Unlike economics, Wildland Fire Science is actually a science. Unlike economists, normal people actually know what the future holds. Debt matters, deleveraging is a bitch, and economist religious rituals ensure our destruction will be more severe and complete than any conceivable alternative. Beware the inevitable conflagration resulting from high levels of debt, followed by extended low interest rates.
One can get a college degree in Fire Science. Remember what it’s like to work in an actual professional discipline? Given a set of preconditions, experts in the field can utilize principles and understanding to deterministically predict a result within an acceptable degree of error. You know, Science.
Your local fire department typically deals with structure fires. There’s a lot involved, and it’s important. However, many of those principles, techniques, and equipment don’t translate over to the fundamentally different world of Wildland Fire Science. One professional may need to know more about electrical, chemical, and combusting metal fires, as well as dynamics within burning sealed structures; while the other deals with conflagrations that can go from zero to more than two thousand acres in a couple hours with changing behaviors in different biotopes and surface features.
Find a professional in wildland fire science. Speak the phrase, “Long periods of drought, followed by high winds.” A sane response by a seasoned professional in that field would be, “Oh, CR*P!”
A quick review:
Wildland Fire Science: A science.
The Yellowstone fires that burned more than a million acres in and around Yellowstone National Park in 1988 are an example of long periods of drought, followed by high winds. The Long Mesa Fire at Mesa Verde National Park in 1989 is another example, going from zero to over two thousand acres in a few hours, with 100-foot high walls of flames. Southern California fires in years with the Santa Ana winds are always a good example of “drought, followed by high winds”.
If economics were a science, or even a professional discipline, then every “expert” would similarly understand the corollary, “high levels of debt, followed by low interest rates”. Since economists (other than a very few, like Steven Keen) are too ignorant to say it, we shall say it on their behalf: “Oh, CR*P!”
It is hard to overestimate the significance of long periods of drought, which kills vegetation, increases fuels loading, and dries out even the largest diameter branches on the ground to the point that when they burn, they will do so completely, at high temperature, which can sterilize the soil such that no vegetation of any kind will grow on that spot for decades. Debt has the exact same effect:
Debt (Pro): Can increase productivity through leverage (if taken for productive activity, NOT for consumption).
Debt (Con): Always increases risk and decreases the risk-adjusted return on productive activities.
Debt is always a drag on productive activity, because it must be serviced. Debt tends to compound, unless future expenditures are significantly reduced (as debt principal and interest is repaid). Debt kills, as it increases risks associated with cashflow, and fundamentally changes the worth of productive activities (which must now be productive in excess of debt servicing and repayment). While it’s true that you might be better off by borrowing money for a productive venture, and later paying that debt off (i.e., leverage), you would have made more money if you already had the capital to do that venture without borrowing (because nothing would have gone to debt servicing).
Don’t forget the theorem: Deleveraging is a bitch.
Of course, these are “silly” arguments that apply to households, businesses, and any responsible (or accountable) institution. One might argue that they don’t apply to sovereigns (who never intend to repay their debt, but rather intend to forever “roll” their debt), or central banks (who merely print their way out of any corner in which they find themselves). While we might disagree on whether sovereigns and central banks can really operate like this over an extended period, we can all agree that past debt is always a drag on the present, even for sovereigns and central banks.
High winds merely amplify the speed and severity of what was already going to happen. Within any finite (relatively short) period of time, while it’s possible you won’t get a lightening strike, and it’s possible no camper will lose control of his campfire, increasing debt levels increases the probability that something is going to get started (e.g., it increases “fuels loading”). In time, probability dictates you will get that lightening strike, and you will get that out-of-control campfire. High winds ensure that inevitable event will spread quickly, and severely.
When debt levels are high, and have been high for an extended period, it’s the same thing as high fuels loading after extended drought. It’s inevitable that deleveraging will begin, and will be significant, even if you’re merely talking about the increasing roll-risk of existing debt. When those high debt levels coincide with an extended period of low interest rates, you can be assured that people have maximized their leverage, and dreamed up mechanisms for risk never previously imagined. When interest rates are high, there is at least a possible “pressure valve” of lowering interest rates (indeed, that’s what central banks for decades promised us was their job), and the cost of money helps ensure truly stupid ideas are not funded (because the money is expensive). However, with low interest rates, we are sure to fund even the most moronic bridges to nowhere, and there is literally no pricing pressure on stupidity (an infinite governmental resource).
