies, e.g., Coca Cola, that will continue to produce real returns even in a downturn.  It is not as if all things are crashing to zero tomorrow.  Sure there will be lots of corpses but the world is not ending and the zombies are not about to apocalypse on us.

Sat, 07/30/2011 - 11:31 | 1507682 cosmictrainwreck
cosmictrainwreck's picture

expose my ignorance (no pride): "GD1"? @ para 2

Sat, 07/30/2011 - 12:09 | 1507694 Bolweevil
Bolweevil's picture


Sat, 07/30/2011 - 12:06 | 1507737 emsolý
emsolý's picture

Grande Dépression I

Sat, 07/30/2011 - 19:03 | 1508380 snowball777
snowball777's picture


Sat, 07/30/2011 - 12:01 | 1507732 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

KO?  Yeah because they own all the 3rd world's aquifirs.  You want clean water in a 3rd world country, you better buy coke.  We call that a monopoly by the way, which is illigal.  And they use slave labor, like all large cap corporations (Apple, Nike, etc).

Sat, 07/30/2011 - 15:38 | 1508096 Use of Weapons
Use of Weapons's picture

Coke is known to hire local thugs, crack unions and hog the water supply, for sure.


But you're missing out on a much larger, craftier and low visibility bunch of predators. The French.

Sat, 07/30/2011 - 11:35 | 1507689 Fish Gone Bad
Fish Gone Bad's picture

Before any nation collapses, its treasury is looted.  The constant borrowing, TARP, and QE++ have all been steps toward the US's ultimate failure. 

Sat, 07/30/2011 - 12:08 | 1507743 Conrad Murray
Conrad Murray's picture

At least someone gets it. The Federal Reserve is nothing more than the TBTF banks's cartel. They are looting the nation by exchanging cotton/linen(and in ever-increasing quantity, merely numbers on a screen) for the assets of the country. They're stealing homes and land through their engineered foreclosure crisis, and they're stealing wealth in general with their cartel created debt as money scheme fueled by the exponential equation.

It's okay though; the Chinese will save the USA, Inc. through their "special economic zones".

Fuck Hamilton, Fuck Lincoln, Fuck Wilson, and Fuck everyone in D.C. Traitors, all.

Sat, 07/30/2011 - 12:23 | 1507769 Husk-Erzulie
Husk-Erzulie's picture

Fuckin A!

I do so hope that just one sheeple stumbles on this comment and says to themself "Hey, what does he mean? Lincoln? WTF?  Intertubez awakenings are started in just such ways.

BTW check out the tenor of the comments here:

It really does seem as if more and more people are in serious cog dis vis a vis the lamestream/military industrial talking points.  For example the talking head parade seem to be having a hard time selling the idea that higher interest rates are a tax (  <--- Which is, by the way, a prime example of just how deep O' vapids' economic thinking goes.

Sat, 07/30/2011 - 15:03 | 1508036 mess nonster
mess nonster's picture

Big Q Who has the paper supply contract for currency printing?  Perhaps a solid investment, no?

Sat, 07/30/2011 - 15:05 | 1508039 HungrySeagull
HungrySeagull's picture

Actually it's Cotton shipped to Harrisburg PA and mixed with Fiber, Paper, Inks etc.

Sat, 07/30/2011 - 17:04 | 1508189 Grifter
Grifter's picture

Crane AB supplies the stock for FRN's.

Sat, 07/30/2011 - 23:42 | 1508943 RockyRacoon
RockyRacoon's picture

Which is why there will be no dollar coin, which is more economical.   Printers unions!

Sat, 07/30/2011 - 21:26 | 1508617 Franken Stein
Franken Stein's picture

But remeber. It's all for the good of the nation...

Sat, 07/30/2011 - 12:11 | 1507751 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

While giving the wealth directly from the people of the Unted States of America to the Major Corporations.

Sat, 07/30/2011 - 17:51 | 1508260 Chuck Walla
Chuck Walla's picture

Ayn beat you to this:


Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: 'Account overdrawn'.

~ Ayn Rand: Atlas Shrugged (1957)


Sat, 07/30/2011 - 10:55 | 1507619 CrashisOptimistic
CrashisOptimistic's picture

I would like to point out something getting zero attention.

Yes, the first look, 2nd look and 3rd look of 2.0%, 1.8% and 1.9% were ABSURDLY different from the final 0.4% for Q1 GDP and gives rise to questions about the civil servants in that office and willingness to lie, presumably on assurance that the final number will be cleaned up.

And yes, 1.3% for Q2 suggests no improvement.  And yes, Japan's earthquake was not until Q1 was almost over.

But just what caused 0.4%?  QE2 was in full force!  

Answer: And do not EVER lose sight of this . . . Brent $135.  Oil.  Oil decides everything.  The rest of these financial tweaking abouts is like bailing a lifeboat with a teaspoon.  Oil decides your future and mine.  Not the Fed.  Not Congress.  Not anything else.

And that future is very dark.

Sat, 07/30/2011 - 11:02 | 1507632 TaxSlave
TaxSlave's picture

We are on the road most travelled -- the FED has painted itself into a corner.  Print and spray, leading to a collapse, or let it collapse now.

Guess which action it will take, having only one tool in the toolbox?

Sat, 07/30/2011 - 11:07 | 1507641 CrashisOptimistic
CrashisOptimistic's picture

Heavens no.

QE2 was in full roar during this 0.4% collapse!

It has no growth value, and Bernanke now knows it.

There is no point in a QE3, and he knows that, too.  There's no lack of liquidity.

There's a lack of oil.

Sat, 07/30/2011 - 12:38 | 1507805 B9K9
B9K9's picture

I think both of you guys are ignoring what history tells us comes next. Like many who become overly focused on particular data points, it's easy to lose sight of larger macro trends.

To wit, it doesn't matter a whit that oil went to $135, or that traditional monetary/fiscal policies are now experiencing a negative multiplier effect. While you are correct that Ben knows QE didn't work, what's important to understand is that he was given a chance. After all, the next steps would be called into question if it hadn't been proven that "drastic measures" need now be taken.

Now is the time for the pointy-headed nerds to step aside. It is also, unfortunately, time to take off the velvet gloves to reveal what lies inside: the iron fist. We are in various ME theatres not to 'spread democracy', but to hold the territory. Our only real potential challenger is China. In the coming conflict, it's going to be our technological prowess vs the sheer size of their human waves.

The price of oil will not be determined by markets; rather, its net cost will be the "free" oil divided by the total economic costs of supporting and deploying our military to deliver it to these & our ally's shores.

When various commentators issue dark warnings, they are not referring to simple things like guns & gold. Rather, they are looking at historical precedent when supposedly civilized nations discover they are really only hairless apes.

Sat, 07/30/2011 - 12:49 | 1507824 TSA Thug
TSA Thug's picture

You are another suspect who should be closely watched. Every last inch of your luggage should be examined microscopically!


--You WILL Obey!

Sat, 07/30/2011 - 13:33 | 1507897 CrashisOptimistic
CrashisOptimistic's picture


You didn't understand.  The price of oil is the suggestive parameter.  Not the definitive one.  

