Debt/Resource Thought Experiment: How Would YOU Craft G20 Policy?

The past few days, delegates from 20 of the worlds largest economies met in Pittsburgh Pennsylvania to further develop international strategies to deal with the ongoing financial, energy and social crises. The "Leader's Statement" could reasonably be summarized by this excerpt:

"We further committed to additional steps to ensure strong, sustainable, and balanced growth, and to build a stronger international financial system."

Considering there was no mention of biophysical limits, nor of mankinds underlying consumptive drivers and considering that 'strong' is at cross purposes with 'sustainable' and 'balanced', I am left with the frustrating conclusion that our same old cargo cult beliefs - that growth and consumption will follow money/debt - are unfortunately alive and well. Below the fold is a brief overview and a chance for TOD readers to play G20 policymaker.

Fiat vs. Real - A Wile E. Coyote moment...

First, some relevant quotes from Karl Polyani's 1944 book, "The Great Transformation":

"By the end of the seventies the free trade episode (1846-79) was at an end; the actual use of the gold standard by Germany marked the beginnings of an era of protectionism and colonial expansion. The symptoms of the dissolution of the existing forms of world economy -- colonial rivalry and competition for exotic markets -- became acute. The ability of haute finance to avert the spread of wars was diminishing rapidly. For another seven years peace dragged on but it was only a question of time before the dissolution of nineteenth century economic organization would bring the Hundred Years' Peace to a close."

"The breakdown of the international gold standard was the invisible link between the disintegration of world economy since the turn of the century and the transformation of a whole civilization in the thirties. Unless the vital importance of this factor is realized, it is not possible to see rightly either the mechanism which railroaded Europe to its doom, or the circumstances which accounted for the astounding fact that the forms and contents of a civilization should rest on precarious foundations.

"The true nature of the international system under which we were living was not realized until it failed. Hardly anyone understood the political function of the international monetary system; the awful suddenness of the transformation thus took the world completely by surprise... To liberal economists the gold standard was purely an economic institution; they refused even to consider it as a part of a social mechanism. Thus it happened that the democratic countries were the last to realize the true nature of the catastrophe and the slowest to counter its effects. Not even when the cataclysm was already upon them did their leaders see that behind the collapse of the international system there stood a long development within the most advanced countries which made that system anachronistic; in other words, the failure of market economy itself still escaped them." [p. 20]

"The transformation came on even more abruptly than is usually realized. World War I and the postwar revolutions still formed part of the nineteenth century. The conflict of 1914-18 merely precipitated and immeasurably aggravated a crisis that it did not create. But the roots of the dilemma could not be discerned at the time. The dissolution of the system of world economy which had been in progress since 1900 was responsible for the political tension that exploded in 1914."
[p. 21]

Note: 100 years ago today, the NYTimes ran a piece on dissipating misapprehensions for a Central Bank".

And here are some excerpts from yesterdays G20 joint statement (bold added by me) :

7. Today, we reviewed the progress we have made since the London Summit in April. Our national commitments to restore growth resulted in the largest and most coordinated fiscal and monetary stimulus ever undertaken. We acted together to increase dramatically the resources necessary to stop the crisis from spreading around the world. We took steps to fix the broken regulatory system and started to implement sweeping reforms to reduce the risk that financial excesses will again destabilize the global economy.

9. The process of recovery and repair remains incomplete. In many countries, unemployment remains unacceptably high. The conditions for a recovery of private demand are not yet fully in place. We cannot rest until the global economy is restored to full health, and hard-working families the world over can find decent jobs.

10. We pledge today to sustain our strong policy response until a durable recovery is secured. We will act to ensure that when growth returns, jobs do too. We will avoid any premature withdrawal of stimulus.

16. To make sure our regulatory system for banks and other financial firms reins in the excesses that led to the crisis. Where reckless behavior and a lack of responsibility led to crisis, we will not allow a return to banking as usual.

17. We committed to act together to raise capital standards, to implement strong international compensation standards aimed at ending practices that lead to excessive risk-taking, to improve the over-the-counter derivatives market and to create more powerful tools to hold large global firms to account for the risks they take. Standards for large global financial firms should be commensurate with the cost of their failure.

A Cargo Cult

Some observations:
1) Money is not a resource
2) Governments plan to reign in excessive financial risk taking in the private sector, but increase their own.
3) The word 'sustainable' appeared 51 times in the Leaders Statement.


Since the creation of the Federal Reserve System governing our money spigot in 1913, money (debt) has been continually created to match the demand for credit, irrespective of future resource flow rates. Following the demise of the Bretton Woods agreement in 1971, (and US oil peak the year prior), there has been no natural speed-bump to this expansion of the money supply. Central banks controlled monetary policy via adjusting the discount rate, the Federal Funds rate, the reserve requirement %, and various other rule changes. Contrary to the distant past, when increases in money would require new energy and materials expenditures to procure more gold from mining to back the new currency issue, under the regime of the last 40 years, commercial banks under the permission of Fed, could create money (credit) at will. As long as there was a demand for credit, the money supply could grow with only a paper tether to the real goods it was designed to represent. As long as prior period debts could be serviced in dollars, money as debt increased, as people accepted it as a resource proxy itself and increased extraction and consumption of real goods accordingly. This was not a problem confined to the United States - virtually all countries, (and all major economies) use fiat currency - backed by nothing other than the faith of government.

It stands to reason that such a system would eventually decouple, not slightly but significantly, from its biophysical tethers - (much of what has been written on these pages since 2005 has in fact been attempts to quantify such departures). Roughly, the world now has hundreds of trillions in debt (government, private, financial and public) that requires servicing, bumping up against a depleting high quality energy supply (the infrastructure of which has been long since paid for with 1960s-80s embodied energy). Not included in this is financial credit risk, derivatives etc. As all this debt is not really a zero-sum game but is more a marker money supply gone wild via social and policy responses over 4 decades, the amount of natural resources we'll have available per unit time is extremely unlikely to allow us to repay but a fraction of this debt. (I will be presenting "Abstract Energy Gain and the Permanent Recession" at ASPO in Denver where I will hash this out in more detail).

In sum, absolutely nothing has been 'solved' in recent months. The components of the debt pyramid have just shifted ledgers. (Market analysts are now projecting the government will never get repaid on its recent loans, let alone other debt. In many real ways we fell off the cliff last fall and a giant airgun (govt intervention not based on real resources) has allowed us to continue the feeling of levitation since. Over 30% of G20 GDP has been guaranteed by G20 central banks via loan guarantees, commercial paper purchases, various Cash-for-coyote programs, etc. The result of these measures has been a moderate recovery in notional GDP, with costs of fewer resources and less time to deal with the real underlying problems. If we are unable to grow, let alone in a 'strong', 'sustainable' or 'balanced' fashion, the whole 'increase-money-supply-each-year-enough-to-pay-off-prior-debts' model not only hits a wall, but goes in reverse.

There are 2 fundamental disconnects with reality prevalent among those advising our decisionmakers: 1) a misconception that money is somehow a resource and not the debt albatross it really is, and 2)that energy is treated the same as any other commodity input, parsable into dollar terms by the market. Following these two faulty assumptions, we have painted ourselves into a dangerous corner - we expect by printing money and government guarantees, that our cargo will eventually resume flowing again, like magic. As such, after the phantom (government fiscal/monetary stimulus led) recovery in next year or so, I expect the financial system to unravel via an across the board debt repudiation, or the Fed and other parties trying to print their way out the problem. The latter strategy seems less likely as the sums involved would be extreme.

Though few benign paths are left, we have enough knowledge to make better choices. Can we?


1) Can you articulate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

1a) If not, what sort of 'economic triage' policy would you recommend? Think bold.

2) What will it take for international economists, policymakers and authorities to understand that money/credit is not a resource, and does not on its own produce cargo?

Please focus on the middle question - assume my view is generally correct for the moment - what could be done?

> 1) Can you articluate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

Yes but it would take some cheating, several months of work, it would not work everywhere and it would only be a set of guidelines that would be better then nothing.

"It would not work every where".

I believe that if a Black Swan event of sufficient magnitude to capture the attention of the world but not lead to an immediate collapse were to occur there mught be a few societies where workable policies could be put into place.

China because the central government appears at least at first glance powerful enough and cohesive enough to pull it off-no elections ,not much in the line of a free press,a society used already to living frugally ,etc.

France as the French have the reputation of being a nation run to a large extent from the top down by an embedded technoligically sophisticated elite,conscious already of the necessity of bold actions to preserve thier country and identity-witness the size of thier nuclear program ,good public transport ,trains ,etc..The French public would go along just to differentiate themselves from the rest of the rabble.

The Germans-if one party ever once got into firm control of thier govt again because they are Germans,well educated ,MOSTLY rational(personally if I were a German I would be demonstrating for more not less nukes) always ready to work together once they have decided who thier leaders are.

Please excuse the stereotyping,I don't have all night to figure out how to phrase these things delicately.I'm trying to get across something intangible.

These countries have something in common to a greater extent imo than most other countries- cultures that enable them to see things from a common pov and work together as (GASP!!) national entities.Also the rule of law is strong in these countries -another necessary but sufficient condition.

Ant actual policies would be the sort discussed here frequently-Alan from Big Easy has already posted a representative list.

The US is probably too far gone in the direction of splintering into factions of every sort under the sun -we are no longer just Americans" but us "vs. them" in too many ways.

Doctors vs govt,autos vs public transport,tax payers vs tax eaters, left vs right, developer/banker vs conservationist,fundamentalists vs rational thinkers, I could go on forever ....

OFF TOPIC-I owe Mauiorganic,Hacland,Starvin Marvin ,and maybe a couple of others an apology for being such a sarcastic excretory end of a digestive system (my meaning should be clear without getting this page blocked at the school library) over the last few days.

There is really no excuse for incivility but I humbly ask you guys to take into consideration that I am stressed to the max right now as the result of the kind of family problems that all of us must deal with at some time.

I'm sorry guys!

Back on topic:

Triage on a world wde basis is imo just not possible because the us versus them rut is too deep for humanity to escape it.

So a country such as Germany could maybe work out a trade agreement based on a straight barter-no money - deal with a country that has uranium-so many Mercedes trucks for so many tons of yellowcake,so many students allowed into a German university for so much natural gas,things of this sort.A sharply progressive tax on gasioline and diesel for personal use above a very smal base amount which would futher discourage the auto industry.

Convert Mercedes car factories ,unions and all into renewables factories.(I know a car plant is probably not very useful for building wind turbines ,the principle is the point)Pensions to be paid by alloting a portion of energy at market price from future generation to workers-each person in the industry owns a claim on the energy generated rather than a claim against currency either paper or electronic.

A serviceability/durability/upgradeability standard for everything manufactured or sold in order to conserve materials and energy.The end of planned obsolescence.

A long term campaign to educate and change cultural values towards quality of life rather than consumption of quantity.As I eat a lot of truly good fruit and home cooked home produced meat and veggies(we raise the best and we eat only the best of that)I have no doubt that a French couple on a picnic enjoy thier wine cheese , pears, and bread made only with three or four ingredients at least as much as the average American enjoys his bucket of KFC.

Middle aged guys who ride bcycles have better sex lives than lard butts who drive Mustangs-

And thier bike riding girl friends look a lot more like teen agers too!

The possibilities are endless.

As for the current economist seeing the light-a rise out of town tarred and feathered on a fence rail might do it if they think that they are going to be burned at the stake at the end of thier ride. Nothing less.They are true believers and they cannot change-thier heads would explode first, like an overheated bioler.