High levels of debt, followed by extended low interest rates… Are these morons serious? This is an inviolable principle, if these economic imbeciles actually treated seriously their “field of study”. Aren’t these central planners supposed to be “adults” who dress themselves, tie their own shoes in the morning, and make themselves cold cereal before they go off to work to destroy people’s lives? What the hell are they thinking?
This is like surgeons in the 1840’s strutting around, “Hey, we’re surgeons, and our brains are HUGE, and hand washing is stupid, because we’ve never heard of these things called ‘germs’!” Surgeons continued to kill over a quarter of their patients for decades, including women delivering babies in hospitals, until the 1880’s when Pasteur extended Koch’s germ theory of disease. The murderers had no idea they were killing literally every one they touched, and were even so bold as to ridicule, show hostility, and discredit anyone who suggested hand washing was a good idea. Poor Holmes. Poor Semmelweis.
Our central planners in our central banks are religious nuts. They show none of the attributes of professionals in a disciplined field of study, and all the attributes of brain-dead zombies performing ritualistic incantations (like the banks they pretend to manage and regulate). Our treasury departments are equally insane. They refuse to wash their hands as they un-invitedly break into each of our homes to devalue our currency, and ensure sovereign defaults worldwide. They have muddy feet too.
“We’re economists, and our brains are HUGE, and we can have free lunches FOREVER because we’ve never heard of this thing called ‘debt’!” There’s no possible way to engineer a setup for more complete destruction. Murderers. Morons.
Being charitable: Economists have a different world view from “normal” people.
Being non-charitable: Economists are literal economic and common-sense morons.
By artificially forcing interest rates too low for an extended period, economists are literally fanning the flames of stupidity. When deleveraging begins, the rates will rise sharply, causing a feedback loop that explodes the conflagration of debt unwind to the point where it will annihilate everything in its path. Can this be avoided? Not anymore, with Captain Jackass at the helm ensuring that little old ladies can no longer live on their fixed income CDs. We’ve already had our record levels of leverage and our extended period of low interest rates.
It’s a good thing economists don’t have any professional standards, or they would be guilty of professional incompetence. It’s a good thing they remain unaccountable to society, because their actions are criminal negligence.
When a fire science professional screws up, someone usually dies, and the professional goes to jail. When an economist screws up, people lose everything they have spent a lifetime accumulating, people starve, nations fall, we go to war, and millions die. Economists will then pretend to tweak their theories and go on book tours.
How hard is this to understand? With high fuels loading, you will get a fire. We hope and pray the acreage burns when we have high humidity and low winds, to ensure it doesn’t burn too hot and too fast. That helps ensure the destruction is not *so* complete that nothing remains. It’s silly talk to say you won’t get a fire, because that immediately disqualifies you from any sensible participation in the discussion with actual adults.
With record high debt levels, you will deleverage. We hope and pray the deleveraging occurs when you have a relatively healthy economy (ha!) and relatively high interest rates (ha!), to ensure leverage remains only for productive activities (ha!) and deleveraging starts with non-productive activities (ha!).
We are in a period of record high debt levels, followed by an extended period of record low interest rates. Oh, CR*P! At this point, because of the debt levels and leverage, raising interest rates is impossible (nearly all sovereigns would default instantly with even a one or two percentage point increase in interest rates). CR*P! CR*P! CR*P! Even today, we are held together only through accounting fraud collusion among private institutions, central banks, and sovereigns. (Yes, we’re talking about go-to-jail fraud.) CR*P! CR*P! CR*P! CR*P! CR*P! CR*P! Still, we can be assured that defaults will inevitably happen, and interest rates will inevitably rise. These private institutions, central banks, and sovereigns are all toast. Pathetically, they all earned it.
The ship has sailed, and we are betrayed by the economists. Central banks and sovereigns the world over utterly failed in their job, not that they were ever qualified to do the job they pretended to perform. We will get a spark. Some happy camper will be irresponsible with his adult beverage around the too-big campfire. When the spark happens, a million acres burning across Yellowstone will look like a cute evening of nostalgic fun.
No, at this point, there is no way out. Thanks a lot, you friggin’ central planning feeble-minded morons! Unlike you, normal people can actually do the math. Even now, you economists won’t recognize your utter failure in your “field of study”? You pretend to use big words, but it’s easy to recognize them as merely confused baby-mumblings. Clearly nobody should have let you wear “big boy” pants. In the true mark of immaturity, you won’t even admit to the increasing stench from the pile of brown stuff in your underwear. Who the hell do you think will actually have to clean up that mess?
Mammas, don’t let your babies grow up to be economists.