The definitive one is barrels per day out and in.  Price is just an offshoot of that.  $135 Brent is not about $135.  It's about scarcity.  The engine can't run when it is choked for fuel.

In general, in this new world that has never existed before, history has nothing to teach you.  "Those who forget history are doomed to repeat it"?

Friend, in about 10 years you will be willing to KILL to repeat history.  

And if you have kids, you WILL kill to try to get a piece of it.  Because food will be a quaint, historical substance that could feed 1 or 2 billion historical humans, but not 7.

Sat, 07/30/2011 - 14:18 | 1507966 A Lunatic
A Lunatic's picture

A cursory glance through history will show that we ignored the lessons of the past to our own peril. An in depth review of history will reveal the great multitude of nations, peoples, and resources we were willing to burn through in order to get to this sorry state of affairs. The only thing sustainable at this point is the inconsolably harsh fucking we are giving ourselves and future generations, and as you have pointed out, it will manifest itself at the most basic levels necessary to human existence.

Sat, 07/30/2011 - 15:47 | 1508103 Use of Weapons
Use of Weapons's picture

On Friday, both the Iran / Turkey and Syrian pipelines were bombed, fyi. I'm looking at South Ossetia closely as well.

Sat, 07/30/2011 - 11:43 | 1507699 Rikki-Tikki-Tavi
Rikki-Tikki-Tavi's picture

Like it or not somebody will still need to buy US treasuries for the ponzi to continue. Does the world have the patience for another round of financial hocus pocus after all a sub 3% yield hardly compensate for the resulting dollar devaluation and inflation? Perhaps domestic buyers will step up as they at least only have to latter problem? I think not but I'll observe with great interest from a safe distance.

Sat, 07/30/2011 - 11:10 | 1507649 trav7777
trav7777's picture

I have ICE brent at 116ish.  Still a $21 spread to WTI, counter to the narrowing everyone has expected.

Let's look at it this way...tons of QE caused positive GDP.  People get fired from Congress for negative GDP.  So which way do you think they'll go?  They will watch California slide into the ocean saying all is well and reporting postiive numbers.

The collective delusion is really that strong.  It's not just that the .gov doesn't want to really REPORT the bad news, the people DO NOT WANT to hear it!  Every single person here who can see on any topic has experienced this.

Just keep stockpiling assets with expected real value and make your own bed.

And don't worry about that oil thing.  The cornucopian PO-deniers convinced me that nukeyaler was going to save us all (no problem, mon) until Fukushima when they were among the most strident in calling for the end of nukeyaler.  So now it's "ionic liquids" and other technobullshit.

Fukushima was a black swan which in retrospect will come to be seen as far more significant than any other.  The authorities know about peak and have for some time.  Their plan was to build nuke plants and keep the lights on.  Fukushima has now created immense political momentum to go in the diametrically opposite direction.  Not only will we not build new plants but we will close existing ones!  The amount of capital waste that will go into this effort will end up having to be reversed as we either turn existing plants back on or else the lights go out.  There's a brick wall waiting called the NG production curve.

Yet, in the face of this, are even the Germans having the adult conversation about generation capacity?  Nope.  Total kowtowing to the political winds and an order to decommission capacity.  Same in Japan.  Insanity.

Now what, Peak deniers?  Now the fuck what?

Sat, 07/30/2011 - 11:20 | 1507667 TSA Thug
TSA Thug's picture

I'm really worried about this peak oil thing. Will it ground planes at the airport if it comes? Will I still have my job if there is no oil? When is it going to hit us?

"Just keep stockpiling assets with expected real value and make your own bed."

Yes, I need more assets.


--You WILL Obey!

Sat, 07/30/2011 - 11:29 | 1507676 CrashisOptimistic
CrashisOptimistic's picture

There is no expected real value.  Gold will be a paperweight in the post Peak world, assuming you can find some writing paper to hold down.

To say nothing of toilet paper.  Charmin, like food, won't make it to the shelves if the trucks and planes don't deliver it.

And yeah, not a lot of need for Xray guys at the airport when daily passenger count for all flights total at JFK is 53.

The usual way this is presented is to tell you to go to Orbitz and price a coach ticket to Hawaii from your home airport.  Then look at the First Class price.  That First Class price will be the coach price.

Yeah.  53.  All airlines total.  Per day.

Sat, 07/30/2011 - 11:35 | 1507685 GeorgeHayduke
GeorgeHayduke's picture

Gold was money long before oil and coal powered the world. It will be money again when they are gone. There may be a settling out period where everyone has to do their Mad Max thing and play survival bad ass, but once things settle back into a likely feudal system, gold will become money once again.

Sat, 07/30/2011 - 12:02 | 1507731 Gully Foyle
Gully Foyle's picture

Hey Spanky why not run down to Sears and toss a chunk of Gold on the counter, see how much tv it buys you.

There are a couple of sites with posts written by actual survivors of collapses. Uniformly they all point out thet even used books were more useful as trade than Gold.

In the end farmer Bob will be trading me Corn for a bushel of Apples before he trades for your Gold. Unless you find a rapping farmer who needs some new bling.

Sat, 07/30/2011 - 12:10 | 1507747 TSA Thug
TSA Thug's picture

Gold is a store of wealth which does not spoil.

Lately at LaGuardia we've started to notice more and more people with small amounts of gold sewn into their clothes. They are traveling with like 3 or 4 ounces of soon to be contraband. That's what my supervisor said.

We try to sneak a little gold from the unsuspecting. LoL. I've got about $7400 so far doing this.


--You WILL Obey!

Sat, 07/30/2011 - 15:07 | 1508042 KowPie
KowPie's picture

So if I'm reading your post correctly..... you regularly STEAL from people as they come to your captive station. You proudly proclaim $7400 in "profit” via theft from people you don't know and most likely will continue to do so in the future. Hmmm.... can't for the life of me understand why airport security personnel have such a shitty reputation? After all, they're all honest, hard working individuals just trying to make an honest living like everyone else. Right... right? (cricket chirps indefinitely)


Please correct me if I'm misinterpreting your post, seems pretty clear.

Sat, 07/30/2011 - 12:37 | 1507803 Milton Waddams
Milton Waddams's picture


Gold, diamonds, and other varying shiny shit is appealing because, well, for whatever reason ... chicks in already comfortable stations in life have determined it has value.  I can trade my cow in exchange for all of the commoner's daughters.  It will take gold to shag the princess.


Sat, 07/30/2011 - 12:53 | 1507833 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You can live in a barter/trade society, but not on an island economy.  What if farmer Bob wants avacadoes?  He will need a medium of exchange that is accepted world wide.  Gold/silver/platinum are:

1)  Units of account

2)  Fungible

3)  Means of an exchange

4)  A store of wealth

It takes this metric to define monie, and if you want to tell me that monie is a human creation, then why does gold fit the rhetoric?  We didn't discover monie, monie discovered us.

Sat, 07/30/2011 - 13:08 | 1507855 Temporalist
Temporalist's picture

Hey douchebag:

Sears and Kmart to Offer Consumer Gold Buyback Program


And that was from 2010

Sat, 07/30/2011 - 15:56 | 1508110 Use of Weapons
Use of Weapons's picture

Your junks are undeserved -

In the short term, you are correct, gold is useless.