You might as well ask a sincere Baptist preacher to sit down and discuss the theory of evolution with you-he might sit, but he sure as xxxx ain't gonna listen.

Eric Hoffer's The True Believer is a GREAT little book.

Middle aged guys who ride bcycles have better sex lives than lard butts who drive Mustangs-

True dat. The times, they are a'changing.

I can't resist............

The guys in Mustangs got the young girls when it mattered.......

Yeah but the guys on the bikes are cuckolding the Mustang guys and getting the younger ones now!

Ok, so here's my summary, which is, you will immediately notice, is a mere paraphrase of Lester Brown's in "PLAN B 4.0" which you can download from

And of course none of this has a chance of snoball in hell??, Right, so we're screwed. Sorry about that, it was nice to know ya.

PS, thanks, oldfarmer, for your good thinking, which has gotta be right because I agree with most of it. As for family problems, mine is everybody's dying. Ah, well. "We owe God a death, and he who pays of a Monday is quits for the rest of the week."

Given the existing extreme emergency combining energy, environmental and economic stress, we intend the following:

1) We will stop all frivolous goods production as of today

2) We will concentrate all energy, resources, and skills thus saved on creating a new energy base, comprised of entirely sustainable sources- solar, wind, geothermal, etc., and coupled by a national/international HVDC grid.

3) We will cancel all existing debt, reallocate real assets in proportion to true productivity, and force all price to equal true cost, as measured by degradation of resource and biosphere

4) We will restructure economic activity to focus on the real goal- to preserve and improve the only planet we will ever have.

5) We will implement incentives to reduce population to a fraction of its present size, consistent with the goals above.

We need to move to a different world, one that is not constrained by limits, if we want "strong", "sustainable" and "balanced" growth. I am afraid that is not going to happen.

The current system cannot continue to work. The logical alternative is every country for itself, plus bilateral trade. It seems like that would lead to a huge "hit" in terms of our ability to manufacture goods using materials from around the world (computers, electric cars, fertilizers, replacement parts for vehicles). Things would likely spiral downhill pretty quickly.

Keeping the current system working will require a huge amount of trust, even in the face of likely major defaults by banks and others in the years ahead. The world will need leaders with very persuasive powers to keep people from seeing that the system is falling apart, in front of their own eyes.

Is 'trust' subject to laws of thermodynamics?

But of course, just ask the Road Runner...Beep Beep!

Sustainable Growth OK

Elegant,a thing of beauty. And blindingly obvious to the choir.

i love your responce, more then mine.

Is 'trust' subject to laws of thermodynamics?

What a great question, one that I plan on giving a lot of thought. Tons of thought. Possibly a thesis. Seriously, great question.

In response to your questions:

1) Can you articulate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

I'm not going to go against the tide and say that "sustainable" and "growth" are compatible but I would say that we need to redefine "growth." Too many people view growth as using larger and larger amounts of resources (e.g. more wood, water, oil, land, etc.) and very few think of efficiency when they think about growth. If the entire world were to start using state-of-the-art LEDs tomorrow, we would use significantly fewer resources (coal and water primarily), though the end benefit to society (lighting) would remain the same. Would this not be growth in a sense? Unfortunately, this would not be seen as growth by most in the field of economics. This mindset has to change.

1a) If not, what sort of 'economic triage' policy would you recommend? Think bold.

The following is the boldest policy I've got (I'm an economist mind you): move the entire world to an energy denominated currency (either the kw/h or btu) I've been working on this idea for a little over two years now and have compiled quite a thesis to back it. Guess this is as good of a time as any to let the cat out of the bag. The summary of the ideas/pros/cons follows:

-Society would instantly be more aware of how important energy is in day to day life. Hopefully/possibly they will act more responsibly accordingly. Information is such an important aspect of economics. People's ability to choose correctly is largely dependent on them having the correct information. Our current fiat currency system accompanied by government subsidies masks the true costs of goods and results in poor choices.

-The intrinsic interest rate would be negative This is due to entropy. People's currency would thus literally "disappear" over time. Huge consequences ensue:
--Spending driven recessions would be a thing of the past. Economists have been dancing around this idea for years. Krugman frequently cites the idea of a negative interest rate in his work (going back to the early 80s) as a cure-all for spending driven recessions.
--Inflation and deflation would cease to exist in the aggregate: market forces would still allow for inflation and deflation in localized instances (such as a "hot" product) but the nature of an energy currency, that it is finite, would cause deflation to materialize elsewhere in the economy. Inflation and deflation would balance each other out.
--Our monetary system would fall in line with the real economy. If we are less productive (for whatever reason), less money is available. If we are more productive, more money is available. Further, carrying costs would be realized. The Austrians seem to believe that money should have a constant value. The fallacy in this idea is the concept of carrying costs. Imagine we live in a two person economy: you and me. Let's say you grow carrots and let's say I have a piece of currency that allows me to purchase your carrots (a call). If I don't buy your carrots the first year your carrots rot and you have to grow new carrots the next year and incur a cost in the process. My "austrian" money has not depreciated, however and I incur no additional cost for you to grow said carrots. Constant value money puts an undue burden on producers. An energy currency, with its intrinsic negative interest rate, would account for your carrying cost. As your carrots rot so does my money.
--A negative interest rate on currency would cause people to invest in flows instead of stocks. That is, they would try to own producing goods (solar panels, farmland, etc.) rather than hoard money in hopes it will accumulate greater money (CDs, bonds, etc.)
--Many would argue that inflation already does this with fiat currency but fluctuations in currency markets and monetary policy don't always allow the negative value mechanism to work. Recent cases of wealth destruction, such as the credit bubble, cause currency to appreciate (fewer claims on the same number of physical goods) give people the idea that currency can appreciate in value, thus giving them incentive to bet (hoard) currency instead of using it to buy/produce a producing asset.

Pricing would be more efficient With appropriate information, people would better be able to price goods. Transport and holding costs would be contextually apparent and rational decisions would be more likely. In the long term, everyone would benefit (no guarantees everyone lives to see the long term but we can't be all things to all people here).

The importance of efficiency in resource utilization would become apparent The idea of utility would be clear. A more efficient engine would be seen as an economic gain

We would be able to price environmental goods The value of water and oxygen would become apparent. To this end, we could effectively price the value of wetlands that filter water, the value of the water itself, the value of trees (need oxygen to burn stuff).... the list goes on. As a side note here, water itself would be priced in terms of energy. Highly saline/contaminated water would have a high energy cost as it would have to be filtered, as would distant or deep water as it would have to be transported. Clean surface waters would be cheap and thus of a comparative value in the market place. Example: growing carrots in Saudi Arabia vs. Michigan. In SA, water has a cost of say 100,000btu/m^3, whereas in Michigan it has a cost of only 1,000btu/m^3. If we assume that all the carrots grown get sold and that SA carrots are not sold at a loss, then the Michigan carrots will reap an economic benefit of at least 99,000btu/however many carrots are grown with a cubic meter of water.

We would be able to measure our growth relative to our environmental impact I'm getting a little bit tire here so I'm going to just start lumping stuff together. Our economic condition could be measured by 1. raw output 2. efficiency in utilization 3. impact on the environment. I have details on these measures in my thesis

Many of the classical ideas of economics would re-emerge No point in expounding on this but I will say that, in my opinion, many of the classical ideas regarding economics have better logic behind them and are more in touch with the real world

Countries would not be able to manipulate their currency to gain an advantage Instead they would only be able to institute policies that would allow them to expand their productive base or become more efficient in using said base. I've designed and modeled (technically, I'm modeling) a transitionary framework. This is not trivial work but it appears if the right countries picked up the flame a universal energy currency would spread quickly enough.

The importance of resource utilization would become instantly apparent At least a few TOD readers have had the thought "my gosh, Saudi Arabia would become even more disproportionately wealthy for no real reason" by now. At first glance, an energy currency seems to benefit energy rich countries (which it does to a point) but this energy is essentially just a savings, a stock, not a flow. What matters in the quality of our lives is flows. The actual quality of life of Saudis would not change immediately due to an energy currency (likewise for most countries). Saudi Arabia could very well increase their flow rate of oil and gas, burn more of it to produce "work" but if this work doesn't somehow better their citizens lives (by providing lighting, climate control, water, food, etc) then their resource utilization will be low and their resulting measured economic well being would also be low. In order to better themselves, SA would have to ship its oil/gas to a region with fertile land which would ship back food. Think gains due to specialization and trade here.

Entropy and enthalapy would become immediately important think quality vs. quantity

Fractional reserve banking would come to an endYay!!! I don't think I need to explain why this is such a great thing. I've come up with some counter arguments that indicate that fractional reserve banking would still be possible though they are too complex and too esoteric for here (plus, I'm getting really tired). FWIW, my initial models indicate that a bank practicing fractional reserve banking with an energy currency would quickly become insolvent.

Economics (and finance as an associated branch) would finally have a link to the other sciences Many of the other sciences can communicate and share ideas because of shared and fixed units of measure. Economics, up until now, has not had this. In my opinion, the biggest problem plaguing economics at the moment is the problem of measuring. There is a great deal of literature about the importance of measuring in science and the consensus is that improvements in the ability to measure result in step changes in the capabilities of science. I hope this proves to be the case in economics. For years I've kept one of Einstein's quotes in the back of my head "Not everything that can be counted counts, and not everything that counts can be counted."

Brain is fried, I know I'm missing 2-3 points here. There's a lot more to this (165 pages and counting :D ), such as transition mechanisms, currency issuance, but this isn't the right venue. I'm just trying to convey the general concept. Nate, it appears you seem to be thinking along the same lines as me regarding our current monetary system. If you think that some of my work on this idea is worthy of a guest post, I'd be honored (not to get a big head, just saying). If you want to contact me directly (this applies to any of you as well) try one of my emails:
- cornelius x carroll at yahoo dot com (this is the one I check most frequently)
-ccarroll at rollins dot edu

P.S. Nate, note that much of the $400-700trillion of debt you cite is in the form of derivatives. Inherently, most (>90% off the top of my head) cannot actually enter the economy in order to claim a physical good. This is because most options (calls/puts) expire worthless, and most credit default swaps cancel out (and simply tie the entire financial system together/create systemic risk, think AIG). Also don't forget that some debt can also cancel out (theoretically, two banks could issue debt and use the resulting currency to purchase said debt). This does not instantly cancel out, however, as the debt has a time value. The result is a build in M3, though in reality this money cannot enter the system to purchase physical goods. This is one of the reasons that the Fed stopped publishing M3 data (not to mention it was pretty darn convenient for them to stop when they did). What is important are the flows (interest rates) as they determine the amount of money that can actually enter the system to purchase goods. The Austrians/gold bugs totally miss these points though I give them credit for at least acknowledging that our current fiat currency system is bunk.

Just as a note, I posted this response over on my blog first (just to mark my territory, I can be a little paranoid at times, sorry). You can view it here:

Something I forgot, there is a natural market mechanism for an energy based currency. I ask that people don't spread this idea around because I fear that if the powers that be in commercial banking ever got wind of it they'd do everything in their power to suppress it:

If progress continues with renewable energy resources (solar power in particular) and they become economically viable under our current monetary regime (which I believe they will) an interesting thing happens: utilities become credit issuing institutions. If power producing equipment (let's go with solar panels) outlive their financed lives, the lack of need to pay for fuel inputs coupled with minimal upkeep charges allows the utility to issue credit in the form of kilowatt hours without the fear of insolvency. These kilowatt hour credits will initially be repaid in fiat currencies but, since the utility will seek repayment in energy, this fiat currency will go out into the system in search of energy denominated resources (oil, coal, land that has energy producing potential, solar panels, etc.). I'm really way too tire to carry out this though experiment all the way through but I'm sure most of you can see the end result.

FWIW, what I'm suggesting isn't terribly different from how we went from using cold coins to paper currency. Bankers issued promissory notes for the gold coins. Eventually these promissory notes became the medium of exchange instead of the gold/silver coins themselves. The first time credit is issued in terms of kilowatt hours, we'll be on our way down the same path.

I am impressed and excited to read some fresh ideas that might actually work in a systemic way to address the core issues. I would love to see a guest post by you elaborating and especially explaining how we might get from here to there.

Not to discount your brilliant ideas but the energy based currency model has been around for a long time.
There was a group of scientists in the early 20th century called The Technocracy movement that advocated this but not in the exact same way that you espouse.
I think that now with the ability to produce energy on small scales and grid tie it may work as you describe or at least have a chance to work.
I have said before on this sight that one of the biggest benefits of energy based currency is that counterfeiting it is actually beneficial.
Instead of printing illegal paper or panning for gold people will try to figure out ways of harnessing more energy and also conserve the energy avaible to them.
This could cause an overnight change for the better because it puts energy right in front of peoples faces all day long and people will react and act based on the present day to day stimuli as we all know.
This is a huge set of ideas and I can't see how it is not the right direction to move in.

We need a not sh@t TOD think tank.

One other thought. The system with energy as it's currency base must still allow for maximum freedom to the participants in the form of the free market.
As poster pfhenshaw has pointed out several times the opportunistic learning that is afforded by the interactions at the lowest and real world levels of peoples affairs can never be mimicked or equaled by any type of central planning.
This has been proven completely throughout history.
The problems are when the participants don't know what is good for them and chose the wrong things to do because of lack of awareness and not considering unintended consequences.
All this can be improved through a better education system and the media.
See how the TOD brings out ideas?

The big catch in relying on education is that the education system is one of the most uninformed parts of the system, leaving people highly misinformed about the systemic consequences of the popular individual choices. That makes it one of the primary culprits... Take the present primary objective of education, to enable science and graduates to sustain the economy by becoming more economically productive, or consider the strategies for correcting economic impacts everyone seems to promote, increasing technological efficiency.

Productivity and efficiency applied to a growth system invariably multiply its impacts is the problem. That's because they relieve the burdens on one thing and enable the whole system make increased use of everything else. I had a long meeting with Mathis Wackernagel, the founder of the Global Footprint Network on Friday. He agreed with me on that emphatically several times...

All our solutions are making our problems worse because the education system teaches people that the effects of our choices are linearly additive rather than systemically reversed. It's a problem!

Just the fact that you and others are aware of the negative relationship implies it can be studied and corrections can be attempted.
The only reason I say the education system is because it is one of two broad ways i can think of to disseminate information quickly and uniformly.
What you just posted above can be taught.
I see it as new knowledge that needs to be made mainstream ASAP.

Sure, I believe that if we can't find a way to teach it so that it sticks, it won't propagate, and if it doesn't propagate by itself it won't matter who or how many people discover it by themselves. It would have no effect.

So far the teaching part has been unusually difficult, since there is almost no curiosity about this whole side of causation, and so it seems nothing sticks. So it doesn't propagate. How do you teach curiosity, anyway??

For example, what seems to be a necessary starting point is one I mention all the time in one way or another and no one seems to respond to. Where people directly manage projects that involve growth processes, like like the expanding and then contracting efforts involved in building a house or starting a business, or even just making dinner, etc., people are very responsive to the system of steps as a whole. The main issue after getting things started is to make sure to have enough time and resources to also complete the finishing steps. Generally for growth systems that we recognize as processes we seem to do the right thing.

For economies where the tendency is to represent them as formulas of increasing and decreasing measurements following rules, rather than as processes of accumulative change, we seem clueless as to what the system as a whole is doing. How we perceive them, of course, doesn't change what they are. It just changes whether we see them as processes or as some kind of magical projections of numbers. We loose much of our natural ability to understand what's happening. It's kind of remarkable that this realization isn't common knowledge in the sciences, that systems are processes rather than formulas..., but it's not.

Systems are processes, not formulas.

You and others may be interested in a book my neighbor was telling me about the other day -- -- about why some ideas stick and propagate and others don't. (I have *no* other connection with the authors or this book.) Apparently in the book there's a mnemonic they created describing the attributes that create a "stickier" message, and it's spelled the way the French spell success:
Simple, Unexpected, Credible, Clear, Emotional, Stories. I'm mulling over how I can use this in my Transition Town project.

Judith, that's good, and maybe some of their examples will go to how to make important "slippery" ideas at least become nagging questions that hang around. Maybe that means adding the "spice" of making them more appealing and just a little disturbing... sounds like I'm talking about wine making or something!

So very many people seem to acknowledge that as long as people are focused on using wealth to multiply wealth we'll have the dysfunctional and destabilizing rule of oligarchies we now have. Then they quickly turn off though, and can't be persuaded to explore how that really works.

Hello Porge and pfhenshaw,

re: "How do you teach curiosity, anyway?"

Curiosity is natural. You don't have to "teach it."

Babies and young children are "every waking moment" eager for connection and "information" - about everything, and, most particularly, about other people.

The challenge is how to stop and/or reverse the type of parenting practices and the general neglect that stifles curiosity and leads to scenes such as this one:
By KAREN HAWKINS, Associated Press Writer Karen Hawkins, Associated Press Writer – Mon Sep 28, 9:09 pm ET
CHICAGO – Cell phone footage showing a group of teens viciously kicking and striking a 16-year-old honors student with splintered railroad ties has ramped up pressure on Chicago officials to address chronic violence that has led to dozens of deaths of city teens each year.

The young men (or whoever actually committed the bludgeoning) were engaged in something light years away from curiosity.

How did this happen? How to create the opposite?

These are questions with answers about emotions and emotional connection: mirroring, "unconditional positive regard," love, safety, respect...modeling, having a family setting and a community where one's contribution is valued because it makes a difference. For example, it brings tomatoes to the table. Or, sings a song. Or, tells a story about the other people at the table and who they are.

Yes, but as much as people have lots of natural curiosity, and technically understand that environments work by the circles of relationships we're part of, I find people having a deep disinterest in the question of "who else is in your circle". It's like nature sits us down at a big table and we pass things around, but we just don't try to look across the table to see who's there.

A few years ago I found a simple but quite powerful trick that lets you do just that, the explanatory principle that "things that grow together work as a whole", identify what things are sitting around the table in natural systems. I don't know why such an effective learning tool for understanding our environments, and separating one environmental organism from another, gets treated like just another annoying take-out restaurant menu. It really shouldn't be.

Take the evidence that the whole economic system consistently responds to the efficiencies we create by expanding the system by two or three times the savings they're supposed to create. The evidence is hard, clear and simple, but understanding how and why would take curiosity. I can hardly get anyone to ask questions about the mix-up and see what would have the effect we intend.

To me that reads as "a lack of curiosity", or "complacency", or "a preference for fantasy attachments", or "not trusting our beliefs enough to be willing to question them". Maybe those things aren't the key logs causing the log jam, I don't know. What other things might it be?

Conformity to the culture through the regimented education system and the force fed media.
Add that to the herd instinct to not go against the flow and here we are.
I know curiosity is born in us and it gets drilled out of us through life.
The environment in a society is not reality and it is also not conducive to divergent thinking at all.
I don't know about others but I thought that "reality"was our culture until certain things didn't seem to mesh with what I thought should be.
That is when I began to examine and question many things that where taken for granted as normal up to that point.
I really woke up when I stopped watching the TV and actively sought my own information.
The internet and the free information revolution is our only chance to reverse this "cultural programing".
One other thing that I discovered that really upset me was that most of what we are taught when we are young is a lie.
History is written by the people that want the history to work to their advantage.
A lot of false information is disseminated with an obvious purpose in mind. In addition a lot of information is omitted.
It took me quite a while to get over the feeling of betrayal of being a dupe.

I think recognizing that each "herd" carries with it a "different mentality" is a key. They all develop their own self-organizing ("revisionist history") principles, would be another way to say it. My discovery, upon learning to read that things were connected into different wholes (herds) like that, is that each of them actively explores and reacts to what it finds in its environments as a whole too. They behave a lot like living organisms, with identifiable working processes and "organs". It's because their parts are people who are actively using their "group think" to explore the world and are actively learning from each other how to adapt it. So... in addition to each of us making up our own planet of meanings, we all are part of one or more "herd mentalities".

It does take a while to get over the belief that the local part of the one you started life in isn't the whole world... of course. For me, coming from a few generations of science educator families, it took a very large push to realize "the herd" mentality of its idealistic principles was simply missing any self-critical interest in the parts of the world it couldn't explain (like the other other organs of its own culture or other cultures and their organs...).

So suddenly the "information age" and the multiplying conflicts of growth limits suddenly give us a powerful common experience, making everyone from every herd try to talk to each other. Much of the confusion is that each herd's strongest or most trusted beliefs may be what they have least in common. That's part of why I keep pitching for people to learn about how large complex systems work from their own personal experiences with small complex systems. It offers a personal experience language that we each develop somewhat independently from the group experience language we get brought into by our herd.

"Herding" has its evolutionary advantages.
So does "group think" and compliance to whomever is the "authority" (alpha dog) in our pack.
Compliance means not questioning, not being curious, not rocking the boat and asking too many questions.

Another "instinct" that is hardwired into our beings is the desire for continuance of that which always was. So there is great resistance to change, especially if it challenges some of the fundamental tenants of our society (e.g., The Market will provide, Technology will save us, God is on our side --we're always the good guys and good guys always finish first because --because that's the way it always works in the movies).

OMG, they run in herds

How many of you guys have heard of this?

I know Wikipedia is not rigorous but this info is accurate more or less.


Was it you who asked me this over a year ago when I posted a link to my blog where I essentially proposed the same kind of approach the GreenPlease has just posted?

In any case Green welcome to the party. Last year I presented a talk at the Biophysical Economics meeting at SUNY-ESF organized by Charles Hall. The talk was precisely on this topic, basing our paper currency on energy (only I argued that we base it on exergy since that takes care of the quality and power issues in one fell swoop).

The idea is old. Howard Odum proposed similar ideas. And, just based on first principles (the physics of work) it makes absolutely perfect sense (for almost all of the reasons that GreenPlease mentions).

But I don't think we are going to change THIS society to accept or even understand the idea let alone work with it. My thought is that this system is crashing. Instead of rebooting what we've been doing, we need a new operating system which includes this way of defining money. See "The Upside of Down" by Thomas Homer-Dixon for a vision of building a new civilization out of the crumbling of the old. You have to let it be very clear that the old institutions were failures before you can get anyone to try something new. So Green keep working on it (by the way I would love to see the thesis). We will be needing all ideas of how to understand an economic system from the perspective of biophysical reality.

See: Question Everything: Biophysical Economics, a group of past posts that cover or refer to the subject. You can also see this index page for a set of series on several related topics, see esp. Steps toward an energy solution #s 5 and 6.


It wasn't me that asked you since I have only been here 36 weeks. But I did read a bunch of your stuff and found myself nodding yes, yes all the way through.
The fact so many people independently arrived at these type of ideas tells me that there definitely has to be something behind it.
I also found out that Odum beat me to the punch by some 35-40 years but who cares? The opportunity to apply this stuff is probably in the near future.
Unfortunately I think you are correct that people will hold on to the old paradigm until it hurts and then it is hard process of regrouping and rebuilding hopefully.
The sooner the collapse the better if it is an inevitability.
Have you ever done any guest posts here?
A lot of eyeballs hit this site.

btw, I'm presenting a somewhat "contrarian" aspect of the problem to the same meeting next month in Syracuse, on why "efficiency multiplies impacts". The systemic effect of improving efficiency is to stimulate whatever direction of development the system has at the present, and at present it's still growth.