In the medium term, when your local dictator / community collective / vampire 1 (delete as appropriate to your luck / ability to organise) gets settled in, then someone needs something non-wearing that is easy to smelt down and stamp faces on.


Gold (and silver) is traditionally useful, because those faces can easily be wiped from history and replaced with the new ones. That is the worth of gold - inertness and ability to switch political sides with immense ease.

  • 1. Tribute to Richard Burton Matheson
Sat, 07/30/2011 - 19:45 | 1508463 DCFusor
DCFusor's picture

Lots of people evidently don't like that message, but it's mostly true.  I'm a farmer, live in farm country.  We already have gold ourselves, why would we want to trade food for it if food is scarce?  Maybe big factory farms would, if you wanted large quantities, but us little guys?  No way, we're not interested, and we're tired of you city boys taking our resources and exporting your trash and pollution, frankly.  If used books are good, I'm rich now!  I suspect standard caliber ammo might be good for trade too, but if you want me to take you in, feed you -- a shovel and a strong back might be best, sucka.

Sat, 07/30/2011 - 22:25 | 1508757 papaswamp
papaswamp's picture

"Hey Spanky why not run down to Sears and toss a chunk of Gold on the counter, see how much tv it buys you."

Go to a farmers market or flea market. They do take gold and silver. A TV is useless. Food and non-electrical items..awesome. Pawnshops take gold and silver for firearms (and TVs). Just have to know where to shop.

Go to can buy what ever you want with gold and silver. Huge number of stores take it.


When you are trying to cashout your netflix stock cert after the crash...I don't think the local lady that decided stock up and is now selling bread will take that certificate....but I bet she will take physical gold and silver.

Sun, 07/31/2011 - 09:53 | 1509521 GeorgeHayduke
GeorgeHayduke's picture

Last I checked, Sears doesn't take guns, ammo or freeze dried food in exchange for its products either, Sparky. What makes you think Sears will still be there if things get as bad as you perceive?

Yes, I've read Dmitry Orlov, Jared Diamond and many, many others on the topic. In fact I'd venture that I've been studying societal collapse and survival since before you had a clue about it.

I've also taken many backpacking trips, with others and solo. So, while I may not have first-hand experience with a major societal collapse, I'm guessing my chances are better than folks who sit around and read blogs and post as though they are experts.

So, does gold still have value today in Argetina and Russia? I'm guessing yes it does. You might not be able to use it in stores, but it survived whereas the paper money of the time may be gone.

You and farmer Bob can have all the fantasies you want about your favored exchanges, but my guess is the people with the remaining real power and the thugs to come take your apples and nuts will still have gold and silver. If it gets to the point you are imagning, then wits and an ability to see reality and react accordingly will be the best investment of all. Being a know-it-all know-nothing who really can't see or understand the bigger picture won't be of much use.

Sat, 07/30/2011 - 12:30 | 1507783 CrashisOptimistic
CrashisOptimistic's picture


Gold was money long before oil and coal powered the world. It will be money again when they are gone.


"They" being people.  The pre oil / pre coal world had a population of 2 billion people.  

There are 7 billion now.

There will be 2 billion again, soon, and gold will not determine if you're one of them.  Water and food will, and anyone with reliable supplies of both will not trade them for chunks of non flammable rock.

Sat, 07/30/2011 - 19:52 | 1508477 DCFusor
DCFusor's picture

Wonder if we're going to be excommunicated from the gold religion, because that's all it is.  Yes, way back in history, when the world had a working system, and a lot of fudge, instead of our about to be utterly broken JIT system where one week of failed supply to stores via trucks from farms dependent on supplies that are also JIT and a working system to finance it all...well, gold worked then because there was excess this and that to trade for it and buy with it.

It no way solves the problem of no food (or just too little).  It can't do squat for no oil to move things from where we decided to make them to where they're needed.  In history, that was all local, and that was possble because we hadn't already used all the high grade ore, the easy resources, and weren't so dependent on a knife edge balance of huge numbers and flows for basics - but now we are.

Hell, I'll even blaspheme all the way, nothing to lose:

It's different this time.


Funny how people here who are great at pointing out denial in others can't see it in themselves. Gold means nothing to my cats, the deer in the field, my crops, or me.  Sure, I've got some myself -- which is why I won't want yours if you expect to exchange it for my food and protection.

Sat, 07/30/2011 - 11:43 | 1507696 trav7777
trav7777's picture was not a paperweight in the pre-oil world, bud.

Why would you expect people in a peak crash to not revert to more primitive ways?  Gold's allure is very primitive.  I mean look, we have an abundance of primitives right here in the US who seem to like to get they teefs covered in it.

Sat, 07/30/2011 - 12:07 | 1507739 Gully Foyle
Gully Foyle's picture

No. Golds allure was only exciting to the business/trading class. Sheep, Goats, Oxen, Cows all had much more appeal to the average working farming class. Gold allows for a single trade, a Cow you can milk and breed for a very long time, same with a Goat. Oxen can work the fields allowing for much more productivity.

Gold is just another pretty stone.

Even the shit from the beasts has more real post collapse value than Gold. How much Gold does it take to fertilize crops?




Sat, 07/30/2011 - 12:35 | 1507796 EHM
EHM's picture

Claiming gold is more barbaric than straight up barter? What the fuck am I going to do if I want johnsons chickens but he doesn't want my blankets? Gold is convertible into anything.

Sat, 07/30/2011 - 12:42 | 1507812 A Man without Q...
A Man without Qualities's picture

Indian farmers are big buyers of gold and silver when they sell their harvests.  Of course, to be self sufficient, you need sources of food, but you're talking about a regression of 14,000 years to the earliest days of the pasturalists and even then there were primative forms of money, and even then, there is clear evidence gold was seen as a sign of wealth and power.

Sat, 07/30/2011 - 13:11 | 1507862 Not For Reuse
Not For Reuse's picture

absolutely true. If you aspire to be a member of the cowshit class, it's probably much more useful to stockpile cows than gold. Nothing wrong with that. There are even plenty of fictional narratives about princes and princesses who chose to give up the existential hell of useless nobility in exchange for the morally superior soul-satisfying freedom of slave labor

Sat, 07/30/2011 - 13:29 | 1507891 Mad Cow
Mad Cow's picture

The PTB have more gold than all the gold bugs on the planet combined. Sorry, you're still part of the "cowshit class."

Sat, 07/30/2011 - 13:41 | 1507907 Not For Reuse
Not For Reuse's picture

you no reading comprehension much?

Sat, 07/30/2011 - 13:47 | 1507923 Mad Cow
Mad Cow's picture

I guess not.

Sat, 07/30/2011 - 16:26 | 1508152 Not For Reuse
Not For Reuse's picture

any relative valuation of non-monetary things has an implicit lifestyle preference built in. I agree that cow > gold makes sense for someone who prefers to be part of the "average working farming class." But as a general argument it begs the question

Sat, 07/30/2011 - 17:41 | 1508249 Row Well Number 41
Row Well Number 41's picture


When the drought/fire/war/pestilence of your choice wipes out his crops or turns him into a refugee the farmer with gold has options.  The only way gold is not useful is if your with ten people on a small island. 