The reason so many people are jumping on the efficiency, conservation, sustainable technology bandwagon these days really seems to be that they are illiterate in systems, looking at a mirage of linear thinking that disguises that fostering growth with efficiencies pushes us directly into a quicksand of systemic consequences. It opens up ever deeper strata of the earth's reserve of potential resources to be used up ever faster. usual, most folks hearing that will still simply presume that whatever casual judgment on the subject they come up with is roughly equivalent to a lifetime of careful scientific research on the subject and walk away bemused and unimpressed...

Efficiency is the inverse of robustness but it is a result of using money/profit as the yardstick.
I think it is intuitive that the more efficient or optimized a system is the more fragile it becomes.

Yes and I agree the essence of the problem is the growth is the only way mindset.

maybe an opening line could be something like this.

I have a son who is 18' 7'' tall that weighs 795 lbs and by the way he is still growing.
Does anyone believe that?
Nature matures and as you have said once mature refines as an adult to improve quality.
The growth thing is simply the most popular cultural meme of our time.

I can see people being blown away by your explanations because after all it really did take a lifetime of observation and study to understand these relationships.
Without the requisite background anyone would be clueless don't you think?

Where in Syracuse?

That's true for simple efficiencies, and a subject that Robert Ulanowicz recently developed a nice analytical proof of. One wouldn't want to automatically throw "simplification" or other kinds of smoothing out of things into the same bag, though.

Efficiency that eliminates versatility when you're going to need it sometime is a major part of the "bad kind". Sometimes people fail to understand the environment they're in, and understand which "spare parts" or "useless diversions", like weekends and coffee breaks or small talk in business, are really necessary "wastes of time" and going to be the informal channels on which important learning occurs, etc. That is clearly displayed in the many ways strictly maximizing output leaves things unbalanced and vulnerable to change. I can't for the life of me understand why so very many systems scientists believe nature uses a maximum energy principle (MEP) for evolution! That's just not stable.

I think it's an important mystery why people don't realize that we were regularly doubling the real scale and complexity of relationships in the economies every 20 years for two centuries. Somehow everyone seems to "renormalize" the ever more radical transformations occurring, as if every night, and wake up considering the world as being fixed and changeless, as if nothing whatever happened.

Sure, it's not possible to see all the ins and outs of a question without exploring it yourself, absolutely. Probably everyone has explored further than others in some direction, and what they should be able to do is raise questions and get questions in response about what they found. That only works, though, if the common subject is the explorable world rather than fashionable opinion, and I think a great many people were never taught how to think and can't tell the difference.

The link to the BioEconomics conference is

That is kind of like a variation on Jevon's Paradox.

Yes, the basic economic multiplier effect, that the economists all talk about as a positive growth effect, in terms of money, and don't tell the sustainability advocates about in terms of physical consequences. The bottom line is that when efficiency efforts save enough energy to eliminate 1 power plant the economy is so happy it builds 3, for a net gain of 2.

Have you ever done any guest posts here?
A lot of eyeballs hit this site.

I haven't. Mostly I comment on other posts and point to my blog. There are so many excellent editors and contributors here and they seem to be covering most of the bases I'm interested in.

However, it was as a result of some of my comments that I ended up being invited to last year's biophysical econ meeting at SUNY-ESF where I presented the Money = Energy talk. And as a result of that encounter with Charlie and others, ended up taking my sabbatical here to develop some of these ideas more deeply. TOD has been mostly about peak oil and energy production, until David Murphy started contributing on EROI (Nate Hagens had posted some of Charlie's work earlier). Now the site seems to be morphing into a general energy/economics/social issues venue, which I applaud. I'd be happy to be a contributor, but it would mostly be repeats from my own blog. I am happy just to point to that for the conceptual framework stuff. We are planning several lines of attack on the science of EROI and energy/economy here and expect to generate a few (no many) papers for publication in the near future. Some of those will most likely end up as guest posts here.

Long answer when a simple 'NO' would have sufficed!


George, do you have a compact version of your Money=Energy approach. I'd love to look at it. I have had good success figuring out how to use that principle to measure environmental impacts, and great failure in getting anyone "in the biz" to use it. The LCA metrics count soooo much less than I do.

In my view the LCA method omits 50-90% of the impacts of our choices since it only adds up the production technology part, and I'm sure you know, there are lots of things other than production technology that consume resources in the process of delivering products and services.

My approach is to count the impacts of the whole systems that are involved. Because a business needs all it's parts I count the impacts attributable to any product as including a share of all the impacts of the whole. A proportional part of the impacts of absolutely everything essential to the business is the true impact embodied in each sale.

Do your go with that? My page on it is

Afraid I can't say I have a "compact" way of describing it. My thinking, as it turns out, is along the same lines as H.T. Odum. Charlie Hall has me reading tons of Odum's work. I had known basically about his notions of emergy and its relationship with exergy, but I'm finding more and more similarities in his thinking and my own as I dig deeper. I use the money=energy as just a shorthand way of saying that there exists (or rather SHOULD exist) a relation between money as a token (in a communications theoretical sense) representing a fixed quantity of energy that is available to do useful work (exergy). A lot of the points that the original poster made indeed fall out of this "axiom". For example, you can't have fractional reserve banking as we know it. You can't borrow from an imaginary future pool of exergy (it has to be proven to exist in a potential form). In other words you can't go into speculative-based debt. And so on.

What the basis of that relation should be is very difficult to ascertain. The claim might be said to derive from first principles energy flow/useful work/wealth - measurement of wealth denominated in a convenient token system. Odum advocated emergy, but I suspect we need to have a measurement unit based on the work directly, i.e., exergy.

My blog has a number of loose, informal essays on this idea under the category of Biophysical Economics. Or you can use this index page to look at the articles in a series called "steps to an energy solution."

My presentation at last year's BPE meeting can be uploaded from here [PowerPoint warning]. This might not be too illuminating since the talk filled in the details.


I would encourage everyone to read this Wikipedia on the Technocracy Movement to fill in the history behind many of the ideas that are surfacing on the thread.

How many new M. King Hubbert was a lead player in this movement?

It would be a big embarrassment if a TODer was not aware of this stuff!!! LOL

Porge, I'm sure someone here can provide the link but it has been discussed before on this site.
I confess that I knew it because of it having been discussed here.

OK thanks, just showing how green I am here on the TOD.
I am sure that someone reading this got some benefit though.

I am guessing that a lot of new eyeballs have been added here in the last year or so and to come on this site in mid-stream with no background info is overwhelming.
That is the reason I emphasized looking into the history of a lot of these ideas.
I have already been caught by the "It has already been thought of" trap.
Funny that. Every time I think I have stumbled onto some new idea i look into it and I am way behind some other thinker from the past.
I think that maybe a lot of these ideas were literally ahead of there time and now might be the time.
In any event I think the current paradigm is played out and the opportunity to do something better in on the horizon.

Greenplease, I think you maybe missed my guest post Banking on Energy here in July.

You might also be interested in my presentation at the All Energy Show at Aberdeen, Scotland re Energy Pools which was also the subject of a 2,500 word article in September's Power Engineering International magazine.

I am pointing out that it is possible, within the correct legal and financial framework, to create what is essentially an International Energy Clearing Union, not a million miles away from Keynes' Clearing Union proposal at Bretton Woods, but with no centralised issuer. Producers would create and issue Units of currency redeemable in forms of energy.

A fixed unit of energy - a "Petro" or Energy Dollar - would be an "Energy Standard" which would serve as a pricing reference point, rather than a purely abstract "fiat" Standard, or the use-less Gold Standard. In other words Units of energy currency - which may be reasonably fungible - eg a Unit redeemable in natural gas; or a Unit redeemable in electricity - would neither be Petros, nor would they change hands not for Petros, but rather would be exchanged for other "money's worth" by reference to the Petro.

Note that I don't use the word "use-less" pejoratively - it's just that you can't inhabit gold, heat your house with it, or type e-mails with it.

The outcome of such a system would indeed be the energy accounting advocated by Technocrats. The difference would be that the Technocrats did not (as far as I know) recognise either the use value of Land/Location (Space/Time) - which is the backing for almost two thirds of fiat money in circulation - or the use value of Knowledge, which I see (in its subjective form - ie what's between our ears) as the core component of "Labour", and in its objective form as Intellectual Property.

Fwiw, my background includes six years as a director of the International Petroleum Exchange, and I think I have a reasonable idea of what will work, and what won't, in terms of market architecture and curency design etc.

Banks/ Credit Intermediaries don't work any more, and in fact such an energy clearing union would be in their interests, as they could transition from a middleman role now being throttled by a terminal shortage of capital to a new role as pure financial service providers risking only the capital necessary for day to day operations.

Are you aware of Rainbow Trading?

Rainbow Trading is a different system, a different money system. Based on the following principles:

  • Honesty and Transparency
  • Personal responsibility of each participant
  • Energy and recycling
  • Balance and Stability

Rainbow Trading is a mixture of general common-sense and concepts from Cradle to Cradle, the Ecological Footprint, the LETS trading system and biological self-organization.

The energy in 100 gram sunflower oil is 1 Red. That is: 3400 kJ or 810 kCal. 100 gram is 1 Green – if recyclable and 100 gram is 1 Blue – if not recyclable.

Trying to find Chris's post reminded me why I don't post here more often: sheesh this format is frustrating.

@Chris and George

Great to here other minds are at work on this idea. IMO, we need a Wiki to aggregate the thinking regarding the idea of an energy backed currency.

I'm not going to go against the tide and say that "sustainable" and "growth" are compatible but I would say that we need to redefine "growth." Too many people view growth as using larger and larger amounts of resources (e.g. more wood, water, oil, land, etc.) and very few think of efficiency when they think about growth. If the entire world were to start using state-of-the-art LEDs tomorrow, we would use significantly fewer resources (coal and water primarily), though the end benefit to society (lighting) would remain the same. Would this not be growth in a sense? Unfortunately, this would not be seen as growth by most in the field of economics. This mindset has to change.

I suspect you are confusing the definition of "GROWTH" with the definition of "STANDARD OF LIVING"

When it comes to growth in the empirical physical sense (not talking spiritual here) it is very straightforward. It means an accumulation of resources which results in augmentation, expansion and increase of something real and measurable, i.e. population growth. I don't think this needs to be redefined I think it works quite well in it's present form

What we consider to be an adequate standard of living is another matter altogether and should certainly be up for debate.

BTW efficient growth is still growth. The problem as I see it is we have to stop growing.

Yes, I say we measure everything on a "Quality of life Index" but it is the same concept that you are advocating.
GDP is a worthless and maybe a dangerous metric. All it does is measure how fast a fiat currency moves through the economy.Like I said worthless or even harmful.

I agree with everything in your post.
I have seen the energy based type money as the best way to link us back to reality and create the best incentives for the future of the planets ecosystem which INCULDES us.
I would love to see a guest post because I think that this issue is the first that needs to be tackled and will lay the groundwork for all the other solutions to all the other problems.

I think that everyone on this site should be brought together in a think tank.
I believe that the reason the best ideas come out here is becuase the group is wholly concerned with actually trying to figure out the best ways of doing things.
There is no self interest in anything that I read on the TOD.
I am not sure why this bunch gets a kick out of just seeing things run better without regard to personal gain but it has to be more than just altruism.
It seems to be some sort of larger awareness that is just not that common in the people that I bump into on a daily basis.