Money is essential to civilization and always exists in some form, gold is just the most widely used through history, and is the natural fall back when fiat collapses.


Sat, 07/30/2011 - 20:17 | 1508496 Not For Reuse
Not For Reuse's picture

sure, but that has nothing to do with whether a cow or gold is more valuable. If you assume that someone's lifestyle preference is to feel maximally nimble in anticipation of a catastrophic event, then of course gold > cow makes sense. But to argue that gold is more valuable in general based on that assumption is in fact the very definition of begging the question. What if your lifestyle preference is to make hay while the sun shines?

Sat, 07/30/2011 - 23:16 | 1508874 data_monkey
data_monkey's picture

I cannot fit a cow in my safe, therefore I hold gold.

Sun, 07/31/2011 - 02:04 | 1509229 Not For Reuse
Not For Reuse's picture

thanks so much for sharing, and that's like so totally relevant to the discussion! Hey, did you hear Amy Winehouse died?

Sat, 07/30/2011 - 16:00 | 1508120 Use of Weapons
Use of Weapons's picture


Good for the garden, great for explosives. A lot of people made serious amounts of money from bat poo before oil.




Stop junking the man, he's right!

Sat, 07/30/2011 - 12:55 | 1507836 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Precious metal is monie.  Nothing else is.

Sat, 07/30/2011 - 18:50 | 1508357 blunderdog
blunderdog's picture

It's totally arbitrary.  The Austrians nailed this one.  PMs only have value because people like you think so.

Sat, 07/30/2011 - 19:03 | 1508379 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Monkeys, in their naivete, do not understand that gold can preserve wealth.  Humans, understanding that gold is a very limited resource, one which lasts forever, understandd that gold is monie.  If you want to argue that you do not need money, try living without it.  And good luck to you!

Price is arbitrary.  Value is arbitrary.  But monie is gold, and nothing else fits the definition.  If you want to trade in a barter system, go for it, but you will likely be trumped by monie, because as far as a means of exchange goes, it is the trump card.

Gold has value because it has value.  It is finite, it is used in technology, ad it is an accepted means of exchange.  It also lasts forever, which means it preserves its wealth perfectly.  It is a unit of account (1 troy oz, 1 tonne, etc) and it is fungible.

Gold is monie, and monie is gold.

Sat, 07/30/2011 - 19:46 | 1508467 blunderdog
blunderdog's picture

So you don't buy into the Austrian school, huh?

Sat, 07/30/2011 - 21:45 | 1508657 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Austrian economics has a lot of good thought behind it.

Sun, 07/31/2011 - 14:07 | 1510096 Temporalist
Temporalist's picture

The Austrian point is that any individual will see value in whatever they choose only if they desire it.  People, humanity, have decided that gold is money and of value and is the lubricant for exchange.  I believe cigarettes aren't money but in a jail they are because people desire them.  They also are consumed so they maintain value through consumption loss.  But they don't last forever and someone that doesn't smoke may not want them at all and would instead prefer porn as his medium of exchange, or toothpaste, or Vaseline.

Many people find gold to be money so it is regardless of it's actual value for use or function or sustenance.

The fiat snake oil salesmen are just that, trying to promote their product as the best because as long as people perceive it to have value it will even if it's just a placebo and ineffective.  But what they don't tell you is that they are going to make their product worth less and worthless eventually.

Sat, 07/30/2011 - 13:51 | 1507929 Mike2756
Mike2756's picture

They'll go back to rationing, just enough to get you to work and back.

Sat, 07/30/2011 - 15:07 | 1508043 HungrySeagull
HungrySeagull's picture

We don't really need gasoline. We fill a few times a month if only to drive one or two tanks worth on part time work.

If I do it right, we stay right here at home and trade pocketing the net each month.

Sat, 07/30/2011 - 19:56 | 1508482 DCFusor
DCFusor's picture

Same here, super low gas footprint - solar power.  I burn more in my lawn tractor than in my cars and backup generator combined.  But I still use gas.  Groceries don't come from Krogers, you know....

Sat, 07/30/2011 - 11:24 | 1507672 CrashisOptimistic
CrashisOptimistic's picture

trav, do you realize Angela fucking Merkel has a PhD in Physics?

The Greens rammed a knife into her back.  She is closing down all her nukes and commuting back and forth to Moscow to beg for nat gas.

It is just like how Gadaffi will unfold.  If he can stay alive, that genius is going to smile at the Italian commerce representatives who will soon be returning to Tripoli and assure them that he'll let bygones be bygones and sell them oil.

At Brent + $300 per barrel.



Sat, 07/30/2011 - 11:53 | 1507714 trav7777
trav7777's picture

yes; even she could not have the adult conversation.

the political momentum is leading us all into a brick wall; that was my point.  The NG productive curve is a frightening thing.

And the capital that will be wasted in decommissioning plants...some of these may get far enough into the process that they CANNOT be restarted.

Sat, 07/30/2011 - 19:58 | 1508488 DCFusor
DCFusor's picture

Have you considered that ANY promise by ANY politician who surely won't still be in office by the time it comes to keep it has even less chance of being kept than the usual ones?  This is just smoke and mirrors, I believe.

Sat, 07/30/2011 - 12:08 | 1507744 Gully Foyle
Gully Foyle's picture

CounterPunch Diary At Last! The Head of Ghad ... General Younis


It is surely one of the great strategic screw-ups in the history of war and intelligence analysis. In March, after the second UN Security Council resolution used by NATO to launch its bombing campaign, the predictions were that Tripoli and thus Ghadafi would fall within two or three weeks.  Right and left alike, though not yrs truly, said it was a sure thing.

Yet, here the Guide still is, addressing rallies in Tripoli surrounded by a sixth of Libya’s entire population, while in the other end of the country, it seems that one faction in Benghazi, that of Mustapha Abdul Jalil, head of the rebel Transitional National Council, has just murdered  Abdel Fatah Younis, commander of the Libyan rebel forces. There are various accounts, none of them attaching the slightest credence to Jalil’s faltering initial suggestions that it was Ghadafi’s guys who did it. One has Younis being taken prisoner on grounds of opening secret negotiations with Tripoli (very conceivably true), then taken to the desert and shot, along with his bodyguard of two colonels; another that he was tortured to death in Benghazi. Either way this renders moot Sen. John McCain’s letter last week to Jalil warning that credible accounts of serious human violations by the rebels were undercutting whatever support the NATO onslaught retained in Congress.

We are beginning to see some very graphic accounts and videos of the actual conduct of the rebels in torturing and executing prisoners and suspected Ghadafi loyalists in Benghazi, not to mention compulsory reimposition of the burka for women and kindred evidence of rabid fundamentalism among NATO’s clients. 

The same day this news of Younis’s killing came, Britain recognized the rebels at the legitimate government of Libya and gave them the okay to take over Libyan government facilities in London.  There seems to be civil war  in  London, since foreign secretary William Hague had come off his hardline stance against negotiations with Tripoli. By way of thank you, as his men pumped  bullets into Younis, Jalil swiftly requested the $25 billion in Libyan government funds, held by NATO powers, which if turned over, -- which I strongly doubt -- will no doubt enter many a private rebel account,  not to mention private NATO accounts – which aim was evident from the start, when Benghazi opened a “central Libyan bank.”