It is time that humans take a scientific approach to our daily affairs.
It is time that we all recognize that we are but one the many life forms. We are the life form with the largest intellect which allows us to chose.
With that ability to chose comes an enormous responsibility that has not been honored...........that needs to be fixed fast.

Again I would love to see a guest post and I bet many others here would as well.


Thanks for the link regarding the Technocracy movement. Surprisingly enough, I never ran across that in my research. Kind of like missing a 700 pound gorilla in a room I suppose. I'm a tad embarrassed now but grateful for the additional information. I skimmed through the Wikipedia article and I can tell you why the movement failed: they tried to do away with a price system (and a market system as an extension). Market price systems, however poorly they might be seen to function now, have the benefit of communicating present scarcity and utility (information) at no additional cost. Further, income constraints imposed by a market price system encourages accuracy in communicating this information. With an energy currency, however, pricing does becomes more scientific and less arbitrary as information such as embodied energy, entropy, and enthalpy are readily calculable.

I totally agree on the idea of a TOD think tank. There was a post a couple days ago proposing some sort of a conference. The consensus was in favor of such a conference, a meet n' greet if you will, though I don't know if any progress was made in achieving that end.

I apologize for me trying to "hoard" an idea and my apparent self interest in presenting such an idea. It's one of my weaker traits that I try to actively address and I'm in total agreement with whoever said that thinking regarding societal structure should be altruistic in nature.

As a humorous aside, I spent yesterday trying to describe an economics problem to a chemist friend of mine. One will never fully appreciate the importance of transaction costs until one tries to explain an economics problem to a chemist. Further, one will never fully appreciate how much the field of economics is frowned upon by the rest of academia until one tries to explain an economics problem to a chemist. Haha.

Yup, Technocracy failed because it was basically central planning.
Did you see my comment above referring to the fact that nothing learns and refines quicker and better than the free market.
I was reminded of this by poster pfhenshaw several weeks ago in a discussion along these lines.
You seem to talk like a tech geek (not derogatory) not an economist. Maybe that is why you are on the right track IMO.
I in no way meant to imply that you were not altruistic on the contrary the fact that you are willing to share what I consider rare thoughts is telling in the opposite.
I saw the Meet Up campfire and really didn't see how logistically it could be done given the many constraints on most peoples schedules.
But if it was somehow considered important it would happen.
Hell we ought to form a formal organization and lobby Obama for grants and funding.
Seems like the political and social climate might be right to sell something like that.
You know Go Green and Efficiency all that etc. Let's think of some more buzz words and catch phrases.

You seem to talk like a tech geek (not derogatory) not an economist.

BINGO! I'm a huge tech geek. As a kid I was obsessed with understanding how machines worked. For the longest time I thought I wanted to be a mechanical engineer. My father and grandfather were financiers so my life was always filled with talk regarding the economy. One day, I had an epiphany: the economy is the largest and most complex machine one could ever hope to understand. Jackpot! So my formal education and entry into economics began. Ever since I have regarded, thought of, and spoke of the economy as if it were a machine.

One thing that is appalling to me about the current state of economics is how detached it is from the real world. Economists are never (as far as I know) taught anything about energy extraction, power production, agriculture*, or essentially anything else that involves humans' utilization of technology. Instead, such technology and its utilization is left to the vagaries of the market place.

*There is a separate field, agrinomics, that deals with the micro-economics of agricultural production. Financial economists never touch this field in their education, however, and certainly nobody considers the impacts of agricultural scarcity on the macro-economy. Instead we just like to assume that resources are infinite...

I would replace machine with living organism.
I have a degree in ME and also Math and that was the way that I initially approached everything.
But The best way that I have found to model anything is to draw an analog to known natural process.
The more I observe and learn the more connections I see with natural process in everything we do and try.
Most people on this site I believe think from this base. It is the correct way to think IMO. And that is coming from a machine freak that beleived we could make a machine to do anything we want.

So look at it as a living organism that can learn and change based on conditions and stimuli and it makes more sense.
Now if we can only get the prize winning economists to see this..............

I would replace machine with living organism [as a way of modeling what "The Economy" is is].
I have a degree in ME ...

Boy they have you really fooled.
And that's what "they" want.
Namely, for you to believe that "The Economy" is a living, breathing organism, kind of like a person.

Then they can talk anthropomorphically to you:

"The Economy" isn't "feeling" well today, it is sluggish and lethargic.

We need to give "The Economy" a booster shot. Yes, we need to feed it more "stimulus".
Money is the stimulus on which Mr. Economy feeds, so we will "inject" more stimulus money into poor sickly Mr. Economy.

Oh look, Mr. Economy is making a "recovery." The injection of stimulus is working. He is walking again. Saved from the brink of dying. It's happened before and it will surely happen again. The natural biological mechanisms inside Mr. Economy will cause him to heal. Heal Mr. Economy, heal. Let the forces of free marketism take control of your body. Yes. It is working. Mr. Economy is walking more gingerly now. Soon he will be running. He will be back to his old biologically healthy self.

Look. Look. See Mr. Economy run. Run run Mr. Economy. See Dick and Jane believe they are watching a real person called Mr. Economy making a "recovery" and springing back to health when in fact Mr. Economy is an invisible fictional character just like Mr. Santa Claus. But Dick and Jane believe they are watching a real person, cause, see; they have advanced degrees in ... (you fill in the blank).

To learn more about Dick and Jane, left click on the picture

No. living only in the sense that the responses to different circumstances and inputs are more complex and exhibit a learning type response more than a reaction.

And to be more clear I think the free market interactions are what exhibit these traits.
I never said human either.
More like a lower order "life" form.

What was the purpose of your comment again?

And living in the sense that the economy is governed by the laws of nature.

Well yes of course but your average economist doesn't know that ;-)

What was the purpose of your comment again?

The purpose was not to allow yourself to be fooled by language.

A phrase like "The Economy" is our way of confooling ourselves into seeing certain human activities as being worthy of accounting for, and others as being "outside" the accounting box. Fooling ourselves into believing we see the whole of the "organism" when clearly we don't.

Because I'm lazy at the moment, I'll raise what a husband and wife do at night as an example. That is not counted as an economic activity (and not taxed, thankfully).

On the other hand, when a John and a hooker meet up for a similar interaction, that is counted as an economic activity (and not taxed, for other reasons). But why?? It makes no sense. There is no rational basis for counting one and skipping over the other. Why isn't all of it included in our GDP? (If it were, we would have a f**ing good GDP; probably growing all the time.)

We can raise many other, alas more boring activities in the why count this and not that question: a wife cooking at home versus a chef cooking at a high-end restaurant; a parent helping child with homework versus a teacher doing the same thing in a school or "tutoring" building, a doctor administering drug to patient in a posh medical building versus drug dealer shooting up one of his, err, "patients" in a back alley; a soldier doing overtime work in Iraq versus union member doing overtime at a GM plant; etc, etc. We count some but not the others and then pretend we see can see this thing called The Economy and we can properly model it (whether as a machine or as a biological like organism). How can you properly model that which you can't even see and fully measure?

We pretend like we're counting everything.
We're not.
We cover up the defect by using con-fooling words like "economy" and "accounting" and "generally accepted accounting practices" (GAAP) and amazingly, the suckers buy it without ever questioning.

Sorry. No sale.

In that case we are in agreement.
Did you see my comment up thread about GDP being a worthless and probably harmful way of "measuring" progress?
We need a Quality of Life approach to measure our progress.
The only point that I was trying to make is that The "economy" (defined loosely as the aggregate activity of people) tends to act like the individual person. That is to say the responses seem to suggest an ability to learn and refine and correct things rather than simply react.
I totally agree that trying to monetize everything has screwed us up completely.
We are in the end game of this mess now I think.

> Did you see my comment up thread about GDP being a worthless and probably harmful way of "measuring" progress?
> We need a Quality of Life approach to measure our progress.

GDP does not measure progress. Quality of Life is better measured by indexes such as Human Development Index and Happy Planet Index.

"GDP" (Gross Domestic Production) does not measure anything.

This is so because what we choose to count or not count is totally arbitrary and unscientific.

Left click & scroll to bottom to see bigger picture

I would only disagree with you statement

BTW efficient growth is still growth. The problem as I see it is we have to stop growing.

Take the (rudimentary and convenient) idea of lighting. If we went from an all incandescent to all LED regime, we could double our light output while still reducing our draw on physical resources. Likewise, imagine going from an electricity generating regime that composed of open cycle steam engines to a regime that used combined bayton and rankine cycle turbines. We could increase power output while decreasing physical resource utilization. I consider this to be growth, though it's just a semantics argument.

Yes I think that a lot of the problem is crude poorly defined terms.
I think that we should throw out "growth" and maybe replace it with "improvement". That would encompass your above reasoning........which I think is correct.
It comes back to "Quality of life" improvements............that is what we are after.
We want the best quality of life for all while using the least resources and doing no damage to the ecology.
What is so hard about understanding that?

We could increase power output while decreasing physical resource utilization. I consider this to be growth, though it's just a semantics argument.

Aside from this being an example of Jevons Paradox it is not a case of semantics, what you describe does not in any way describe any kind of growth that I'm familiar with. You have lost me here, could you please elaborate?

The current synonym for "trust" is "money". One thing that money does is act as social glue (embedded in that glue is cheap energy).

There is far less trust with the individual people you deal with in order to have economic money-based transactions. Barter and personal exchange requires existing trust or the building of trust.

And there isn't much existing trust. And we've had a shortage of smart, caring people of conscience capable of engendering positive trust for a long, long time.

I say positive trust, because negative trust is applied frequently. Any con-man worth a grift knows how to engender negative trust. Advertising and marketing use negative trust. The legal system uses negative trust.

We will be moving to a different world, Gail, regardless of whether we want to or not. Of course, there's also the problem of how many of the "we" will make it.

Unfortunately the good die young.
If things get bad then the bad guys have an advantage just because of their basic psychological constitution.
Net Oil Exports Revisited
Published Aug 21 2006 by GraphOilogy / Energy Bulletin, Archived Aug 21 2006

A Proposed Triage Plan

I believe that vast expanses of American Suburbia are going to become virtually abandoned in the years ahead. Alan Drake has noted that a good deal of suburbia was so poorly constructed that a lot of it is biodegradable. Alan has outlined how we can go back to what we used to have: electric trolley cars connected to electric light rail lines.

CBS Sunday Morning, on 8/20/06, had a segment on "tiny houses." They profiled a home designer and builder who specialized in building very small functional homes of about 100 square feet. You can find more information on his website.

What this builder has realized, and what millions of Americans are just beginning to also realize, is that anything over 100 square feet or so per person is not a necessity; it is optional consumption, a want, instead of a need.

The US is not Switzerland, but Alan Drake has described how Swiss per capita oil consumption in the Second World War was about 0.25% of current US per capita oil consumption. They did it primarily by electrifying their transportation system.

I propose a sort of triage operation: "tiny" homes and multifamily housing along electric mass transit lines. In my opinion, it is the only way that we can preserve some semblance of a civilized society. The suburbs are, by and large, a lost cause.

Net Oil Exports and the "Iron Triangle"
July 13, 2007

To some extent, what we are seeing across the board, from large sectors of the energy industry to the auto/housing/finance industry, media and beyond, is the "Enron Effect," i.e., many people know that we have huge problems ahead, but their paychecks are dependent on the status quo.

The suburbanites are caught in the middle of this, although they have a strong inclination to believe the prevailing message from the "Iron Triangle." As in the movie "The Sixth Sense," for most of us the automobile based suburban lifestyle is dead, but we just don't know it yet, and we see only what we want to see.

However, it is increasingly difficult for many suburbanites to ignore reality as it slowly dawns on them that Jim Kunstler was right when he said, “Suburbs represent the biggest misallocation of resources in the history of the world.” We shall probably soon see that hell hath no fury like a Formerly Well Off suburbanite who just had his SUV repossessed and his McMansion foreclosed.

At least those of us trying to warn of what is coming can try to be ready with a credible plan to try to make things "Not as bad as they would otherwise be,” when it becomes apparent to a majority of Americans that we cannot have an infinite rate of increase in the consumption of a finite energy resource base. How's that for a campaign slogan?

I recommend FEOT--Farming + Electrification Of Transportation (EOT), combined with a crash wind + nuclear power program.

Alan Drake has written extensively on EOT issues, for example in “Electrification of transportation as a response to peaking of world oil production.”

In simplest terms, we are soon going to need jobs for hordes of angry unemployed males, and in my opinion “FEOT” is a way to put them into productive jobs.

On an individual basis, I would also recommend “ELP,” which is summarized in the following article: “The ELP Plan: Economize; Localize and Produce.”

Good luck to all of us. We are going to need it.

From about 1908 to 1948, Dallas had 200 miles of local electric streetcar lines, connected to a regional electric Interurban system. It's more than a little ironic that this system was shut down at about the same time that the US became a net oil importer, in 1948. A real tragedy for the US was that we took such a divergent path from the path taken by Europe following the Second World War, in regard to housing and mass transit.

Jeff, I am an admirer of your work and sensible views. ELM in my mind defin es future history and ELP is the only answer to the second question. All other details including Alan's sensible rail suggestions will have to wait for a demand to happen once the political fallout of ELM is sorted out. However I have an issue with one comment above:

is that anything over 100 square feet or so per person is not a necessity; it is optional consumption, a want, instead of a need.

There were significant improvments in the prevention of communicable disease based uppn less crowded living arrangements. The 100 sq feet can not be treated as an average but must reflect a reasonable spacing of living arrangements so that close contact disease spread (eg TB) is avoided.

On the other hand village living based upon central high density living arrangements surrounded by productive resources (fields etc) make a lot of sense from an energy and resource demand perspective.

100 square feet is a circular area with a diameter of about 11 feet. The problem with the disease argument is that in the normal course of a day there are numerous times that we are in situations with a higher density of more than one person per 100 square feet, e.g., a coffee shop, crowded street, meetings at work, lunch counters, mass transit, etc.

The "Tiny Houses" (Jay Shafer) website is as follows:

Actually, the smallest house that he builds is 65 square feet, with the largest being over 800 square feet. But basically this is a mathematical problem, to-wit, what is the smallest area in which you can cook, eat, use the bathroom facilities and sleep. As argued above, I think that anything over a 100 square feet or so is an optional consumption item, a want instead of a need. (And good luck persuading our wives.)

The "Tulipomania" analogy has been frequently used in regard to housing, but it is a good analogy. Insofar as the productive use of capital is concerned, we might as well have been collectively putting our money into prized--and ever appreciating (until they stopped appreciating of course)--tulips, rather than excess housing space at great distances from job centers.

Must say, as a woman (and a wife!), I love the idea of living in a tiny house! Jay Shafer's business is one of two "tiny house" companies based in my county. Also check out: Jay does workshops on design/build for these cool structures. I envision tiny home cohousing communities in the US -- that way you can share a "Common House" for those times when you want to congregate.

There may be a business opportunity here: Re-education camps for spouses who are suffering from SNS--Spousal Nesting Syndrome, i.e, the desire to have a large nest.

Hmmmm....someone else brought up the concept of latent totalitarianism in these reponses. Are you thinking "Skinner box"-type re-education camps? ;-) Maybe a homeopathic dose of an "appetite stimulant" would help?

By the way, I just co-coordinated a wonderful luncheon/conversation last Thursday with Vicki Robin (Your Money or Your Life) and a bunch of local sustainability thinkers/doers including the EDs of the Post Carbon Institute and Transition US among many other thoughtful people. Two hours was just enough to scratch the surface; we plan to do this quarterly.

fyi: Vicki is offering a telecourse in "Discovering Your Enough Point" next month.


Yuor ELM work scares the xxxx out of me-I can't see any holes in it at all,but then I stop and remember all the other things I have known for sure that turned out not to be true , or true but only on a different time scale than initially proposed.

So I got to thinking some time back about the predicted abandonmemt of the suburbs and the almost unfathomable amount of sunk costs involved.A Mc Mansion may or may not have some intrinsic value-I guess value and beauty lie mostly in the eye of the beholder in the last analysis..

The people who owe three hundred plus more monthly payments on then certainly put a high value on them at the time they bought-although I believe many of them believed that inflation and growth made them great investments.

So how much intrinsic value-measured as owner satisfaction- does a house in the outer burbs have in comparision to a house or apartment in town?

I did my own down and dirty survey today to find out by talking to every body I could get on the phone among my acquiantences who once lived (at some point in thier adult life)in the city but now lives roughly five to twenty five miles out side the nearest city limit.

Every last one of them -nearly a dozen -said that they would pay AT LEAST an extra fifty bucks per week to avoid moving back to the city,as they could not buy the same quality of life for less than that amount in the city.Some said they would more than an extra hundred bucks per week,basing this on thier ability to pay rather than an a higher amount,saying they could not buy thier current lifestyle in the city with thier entire salaries. All mentioned privacy ,open space,garden spots,space for hobbies,and so forth without prompting.

One good friend put it this way-thirty to thirty five bucks a week for gas right now enables him to live -with about seven hours spent commuting per week-in a house that is worth six hundred a month on the local rental market.

He is real estate savvy and says that close in a comparable rental would be twelve hundred plus-if he could find a house for rent with a workshop, large fenced lawn and garden, plus he would have a water and sewer bill thats typically sixty bucks or more.And he would only cut his commuting time in half(he could cut the mileage by a larger fraction but traffic is slower in town) even then-any closer in, such houses rent for even more.

This guy would rather spend a hundred bucks on gas every week than live in the city ,and he is not well off.

The last two times he has traded cars he opted for a more fuel efficient car, moving from a 16 to 18 mpg car to a 25 mpg car to a 30 mpg car.His next car will be a 35 mpg or better car.He says he is ready to buy a fifty mpg car as soon as he can get a good one three or four years old-that gas so far has been " a lot cheaper than depreciation".

Surburbia may be doomed , but I am not so sure that the time is yet ripe if the folks who live there still have jobs.

They will bite the bullet imo as hard as necessary -and for as long as they are able.

Oldfarmermac, to speak to your thoughts about people leaving suburbia, I quote from a geography textbook, "Canadian Cities in Transition: Local Through Global Perspectives," edited by Trudi Bunting & Pierre Filion, 2006:

[T]he unit cost of low-density suburban development is already high when all the related costs for land and infrastructure are factored in. The situation is at its worst under conditions of unstructured dispersal such as prevail around most of the largest cities, but even moderately intensive, contiguous suburbs like those of Edmonton consume more in public expenditures than they generate in property tax revenues. This means that the suburban way of life, a privileged way of life in many eyes, is actually being subsidized by other taxpayers (Lewinburg, 1996) (p. 230, emphasis mine).

In other words, as long as the costs of suburbia aren't born entirely by suburbanites, they will of course generally prefer to remain there in lieu of making alternative living arrangements.

All mentioned privacy, open space, garden spots, space for hobbies, and so forth without prompting.

I concur with your sources; my girlfriend and I live in a ~500 square foot apartment near a small city center, and these are all issues we struggle with. (Btw westexas, I can honestly say that even the thought of living in less with our computers, books, and cats generates feelings of cabin fever; we have stacks of books on every available surface - including the floor, dining room table, and my computer - for lack of shelf space as it is, and my dad once compared our place to "living on a sailboat.")

...if he could find a house for rent with a workshop, large fenced lawn and garden... And he would only cut his commuting time in half

Some thoughts:
1) houses aren't city, they're suburbia; inner-ring suburbia is still suburbia and really doesn't belong in cities;
2) workshops and gardening space could - and imho, should - be rentable seperately from housing with the right incentives or laws;
3) lawns are a waste, although I grant that greenery is good for you; for playing on the grass, cities can have parks within walking distance of residents (my city is thankfully(!) unusual in this respect);
4) your comment on car-based commuting highlights how ridiculous driving becomes in a city; one of the best features of denser development is that driving isn't mandatory for most tasks, and becomes dangerous and a noisy, polluting disturber-of-the-peace for those of us who don't drive; meanwhile, other tasks can probably be managed without cars (e.g. delivery services for larger loads, electric bikes/trikes to carry small to moderate loads up to moderate distances, electric trolley and rail systems for longer distances, etc.).

Surburbia may be doomed, but I am not so sure that the time is yet ripe if the folks who live there still have jobs.

This is the key question, isn't it? However, consider that job creation is said to lag recovery. If, every time we start to see economic recovery, we also see oil demand bump up against an ever lower production level, resulting in a price spike that produces a recession (e.g. once oil prices reach/exceed ~4% GDP), and recessions result in higher unemployment rates, then what reason do we have to expect this?

My question is what the increasingly large masses of people will do to survive when they lose access to the formal economy. Move in with relatives who are still working or else live on the street, I suppose. Start guerrilla gardening, perhaps? I don't see many moving out to live on farms as long as most land is cultivated using large tractors that only require a small workforce (and you can bet that the lobbyists will do their best to keep the subsidies to agribusiness flowing; it's more "productive" after all).

I'm afraid the job situation looks bad for sure.

But my gut feeling is that the folks who have sunk so much into surburbia will fight tooth and claw for it, and make almost any adaptation to preserve it , from carpooling to advocating laws requiring a four day work week to organizing privately owned bus or limo clubs-this might require leglislation-if so they will have the muscle to pass it.

Also , the city has only one thing really going for it-good short internal lines of communication.
I'm going to spend a few hours thinking about how the burbs can steal this thunder.

Surburbia will not go down without a fight.

the city has only one thing really going for it-good short internal lines of communication


On the energy front, half the per capita residential use of electricity. Less energy for water too.

Less social isolation, more variety in choices for almost everything, including types of people.


Alan ,

I agree about the energy- "Good short lines of internal communication " is a poor choice of words that I have lifted out of some old book of military history.

Really it just means that everything that matters is close to everthing else-the grocery store and the cook , the water treatment plant and the drinking fountian ,the police station and the scene of the crime, the first grader and the elementary schol, etc.

I expect these short distances are responsible for most of the savings of energy you mention ,with the rest mostly coming from savings enabled by utilizing common walls between buildings, apartment blicks ,etc, that are much easier to heat and cool on a square foot basis and advantages of this sort.

There is no doubt whatsoever that the burbs require a lot more investment in terms of water and swer lines , pavement , loss of farm land , etc, than city style development but my point (not necessarily obvious is that these are now SUNK COSTS.

(I think the burbs will continue to grow for a while yet but mostly I 'm trying to explore the idea of whether the EXISTING burbs will survive or if not how long it will take them to "collapse".

So all the burbanites have to do really is somehow reduce thier energy use enough to KEEP the burbs habitable.

There are tons of things that suburbanites can and will do to hang on-I have not yet spent any significant amount of time trying to work up a list of some of the less obvious ones but hopefully I can before this thread closes.