This is one of the greatest humiliations of NATO in its history (also, to be petty, a terrific smack in the eye for the analytic and political acumen of a prime propagandist in progressive circles  for the rebels, Prof.  Juan Cole, whose blogs on Libya have been getting steadily more demented.)  Incidentally, they keep calling for Ghadafi to “step down.” In constitutional terms, which is what NATO must keep in mind, I believe he did some time ago.

Sat, 07/30/2011 - 11:51 | 1507710 SoCalBusted
SoCalBusted's picture

Coal.  Bought ICO right after Fukushima and made some money.

Sat, 07/30/2011 - 12:12 | 1507755 DogSlime
DogSlime's picture

It doesn't take technobullshit to produce energy.  You talk about peak oil deniers (I am not one - I think we maxed our fossil fuels in the late '70s) but for every peak oil denier there are a dozen deniers of renewable energy.

There is plenty of energy hitting this planet every day.   There is a vast amount of energy produced every time the tide comes in or goes out.  The USA regularly experiences huge energy surges from winds (this year's tornado-fest, anyone?)  The USA is sat on large geothermal regions.

It requires MASSIVE investment, but the energy is there.  No-one will commit to that kind of investment, of course, so we're fucked but it annoys the hell out of me when so many of the Peak Oil brigade act like there's no solution.   There IS a solution but it will never happen.

Wind spins windmills.   The sun heats things up.  The tides come in and go out.  There is vast amounts of heat underground.

The energy is there, but it's very expensive to set the world up to use it instead of fossil fuels.   No-one will spend the money to really exploit this energy so we are fucked, but we're not fucked because there's no solution.

Nuclear is another solution of course - just so long as people don't mind being radioactive and dying young.

Our energy crisis is because of human stupidity, not because the problem in insurmountable.  The problem of human stupidity is, unfortunately, insurmountabe so we're fucked.

Sat, 07/30/2011 - 16:08 | 1508132 Use of Weapons
Use of Weapons's picture

Point of order: Nuclear Batteries have been viable for a long time now. You can find them in parts of Russia, stripped of their copper, and very dangerous. And yes: the reason the 1950's SF version didn't happen is because you can't trust monkeys with them.


As to the main point - Google just did what you were asking for (5 days ago) - $168 million in Californian solar.  It will be the first large-scale solar power tower plant built in the U.S. in nearly two decades and will single-handedly almost double the amount of commercial solar thermal electricity produced in the U.S. today and nearly equal the amount of total solar installed in the U.S. in 2009 alone.


Then go look at the troglodytes blowing the tops of mountains in Virginia, and the vast bribes they're dumping all over the local law, judges, Congressman and so on - shameful.

Sat, 07/30/2011 - 21:30 | 1508503 DCFusor
DCFusor's picture

I live on solar power NOW, and have since about 1980.  Yeah, I don't get enough to just waste it, but recently have managed to have enough panels that I now have AC on hot days.  I've run a computer consultancy on it - 3-4 guys with large machines running all day every day, stereo running, refrigeration.  It didn't even cost all that much in retrospect.  Maybe $30k total at this point (Its hard to keep track of as I've been adding the entire time).  Largely, this is with tech that existed in duh, 1980, all that stuff except batteries is still in the system and still delivering at spec here in Virginia -- not an especially great or terrible place for solar.

All my posts here are solar powered.

But the slobs don't go for it because it's not automatic (if you're your own power company, you do have a job, not much but at all), and it's only done pay-ahead.  If we'd spent the money we wasted on mcmansions on solar instead -- we'd be there NOW instead of having some millions of homes that are degrading and might as well be burned down.

I have a deal going that makes it even better.  I homesteaded bare land in the far boonies where there is little government, and what little there is delegated the power to enforce building permits to the aptly named power company.  As a result, all 4 buildings on my campus are "barns", not dwellings, and taxed as such.  Talk about a quick payback and great ROI!

And who pray tell made my solar panels?  Solarex, owned by Amoco at first, then BP.  I got the latest batch when BP in incredible timing shut down their MD plant as it wasn't making enough money - just before that spill.  Distributers put them on fire sale!  The inverters and batteries were made by our pals to the north in Canada.

The new non silicon thin film tech is a non starter.  I've tried variations on them in the past, and the silicon was never the problem - it's the quality of the rest that matters, the good thick glass, the frame, the magic hermetic seal that lives through thousands of heat/cool cycles, and the magic crap that matches the tempco of the cells used for the backing.  They're really not that much more expensive than quality windows but aren't cheap for the very same reasons.  Good stuff costs money.


All the amorphous types I've bought have failed in 6 months.  They didn't match the thermal tempco to the substrate, and they crackle and quit working fast.

Sat, 07/30/2011 - 12:13 | 1507756 gwar5
gwar5's picture


Good questions Trav7777 ...

Option 1:

Use the remaining oil to pay for the long term conversion to other technologies such as thorium reactors and alternative energy, and stop the war against coal and nat gas.

We could also change the net-metering laws to actually make it worthwhile for millions of people to become mini energy entrepeneurs which would also provide much greater grid stability by decentralizing it.  Best ideas would quickly become widespread and mass produced and the next Bill Gates and Steve Jobs would emerge in this sector. 

We're being held back. There are 10's of thousands of fantastic ideas out there already on the internet for homemade cheap energy generation and conservation devices. I'm astonished at the human ingenuity that is out there.  But there is no incentive to mass produce and deploy them. 

Here in NC the energy monopolies strictly limit yearly permits for net metering to 2% of applicants, and are allowed to pay substandard compensation for home produced energy. They are also allowed to charge substantial fees to the home energy producer for  "monthly inspections" of their home systems. This results in a net negative for the home producer, and no incentive for them, while the energy company mantains their monopoly while profiting off the mini entrepeneurs by reselling their cheap homemade energy. 

Also, even if we had a magic wand to convert all internal combustion engines to electric ones, we still don't have the capacity to charge them and make them go. And Pickens is right, electric cars still wouldn't produce enough power for truck hauling, so it's continued NG, diesel, or cost effective hydrogen engines in this niche for now.  So drill baby drill.  

Option 2:

Go medieval until we reach peak firewood.



Sat, 07/30/2011 - 15:49 | 1508106 WebWeasel
WebWeasel's picture

No technology will be developed that changes the status quo. Those making money in the current energy market are the only ones allowed to make money in the energy market. The western powers will allow themselves to be completely destroyed rather than change that equation.

Sat, 07/30/2011 - 12:26 | 1507773 walküre
walküre's picture

I'm looking at a vast Texas shale oil & gas reserve. Geogolists say 100% proof there's alot of oil & gas.

Unless they're lying or their math is off, I'm not worried. Ready to put good money in there.

Sure, we are at the end of cheap oil which is what "peak oil" is about essentially.

But we're not at the end of oil & gas by a long mile.

Sat, 07/30/2011 - 15:09 | 1508050 HungrySeagull
HungrySeagull's picture

If they uncap a set of three individual wells and start pumping, we wont have to do much of anything anymore.

Sat, 07/30/2011 - 12:51 | 1507830 tmosley
tmosley's picture

You're right Trav.  Technological advance is a myth.  There is no such thing as an ionic liquid.  It does not extract hydrocarbons from tar sands with little or no energy input.  You can feel free to ignore any form of reality that doesn't line up perfectly with your dream of a world where all the niggers are sterilized because your wife left you for one.

I mean hey, who cares that the "technobullshiters" have been (correctly) calling all these problems POLITICAL ones (something you have implicitly agreed with in your post).  Now you can try to backtrack and say that politics don't matter, that there was never any way out because PEAKOILPEAKOILPEAKOILPEAKOILWORSHIPMEPEAKOILPEAKOILPEAKOILSTERLIZENIGGERSPEAKOILPEAKOIL.  Nevermind that political problems like this always give way before reality.  You REALLY think that these guys are going to be able to block nuclear forever?  Even as brownouts spread across nations, and last for years?  Either they will let it happen, or the political bodies blocking progress will collapse.

But hey, fuck everything that exists, right?

Also funny that now you are calling for stockpiling of real assets, when you were calling anyone doing this while disagreeing with you morons.  Yet here you are doing the same damn thing.

Sat, 07/30/2011 - 13:55 | 1507932 EscapeKey
EscapeKey's picture

Hey, hang on. I happen to work in R&D, and I can tell you for a fact that only a fraction of research projects ever make it out into the wild. Only a few years ago, we heard tons of "algae will save us" stories, only then to realize the amount of energy harvested is disappearingly small, and will not be the solution we look for.

So, while we unquestionably will see progress in terms of tar sand extraction methods, remember until these are installed in the wild, they are nothing. So don't parade research projects about as certainties, which they are not.

Furthermore, the IEA conventional decline rate is in the region of 5.1-6.7%, which essentially is a new Saudi Arabia every two years. All the undeployed research projects in the world will not change that.

Sat, 07/30/2011 - 13:45 | 1507918 Prometheus418
Prometheus418's picture

Still hoping for a reversal of propiganda to push for modern nuclear plants.  Time to drop the idiotic 50's B-horror image of a power source we now NEED.  

Yes, bad shit might happen.  Who knows, a power plant might even get hit with a 9.0 earthquake, followed by a giant tsunami.  Fuck it- we're going to have to take those chances.  Might be worthwhile to promote putting the plants somewhere other than on coasts, flood plains and fault lines.  Oh yeah- and we might want to consider a better plan than keeping the waste in 55 gal steel drums under tents in the desert.

Sat, 07/30/2011 - 16:01 | 1508122 Calmyourself
Calmyourself's picture

I could not agree more pull your luddite heads out and realize that Fukushima was essentially 1950's tech..  Newer reactor designs can be walked away fro m while fired up and they cool down harmlessly all by themselves with a 1/4 of the waste products.  Old school GE reactors like Fukushima will never be built again.  The Germans will be begging for nukes in 5-6 years. greeniac fools..

Sat, 07/30/2011 - 14:04 | 1507947 r101958
r101958's picture

The only thing the WTI price is used for now is propaganda. It is suppressed, just like silver/gold. TPTB are trying to keep it under $100. Other than that it is meaningless. Compare the price of Brent to RBOB gas and then compare RBOB to the WTI price. The patterns you will see there will show you that the RBOB price is 90% linked to Brent, maybe 10% to WTI.

Sat, 07/30/2011 - 11:55 | 1507715 HungrySeagull
HungrySeagull's picture

Yes oil decides everything.

But suppose every home, store, walmart, warehouse, buildings, etc etc are soaking up the sun for own consumption and export to the new grid that has also supplies trains and trucks via highway interfaces and cars run on charging overnight.

If the USA has sufficient shale oil in the next 5 years and pipe lines completed from our North and Artic, we can literally say good bye Brent and adios and good riddiance to the arab sand heads who sell oil.

Once we learn to make fluids that do the work of oil without actually needing the stuff then Oil matters not.


But remember this. Retire the EPA for good and Good King Coal for steam and other uses will last this Country a thousand years so they say.

Hell, you can run a gasoline generator off Austrian Wood Gas with a burner to covert your wood.

Sat, 07/30/2011 - 12:11 | 1507748 CrashisOptimistic
CrashisOptimistic's picture

Odds of an electric road network being in place in the US in the next 5 years?


Odds of an electric road network being in place in the US in the next 10 years.


Odds of an electric road network being in place in the US in the next 15 years.


Odds of a Chinese frigate in the next 10 years stopping a tanker enroute from Nigeria to Houston and offering to pay more for the cargo if they divert to Shanghai ?   


Odds of the US objecting to this in a military way?


Sat, 07/30/2011 - 12:30 | 1507789 walküre
walküre's picture

The reason why there hasn't been any improvement inside the US is because of OIL. The oil interests overweigh anything else and therefore, Americans are being denied real solutions to a foreseeable energy crisis.

Germany is gutting the nuclear industry in 10 years. The motivation to create alternative energy from renewable sources for example is huge there. Guess which country's technology will most likely lead the world in 10+ years in terms of all things energy?

Americans are knuckleheads for the most part. They couldn't seize an opportunity if it hit them in the face unless that opportunity was somehow tied to gambling or religious cheerleading.


Sat, 07/30/2011 - 13:37 | 1507903 Calmyourself
Calmyourself's picture

I will believe that when I see it..  Germans don't like to be cold they get ... aggressive..

Sat, 07/30/2011 - 14:31 | 1507988 newworldorder
newworldorder's picture

Oil is the path of least resistance politically throughout the world. Human energy needs will not adopt or seek another primary energry source untill the cost of extracting and using oil becomes prohibitive vs. other sources.

Sat, 07/30/2011 - 15:10 | 1508053 HungrySeagull
HungrySeagull's picture

China will have to physically occupy Cushing Oklahoma.

One tanker highjacking does not a oil market make or break.

Somali Pirates high jack them all the time.

Sat, 07/30/2011 - 13:18 | 1507850 coded language
coded language's picture




At the moment oil does hold tremendous influence over our lives.

There are other options becoming available and a shift inconsciousness towards other alternative sources, besides solar and wind, which in my mind cannot supply demand at this time or perhaps ever, is needed.


Rather than focusing soley on oil and keeping that control paradigm in place take a look at these inventions.


 Andrea R. Rossi Cold Fusion Generator (E-Cat)


In Austrailia, a zero point generator can develop 5 times the power it uses, producing 24 KW of electricity per day. And that's a small one!!


And more inventions are coming to light.


Sat, 07/30/2011 - 15:11 | 1508054 HungrySeagull
HungrySeagull's picture

I only need 8 every 24 in winter and 12-20 in summer.

Sat, 07/30/2011 - 15:53 | 1508112 WebWeasel
WebWeasel's picture

People who work on projects such as those tend to have unfortunate accidents.

Sat, 07/30/2011 - 16:15 | 1508142 Use of Weapons
Use of Weapons's picture

Can't break the laws of physics, Mr Metalgear.

Put it this way - if you had $1 for every 'free energy' scam on the internet, you'd be in a position to help out the negotiations.