My thesis is that US suburbs grew as a combination of gov't support/subsidy, the herd instinct and a desire to get away from the blacks.

Gov't subsidies went so far, that after WW II, VA loans could not be used to buy existing homes in established neighborhoods. There was a fear of a return of the Depression, so building a new home for every GI would help avoid that. Then aid for new streets & highways, sewer, schools, and all the rest of the infrastructure. Deduction for mortgages helped suburbs more than cities.

What person in their right mind would chose burnt orange shag carpeting with avocado colored appliances ? Yet, for over a year, a majority of new homes got those colors (or harvest gold). Proof in my mind of the herd instinct.

Real estate agents always (or used to) talk about the "hot" part of town/new suburb and steered clients there.

"White Flight" filled many a subdivision.

Ever lower prices will attract different sets of home buyers, but the "house as investment" group will soon turn their focus back to the cities (some "bargain shoppers" for the next few years, but enough losses will turn things around).

Just as central cities went through several stages of occupancy before some % of final abandonment, so will exurbs. My guess is what will "board them up" will be major repairs that cannot be justified combined with ever lower levels of municipal services.

The "jack-o-lantern" effect when 1 in 7 houses are empty and 1 in 20 houses is not even maintained by the bank, then 1 in 5 and 1 in 12, then 1 in 3 and 1 in 6 ... will lead to wholesale abandonment except by the truly stubborn and those with no where else to go.


Personally the burb way of life depresses me no end-to me its the worst possible combination of the city and the country-you still have to drive ,taxes are high, you have no real privacy of the quality that you get out in the deep country, NOTHING is convenient,and everything is expensive.. I would rather live in a camper in the woods.

I once lived in a formerly posh nieghborhood that went to seed and was gentrifying at the time I lived there-the Fan in Richmond Va.Lots of nice little stores, restaurants, the university (VCU) within an easy bike ride, theatre ,museums,a nice park right down the street -Now that's not bad.I could stand it forever if I had lots of money and a forever valid "special graduate student " id.

I am a 24 carat redneck underneath my semi-civilized exterior and can and do mix easily with construction workers,bootleggers, convicts,Baptists, Republicans, and all sorts of lowlifes(none of them as a rule realize that I'm an outsider) so I can get along anywhere almost and actually found the Fan a bit exotic after growing up in the back of nowhere.

But at that time I had a very attractive young wife. I never rested easy for a minute if she was out alone-robberies were frequent and rape not that rare.Personally I felt quite safe,as I was assaulted only once in three years-life was considerably more exciting in the back in the mountians in those days insofar as guns ,knives, and fists were concerned.

(The tables have turned in this respect.)

Our social circle was rather liberal,consisting of students and young professionals, musicans, artists, and a few genuine ageing hippies.There were some blacks folks, more than a token few but not that many mostly(?) because the local blacks in our age group were not prosperous enough to run with our crowd.Rents were high and what's the point of living within walking distance of dozens of nice trendy bars and restaurants if you are not going to patronize them at least every other day??

Every single couple who decided to have a baby found a good reason to move out-the real reason being the schools of course.But the places they moved to in nearly every case also had lots of black kids-a fact of life in that general area, but still much better schools.We never had a kid so the issue didn't matter to us.

For what its worth I know of some lily white schools that even today are no better than the Richmond city schools were then.

Cities can be great places.We had a folk dance club ,lots of partys with live music,something interesting to do all the time.I would take a cramped apartment in a good well mixed city nieghborhood(meaning mingled business /housing /people/parks) any day over a high dollar Mcmansion and a half acre of grass and the closest store ,doctor's office ,or park a car ride away- my limited experience with such "communities" is that they just aren't-communities, that is.

But just because you and I don't like the burbs doesn't mean that others don't.

I've gone to the trouble to type all this up with two fingers just to make sure nobody will think I might not know how to use a flush toilet in case there is an Oil Drum get together at thier house..It's either the real country or the real city for me.

Maybe next comment I will get around to some things the suburbanites might do to hang on .

Lots of nice little stores, restaurants, the university (VCU) within an easy bike ride, theatre ,museums,a nice park right down the street ... students and young professionals, musicians, artists, and a few genuine ageing hippies ... in a good well mixed city neighborhood(meaning mingled business /housing /people/parks) any day

Sounds like my neighborhood.


Best Hopes for Real Communities,


Yes, it was a real community , and a good one, except for the fact that most of the residents were transoients and the grentrification continued until the people who made the place interesting all had to move out.

The real shame is that although the entire metro area is growing like a weed , there is nothing possible like it being built any where due to the doofus zoning rules.

The few attempts I have heard about where somebody tried to build something like this from scratch have all failed apparently because the prices of all new construction in a hot market make it impossible for the right mix of people to live in the scratch built experiment.

moderately intensive, contiguous suburbs like those of Edmonton consume more in public expenditures than they generate in property tax revenues.

Is there any quantitative detail? I'd be curious what the numbers are, and how he came to this conclusion. For one thing, at least for local governments in the US, property taxes are only a minority of revenues, so the analysis needs to be much wider than that.

I think the whole issue rests on gasoline prices.
I also think that it is going to take very high prices at the pump on the order of 5 minimum and probably closer to 7-8 before decisions will even be considered to move.
Suburbia is a very sticky part of the American consciousness fact it is the thing that makes America America.

One other thing.
The park and ride destination should have the theme of a lower energy lifestyle all over it.
It should have a natural quality built environment that feels in synch with nature and not the cheesy junk that is littering the landscape of suburbia today.
This could all be done and enhance the beauty of the natural landscape.
I am trying to convince my nephews and nieces to pursue educations in the new urban design that is starting to take hold.

You could even use the shops at the park and ride as high efficiency examples of building ie water catchment and solar power and all the renewables you can think f and even bring it to the attention of the pedestrians. Even label the features that are energy efficient to bring up awareness.

Seriously most people are not stupid but just unaware and I blame that on the main stream information sources.
All this could be fixed in a big hurry just through the media and through what is actually on the ground in each persons daily routine for them to observe and for new opinions and ideas and awarenesses about.

If this comment above seems unintelligible it is because I tried to add to and already long comment and somehow I lost most of the original.

In a nut shell the solution to long commutes with high gas prces is a park and ride system on the outer rings that has collocated eco-freindly relavant businesses that could make it a destination all it's own.
Make it fun and useful and people will catch on and do it willingly.
Just 2 people carpooling cuts fuel and vehicle maintenance in 1/2. Move that number to 2 or 4 and you get the picture.
Businesses might have to back to regular type work schedules and blow of "flex" time but that is simple and if needed maybe stagger the start and quitting times of different businesses to ease traffic congestion.
The staggering should be done now wherever feasible.
I will add to these comments as the ideas pop into my head but you get the basic idea.

Once established I would expect that a hub and spoke mass transit system would be built along these eco-business park commuter park and ride routes and then you could have a cool little train stop theme that everyone would enjoy while jacking up commuting efficiencies orders of magnitude.
Much of these basic ideas are already in practice elsewhere so it is not even a matter of proving the viability and the obviousness of this solution is mere common sense thinking.
You could have day cares and health clubs and healthy eateries and grocery stores and wine shops and hair salons and cloths cleaners get the picture.
People would end up getting in a pattern to just want to go to these cool little parks just to use the services and then you got them.

(1) There can be no such thing as strong,sustainable and balanced growth.We live in a finite world.

(2) There are many things which need to be done but first we must abandon the ideology of globalization.This has caused so many distortions within nations with tragic consequences.It will happen anyway as national self interest resurfaces with a vengeance.

(3)There are a few in the heirarchy who understand what is happening.They have little or no input into decisions.For the rest,it will take a firestorm to convince them,but more likely it will destroy them along with many more innocents.

Years ago, I learned of Leontief's economic analysis using "Input-Output Models". These models allowed the economist to track the flow of material goods from raw resources thru each sector of the economy to produce goods for final consumption. It doesn't take a rocket scientist to understand these models. If the raw materials aren't available as input, the output will not happen. Of course, the technology at each step in the overall system can change and production efficiency can be improved. But some resources, such as energy and concentrated minerals, are vital and without them, the production process will be reduced. Transportation in particular is dependent on the highly concentrated energy found in oil and energy in general underlies all other processes. The trouble is, the economists can't see the connection between the inputs to the economy and the Earth from which those resources are extracted.

Given the obvious impossibility of continued expansion of consumption of non-renewable resources, which must at some point in time hit a maximum and begin to decline, we must some how make the peoples of the Earth realize that "Sustainable Growth" is ultimately impossible. That our leaders insist in publicly ignoring this fact of life can only be the result of intentional deception on their part, with their statements intended to continue the mass delusion of the sheeple who are so conditioned to consume that they can't see thru the fog.

I'm afraid that the politicians won't admit that limits exist until they are backed into a corner from which they can not escape. That will happen after Peak Oil becomes obvious or perhaps sooner due to some disruption in the energy supply chain. I would not be surprised to see another major conflict as a result. Humans do seem to have a "fight or flight" response built in and when the fear in the general public climbs to a high enough level, it won't take much to set it off. When the public's illusions die, they will die hard...

E. Swanson

Catton has taught us that any species that experiences frenzied growth on an accumulated supply of resources will overshoot the long term carrying capacity of it's environment and eventually experience collapse.

Tainter has shown us that the most directly quantifiable mechanism for that collapse in complex human societies is the diminishing marginal returns of attempts to mitigate the problems faced by that society. Ironically, problems that are made increasingly worse by those very attempts to solve them using a world view that is not appropriate to the actual situation.

Meadows, et al. have demonstrated that our current industrial society, if it remains committed to exploiting our abundant accumulation of non-renewable resources, will experience greatly diminished marginal returns on the amount of capital that must be expended to continue extracting those resources, as well as to mitigating the problems created by the frenzied growth enabled by those resources. Further, because the short term carrying capacity of our environment was so dramatically increased by the abundant accumulation of non-renewable resources the resulting overshoot will severely degrade the long term carrying capacity and the eventual collapse will reduce the population to a much lower level than might otherwise have been sustainable.

Odum further elucidates that such cycles of frenzied growth on accumulated resources followed by collapse are found at all scales of complex systems, both living and non-living, and are repeated at regular intervals at various time scales in "pulses". In fact, complex systems emerge quite naturally around flows and accumulations of resources and self organize to fully maximize those resources, eventually dying-off when the resources are exhausted, only to begin anew after another accumulation or flow has built up. Such pulses, while they might be viewed as a disaster from a limited perspective, actually seem to increase the eMergy of the whole system as seen from a larger perspective and longer time scales.

Therefore, anyone who thinks our current drama of overshoot and collapse, with the global economy evaporating into a black hole, billions of human lives being rendered redundant, and entire ecosystems wiped off the face of the Earth, is some sort of freakish calamity that must be avoided AT ALL COSTS..., well, they are quite simply dead wrong.



Ok, yes, maybe, but ...

>billions of human lives being rendered redundant

I have a big problem with us being sanguine about billions of deaths. And when we also keep hearing that we mustn't move to nuclear power because it is "dangerous" and we must stop burning coal because it is "dangerous", then you start to wonder whether there is a subset of people who know that giving up nuclear power and coal would lead to billions of deaths and whether those people have a positive view of that eventuality.

The trick is to NOT be one of the initial billions. Words and lofty sugestions are not part of the trick. Assemble your caca and get ready for TEOTWAWKI. If you and yours makes it through the chaotic times in our future till a natural death catches up to you, then you did the trick well enough.


I'm not sure Jerry was being sanguine as much as making a simple observation.