Sat, 07/30/2011 - 18:40 | 1508332 Pay Day Today
Pay Day Today's picture

So, when are they going to package that "Zero Point Generator" into a "Zero Point Module" (ZPM)?

Sat, 07/30/2011 - 19:09 | 1508390 blunderdog
blunderdog's picture

I saw a movie about a guy who invented a tiny reactor he wore on his chest and he could fly around and blow stuff up with all that energy.

Sat, 07/30/2011 - 20:20 | 1508523 DCFusor
DCFusor's picture

I do research into alt energy for a living, and live on solar power now.  I'm aware of those and they are bunk -- fraud as far as anybody can tell.  Rossi et al won't say how it works, their patent was denied on grounds of vagueness, the only scientific paper they produced was rejected for publication by the journals because it was pure fluff, and the only paper that claims to explain it is by someone who only references themself -- and who claims a Bose-Einstein condensate inside a solid at high temperatures.  For those who know a little science - that would be Nobel prize turf if so and cause a huge stir, but since he can't back up even his theory, we just ignore those types.

Here's a link where you can get the paper on the Rossi stuff.  Might look ok if you know zero about science.  Otherwise, the scientists on that forum can't even be bothered to comment, it's that bad.

Zero point energy, even in current theory is so tiny - by definition - you can't measure it, much less use it.  Heisenburg, suckas.  Anyone saying they can would have to show how all existing standard model science can be explained by their new theory, as well as recoverable zero point energy - and no one is.  All frauds.  Sorry.

Even my own work is some orders of magnitude away from being practical - and I'm doing it better than the governments are - self funded by trading.  Which is why I'm running on solar here - it works now, even with tech from 1980.


Sat, 07/30/2011 - 20:59 | 1508561 A Lunatic
A Lunatic's picture

Our zero point economy doesn't work worth a shit either. Peak Hopium bitchez.

Sat, 07/30/2011 - 23:55 | 1508982 tip e. canoe
tip e. canoe's picture

"Heisenburg, suckas"  i/o/w the only way to grab zero-point energy is with zero-point consciousness. 

Sat, 07/30/2011 - 14:15 | 1507962 r101958
r101958's picture

Reminds me of the song "Ain't nothing but a dreamer........"

"But suppose every home, store, walmart, warehouse, buildings, etc etc are soaking up the sun for own consumption and export to the new grid that has also supplies trains and trucks via highway interfaces and cars run on charging overnight."

Works great during rainy days. Plus, try running 18 wheelers on batteries.

"If the USA has sufficient shale oil in the next 5 years and pipe lines completed from our North and Artic, we can literally say good bye Brent and adios and good riddiance to the arab sand heads who sell oil."

Big if. Please check out the meaning of EROEI. Shale oil is much more costly than conventional oil to produce not to mention the environmental issues associated with extraction. There is plenty of oil out there but what is left is becoming more and more expensive to produce.

"Once we learn to make fluids that do the work of oil without actually needing the stuff then Oil matters not."

See above.

"But remember this. Retire the EPA for good and Good King Coal for steam and other uses will last this Country a thousand years so they say.

Hell, you can run a gasoline generator off Austrian Wood Gas with a burner to covert your wood."

Best to do some studying about coal usage and supplies. Also, how many trees do you propose using to gas up our fleet of trucks?

Sat, 07/30/2011 - 20:25 | 1508534 DCFusor
DCFusor's picture

Actually, while I don't get as much during rainy days, I do get some, and batteries work fine in fixed installations like mine. (I am 100% solar powered, and have enough on good days to run the AC - or charge an electric car)  And if we didn't use up fuels for electricity, more would be left over for those tractor trailers.  As an engineer, I recognize that long haul heavy lifting is going to be done with a fuel that doesn't require you to carry the oxidizer along -- you use the air for that.  Batteries have a built in 16:1 hurt on that one, as they carry both oxidiser and reductant with them.

I bet if we put all that coal carbon back in the air it's going to give us the same climate we had last time it was all in the air.  Does anyone think I'll get to try my .50 BMG on dinosaurs?

Some people who think they know science, gheesh. There's this little 2nd law of thermodynamics.  You can't win, you can't cheat, you can't even stop playing.  Fix that one up (and solve entropy and make time go the other direction) - then you have something.


Sat, 07/30/2011 - 18:37 | 1508316 delacroix
delacroix's picture

to retain an advantage,the PTB need to deplete reserves that are available to competitors, first, before tapping domestic reserves, or support alternative tecnologies. it helps, to get the competition, firmly commited, to the obsolete system, prior to the shift. not nice, but deemed necessary.

Sat, 07/30/2011 - 11:54 | 1507717 NumNutt
NumNutt's picture

I agree with your theory 100% People seem to forget the down ward slide started when gas prices first spiked in 2007(?). The ugly truth is that the US has been building a house of straw for generations. Our entire economy is built on oil, which fuels the TBTF auto industry, and the finance industry to fund the purchase of the cars. Add to that the tax system the federal government has setup on fuel, roads and everything else car related. If we had been investing in more public transportation we would not be so bad off. Instead we find our selves with our tit in ringer all way to the hilt, and it is going to be painful as hell to get it back out.

Sat, 07/30/2011 - 14:27 | 1507980 r101958
r101958's picture

Agreed NumNutt. It is not that there are not any alternatives out there but none of them are as cheap or as scalable as oil. Too many people here are compartmentalizing energy and the economy but they are inextricably linked. I agree that we need to invest more in alternatives but we also need to understand that there is a paradigm change on the way. That change will require much more local production of goods. We will not be able to continue shipping lettuce 2000 miles from California. The folks in DC are arguing about the economy but leaving the huge energy factor completely out of the discussions. Perhaps they just don't want to bring that discussion out in the open when they are so busy screwing up everything else.

Sat, 07/30/2011 - 12:14 | 1507757 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Interestingly the SPR release is being used not to put supply on market, but as a location for shorts to gather.  Thus why it was sold to JPM.  They are using the oil released by the SPR to short the oil price.

Sat, 07/30/2011 - 13:42 | 1507910 CrashisOptimistic
CrashisOptimistic's picture

JPM leased tankers when it won the bid.

An examination of destinations for those leased tankers found NO entry.

They are floating storage.  JPM has made its bet.

Sat, 07/30/2011 - 14:45 | 1508009 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Now JPM has oil to fuel their Bentley to deliver their hookers to the Hamptons.  Short term they are using the oil to locate their sold shorts.  And they are selling calls, and likely buying puts too.

They are playing both sides now as going long oil was about to usher in the NWO, but they wanted one last summer before it turned, and they wanted to make sure the ME knew who the boss was before the collapse of the dollar and the old financial system.

Oh and Obama signed on because he knew that it is make or break time concerning his election campaign.  Why he wants to be POTUS past this term is telling:  He wishes to be Supreme Dictator of the World!!!  Nothing less will do for the Ivy League psychopath.

Sat, 07/30/2011 - 15:13 | 1508060 HungrySeagull
HungrySeagull's picture

It's going to be damn close to Houston or Hammon La. One of those two places.

Sat, 07/30/2011 - 15:34 | 1508088 oldman
oldman's picture

Good post, Crash

There is, however, another something that is getting zero attention: a flat global human population that may turn negative sooner than we think. The numbers are based upon some sort algorythmic system using a blend of trailing average estimates of growth, I imagine. To me, this implies that we could be off already because none of these averages would be assumed to be negative. Anyway, I have no idea nor has anyone been able to explain how the numbers are obtained. I'm a conceptual guy and can only imagine how terrified tptb would be of a declining population.

A world with too much of everything might upset the rigid mindset that believes it has a 'manageable' event like a simple collapse or long-term depression. This is all 'play' for now-----no evidence of anything so stupid in our future---I'm a stupid guy so I don't mind being called stupid.

Just curious if you have any comment on this---no one wants to talk about it in my neighborhood.

thanks     om


Sat, 07/30/2011 - 16:01 | 1508123 WebWeasel
WebWeasel's picture

Population decrease could happen. Both India and China sell antibotics OTC and abuse the hell out of them. I'm suprised they have not had a major untreatable infectious disease outbreak yet.

We dump enough toxins and modified organisms into the food chain and who knows what will happen.


Go watch Children of Men.


Sat, 07/30/2011 - 18:13 | 1508201 oldman
oldman's picture

Thanks, WW

Children of Men is not what I'm curious about, though. It is a bit too soon to be concerned about the never-to-be 'end of the world', though it might be true for some species.

Do you have any idea about how the population numbers are calculated?

I am more interested in the initial reaction of tptb and what the financial universe might look like, because we have no model that I know of for deflation combined with shrinkin population; and that is what we are coming to sooner than we imagine. So many limits are behind us already, but I don't really want to open that bag on this forum--------------------

Is there any model that you can point me to?

Thanks for your help on this              om

Sat, 07/30/2011 - 19:01 | 1508377 CD
CD's picture

There was a Deutsche Bank analytic piece published right here on ZH a few months ago, just search the site if interested in topics of global importance... ;-)

""the human race will no longer be replacing itself by the early 2020s. Population growth will continue for a few more decades because of momentum from the age structure and people living longer but, reproductively speaking, our species will no longer be growing." And since global reproduction will not be net additive, it will be net subtractive... and on a long-enough timeline the world's population will drop to zero..."


Sat, 07/30/2011 - 21:52 | 1508432 oldman
oldman's picture


Sat, 07/30/2011 - 21:51 | 1508670 oldman
oldman's picture

Muchas gracias, CD

I read this article a few months ago and even sent it out to a few friends, but I just now re-read it. This second reading gives me more reason to suspect that the curve has flattened and that we are in a decline. I am happy about this for several reasons, the least of which is the fact that I grow weary of being laughed at without any of the laughers having any idea of how these UNESCO population numbers showing constant growth are compiled.

In reading the article carefully, I can see no reason be concerned about the environmental limits of the species which we have already passed. There is less reason going forward for concern as we are in a collapse that will not facilitate increased birth rates for quite a while.

Again, CD       thank you so much for the help                om

Sat, 07/30/2011 - 10:58 | 1507625 mayhem_korner
mayhem_korner's picture

This is like the Seinfeld episode where Neuman disposes of the muffin "stumps".  Absorbing duration risk (stumps) by the Fed (Neuman) keeps the markets happy with an ongoing flow of showy muffin tops.

The problem is the muffin stumps have unresolved liens on them.  And since you can't get muffin top prices for toxic stumps, we have a little problem...

Sat, 07/30/2011 - 10:59 | 1507626 Hansel
Hansel's picture

In other words, the Fed's easing has provided none of the promised benefits, but they will keep doing it anyway.

Sat, 07/30/2011 - 11:48 | 1507709 Bolweevil
Bolweevil's picture

It benefitted precisely whom (who?) it was intended to. Kleptocrats Bankstahs and Pimps (don't hate the playa)

Sat, 07/30/2011 - 11:00 | 1507627 Stares straight...
Stares straight ahead's picture

gold is the only winner in stagflation

Sat, 07/30/2011 - 11:10 | 1507648 TaxSlave
TaxSlave's picture

Stagflation is what is desparately hoped for at this point.

They only have to paper over somewhere near ten times the actual value of every asset on earth in order to 'disappear' the punctured 'assets' that backed the ponzi banking scheme worldwide.  It's only numbers, so they could do it overnight, except then the game would be up because the confidence of the marks would be blown to smithereens.  So they need to dribble it in, and hope and pray the confidence holds.  The banks are hopelessly insolvent.  Their owned governments are trying to take the fall by putting the loss on the people, so money-printing will be asked for, demanded.  This is the only way to suck the value out of honest people (dupes) in order to prevent the dissolution of the ponzi banking system.  It might even work, as long as the confidence of the dupes can be maintained.  They need a steady hand on the valve.  If the herd stampedes, it's game over.  Worldwide.  That's why the Bernank has that quivering lip.

Sat, 07/30/2011 - 11:15 | 1507659 trav7777
trav7777's picture

and in 08 we got Obama....that tells you all you need to know about the primacy of delusion in this nation at least.

In the depths of the greatest financial crisis, the electorate was crying tears over slaying the imaginary dragon of racism.  Like instead of focusing on a competent President, let's get a guy for the sake of his skin color and look past the fact that he had no qualifications nor redeeming qualities whatsoever.

Sat, 07/30/2011 - 12:57 | 1507838 B9K9
B9K9's picture

I knew it was all over in '08. Actually, the entire idea of a self-governing democratic republic is ludicrous. It takes awhile to come to that conclusion, but when you see the general elecorate fall over themselves for a drug addled loser, you finally know it's true.

There will be no 'adult conversation', as Denninger so pitifully calls out for. Rather, there are simply those who know the score that are quickly looting as much swag as possible, and the clueless sheep who will be surprised when the truth is finally revealed.

At that point, we'll get Kunster's corn-pone Hitler to spill the beans. History is the best guide, because human nature is constant & unchanging. The only thing that changes from year-to-year and generation-to-generation is the availability of scarce resources. This alone, and nothing else, determines whether mankind acts 'civlized' or reverts back to its roots as tribal apes. (Ever watch a chimp 'war party' go out to hunt for enemies?)

Sat, 07/30/2011 - 13:43 | 1507913 Oh regional Indian
Oh regional Indian's picture

Excellently stated as always B9. I saw some depth plumbed today as I read an article about a rapper named Soulja Sumthin' had bought a 55 million dollar G5 for his 21st birthday.

You know at such times, with an intense clarity, that the edge of the cliff too is behind us. Now we have between here and the ground a few thousand feet below approaching at break neck speed, to learn how to fly. Collectively.

I will also add that the planets and larger forces impact us in ways we cannot yet imagine.

Civilization. What a loaded word eh? it implies a forced change from a natural state. Come, let me rob you of your name, your heritage, your language, your food, your culture and civilize you.

Blessed be the name of Jeebus Christo, angry god extraordinaire. For we are surely living in his blessed shadow.



Sat, 07/30/2011 - 18:15 | 1508294 slewie the pi-rat
slewie the pi-rat's picture

my first thought:  that's gotta be a new record for a gibson!

Sat, 07/30/2011 - 20:03 | 1508499 cosmictrainwreck
cosmictrainwreck's picture

I was wondering if it's a self-vid? Hey, ORI..........

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