The truth is that most of us are already sanguine about the "preventable" deaths of billions of people (well certainly millions) every day right now. Even when we see death and suffering (e.g. Darfur) on the nightly news, how many people race out to actually do anything about it. Caring for every life on this planet is not the moral high ground many would like to believe (especially when they can be vocal without actually doing anything about it).

Jerry points out that "It is what it is." We don't have to like it. But we don't have to waste our moral energies wishing it were different. If collapse is inevitable then the moral thing to do is think about what to do to prepare and plan for how to help those who might survive. In one sense this is not very different from what elder parents do to prepare for their own inevitable death vis a vis their children's future well being.

In sum, absolutely nothing has been 'solved' in recent months. The components of the debt pyramid have just shifted ledgers. In many real ways we fell off the cliff last fall and a giant airgun (govt intervention not based on real resources) has allowed us to continue the feeling of levitation since.

I would propose that we fell off the cliff in the mid-70s, after Bretton-Woods II met the Texas Railroad Commission in 1971. We've been spinning up growth based on technology and debt ever since Reagan proclaimed that it was a "New Morning in America." And Obama, for all of his talk of change, is still spouting the growth mantra. It makes me cringe every time I hear it.

Jolly's statement: As to the argument that the demise of Bretton Woods has somehow contributed to unsustainable growth...did World GDP growth really accelerate that much with it's demise? That seems like a pretty straightforward way to check the premise. Taking fiat off its partial gold backing was the only way to spin and accelerate GDP growth. We had autocatalytic, accelerated growth occurring, and a currency that did not grow along with it would have restrained the progress of the growth.

1) Can you articulate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth? Why would you, unless you were a politician or an economist?! And I don't use those two labels here in a very nice sense.

1a) If not, what sort of 'economic triage' policy would you recommend? Think bold.

First, fire all the economists, get rid of the Fed, and let the banks that are insolvent fail (that would be most of them). Crank gas prices way up, and use the taxes to build mass a national train system. Pull an FDR and employ the unemployed in this job. I'd say tax imported goods to encourage relocalization, but the dollar is soon to take care of that issue. Put subsidies into population degrowth policies to stop the "Quiverfull" movement. Take all human rights away from corporations. Stop all corporate funding of academic research. Create a longer-term outlook somehow for politics, and make voting one person, one vote. Stop all funding for highways now. Cease the fractional reserve system. Mandate 100% reserve requirements for banking and put us back on some sort of asset-based currency, preferably energy based and local. Limit the range of inequality in incomes to 20:1. Allow more personal leisure; make the work week 25 hours. Disband the IMF and WTO. Put the remaining commons in public trusts that provide dividends to all (much like the Alaskan PFD). Reform medical ethics to allow deaths to occur at a normal age. Reform the definition of GDP a la Henderson, or Bhutan, maybe. Henderson's Quality of Life Indicators: education, employment, energy, health, human rights, infrastructure, income, national security, public safety, recreation, and shelter.

Decrease in Growth Capitalism: When there are resources to develop, rapid competitive growth of a few enterprises prevails. In ecosystems this is called eutrophic overgrowth by weeds. In the economy, this is growth capitalism. Those developments with investment loans outgrow those without the more rapid start. When there are few undeveloped resources, a no growth system of higher diversity prevails because it is more efficient and better at recycling materials. Enterprises with loans to repay are then at disadvantage.

Descent Capitalism: During descent, new versions of capitalism may appear. Enterprises may be initiated to organize the contraction of the economy using the stored assets as the resource for organizing a smaller economy. There are already some specialists at downsizing. In analogous equivalents in ecosystems, new generations are fueled with the storages of a previous annual cycle.

Decrease in Unearned Income: During growth, capital earns high interest as enterprises pay back loans and dividends. People with money have large incomes for which they did no work for the system. After growth, unearned income decreases. A system is more efficient if money is paid for real work.

Change in Development Policies: When unused resources were available for development, laws developed that maximized competitive capitalism and growth (because monopolistic overgrowth maximizes empower at that stage of succession). Examples are sale and use of public lands for profit; priority rights for mining over surface land use; and corporations given the same constitutional rights as individuals to exploit economically. After growth, such development accelerating laws are likely to change.

As efficiency becomes a recognized priority, measures to eliminate luxury and waste may be recognized in law and policy. One proposal is to establish a limit to personal income at about $150,000 per year. A policy suggested for downsizing reduces income of all personnel in place of the common practice now of reducing the number of employees.

Stock Market Transformation: When most growth is over and the public realizes the fundamental change, a destructive stock market crash is possible. Some mechanism is needed to program a gradual, non-catastrophic deflation of the money held in stocks and bonds. For example, an economy-wide stepwise limitation of interest and dividend rates could shift money from stocks and bonds to ownership and efficient operation of those productive enterprises with good annual yields.

Private Enterprise with Public Control: To maximize system prosperity, private production must include public benefit needs in its operation and pricing (not only make the most for the lowest cost to sell for the highest price). Private business can be required to add the costs of environmental protection and social equity costs of recycling materials, restoring land, and replacing destruction. Minimum wages and benefits need to be included in the costs. These costs are not a burden to an individual company if required of all competitors.

Developing Trade Equity: Because the money from developed countries buys more real wealth in trade with more rural countries, the present free trade is not equitable (because of differences in emergy/money ratio). It accelerates the weedy over-growth of developed countries, which is appropriate only in early growth stages. Developing equity (equal emergy in international exchanges) allows more countries to make maximum contribution to global empower. Trade treaties can be used to adjust prices, subsidies, foreign aids, information and other types of exchange to be equal.

2) What will it take for international economists, policymakers and authorities to understand that money/credit is not a resource, and does not on its own produce cargo? American economists will never understand it. Policymakers need a post-global-peak-oil oil shock to bring them into the fold. The military has already got it figured out.

And we need these fixes yesterday. Per Jerry/Tainter: Tainter has shown us that the most directly quantifiable mechanism for that collapse in complex human societies is the diminishing marginal returns of attempts to mitigate the problems faced by that society. Ironically, problems that are made increasingly worse by those very attempts to solve them using a world view that is not appropriate to the actual situation. We are Tainter's leaf-cutter ants. We're going to burn everything up in the next two decades in the face of diminishing marginal returns--our techno-society will be more damaging to the environment on the way down than it was on the way up.

Well,... but HOW important is it?

To be important enough for people to reason that we must be making some mistake, and start openly looking for why our solutions are causing so very many problems, would takes quit a lot of curiosity, no? I think I see that everyone has that ability, but they don't seem to use it so much, like the curled up dimensions that the "string theorists" talk about.

Such pulses, while they might be viewed as a disaster from a limited perspective, actually seem to increase the eMergy of the whole system as seen from a larger perspective and longer time scales.

Could you expand on this thought, or direct me to the relevant sources?

The current pulse is quite possibly a once-in-the-lifetime-of-our-planet event, and extinction events of the magnitude we are currently witnessing have only happened five times since the Cambrian explosion, so I can't help but think our situation does - or soon will - qualify as a "disaster."

I realize that without the extinction of the dinosaurs mammals wouldn't have had their day, but since I figure humans - or species descended from h. sapiens - will probably survive this, I really can't see how things will be better - for us or the planet - after such an event.

Hello Nate,

Your Question 1A: "If not, what sort of 'economic triage' policy would you recommend? Think bold.

1. Global Recognition of Jay's Thermo/Gene Collision fast-crash scenario, Archdruid Greer's Catabolic Grind, and Duncan's Olduvai Re-Equalizing would be an excellent start for TPTB. This should be enough incentive alone to goose full-on Peak Outreach everywhere, ASPO Depletion Protocols, meaningful CC mitigation, and efforts to reduce our elevated species extinction rate. Anything is better than Overshoot collapse resulting in the maximum Undershoot phase thus defaulting to Jay's "Requiem" or TODer DarwinsDog's fast human extinction.

Economic & Ecologic triage minimized by Countdown Digitization to Base-9. I would be happy to join Obama and Putin at the first televised event followed by a Peakoil Shoutout Party.

2. Global Recognition of Optimal Overshoot Decline, Asimov's List, and how the Circle of Life [Evolution] has us locked into the chem-limitations of the Periodic Table. Foundations for meme creations leading to polity arranged around watershed boundaries, Innate Territoriality, Hirsch's Fifteen Detritovore States plus initialization & gradual enlargement of biosolar habitats causing Mercs to arise to be opposed by Earthmarines. This results in focused global conflict over the Circle of Life, not FFs and other depleting resources.

3. Other ideas such as SpiderWebRiding, strategic reserves of I-NPK, plus much more are additional thoughts to build on 1,2 above. See my prior postings.

Consider the consequences of failure to adopt all of the above in a timely manner, then moving stuff this way:

Your mileage may vary [YMMV], but remember: "She comes down from Yellow Mountain.." because [P]hosphorus is naturally Chem-locked and we won't have enough bats & birds & bees.... for O-NPK if we continue our present course.

Compare to these Optimal Overshoot Decline ideas of Unity based upon Asimov's Bio-Elemental List:
"Remember when the music...[Harry Chapin]
Was the best of what we dreamed of for our children's time
And as we sang we worked, for time was just a line,
It was a gift we saved, a gift the future gave..."

Elysium is referenced in the Schiller poem which inspired Beethoven's Ode to Joy (9th symphony, 4th movement):

"Joy, beautiful spark of the gods,
Daughter of Elysium,
Touched with fire, to the portal,
Of thy radiant shrine, we come.
Your sweet magic frees all others,
Held in Custom's rigid rings.
All men on earth become brothers,
In the haven of your wings."
Again, discussed extensively before in my prior posting series. BOLD ENOUGH?

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

How about using the resources that would otherwise be devoted to growth to stabilize the economies, to provide the resources to bring economic development into balance with nature, by (with a few more details to add) including that as part of the definition of "fiduciary responsibility" for a world in crisis?

> energy and materials expenditures to procure more gold from mining

I thought the traditional method of acquiring gold was to conquer other cultures and melt down their priceless art. Be careful what you wish for. I'd also note that money is a trusted medium of value exchange. The definition of a trusted computer system is: one that can hurt you. Gold is a trusted commodity exactly in this sense.

I'd strongly oppose tying money to any particular commodity. If we're going to store commodities to back money then it needs to be the widest possible range of commodities. The G20 got one thing right: exporters have to balance their exports with imports. China is going to do that by importing and stockpiling raw materials. Others will follow. This could lead naturally to commodity-backed money.

The other thing the G20 want is responsible lending by banks. However the ability of borrowers to repay loans is much more dependent on the future of the total economy than on the particular circumstances of the borrower. So the missing piece of that puzzle is good quality modelling of the total economy and if they did that right it would include energy and it would be driven by a strong open vigorous well-funded investigation of the facts.

Well, of course, that isn't going to happen. Instead we get traditional economists like Krugman saying things like "economic production is 2 trillion down, so there must be 2 trillion insufficient demand, so all we have to do is artificially supply that". What's missing is the calculation of what maximum production now is, given the inability of oil production expand.

It`s quite likely that many people in the govt understand the hopelessness of the situation.
But if they start articulating non-growth or de-growth policies, they (probably correctly) believe they would start to panic people around the world. Many people regard growth as a kind of religion. To suggest a change in that policy is like the Catholic Church saying, "wait, maybe we were wrong......"

But furthermore, how would the leaders frame the non-growth idea so it would "pass the USA Today test" and be understandable by the ordinary person? (The idea of de-growth is hard to understand actually, if you understand life forms....biological entities.....they grow. They reproduce and just keep on doing so until they die off. There is no other significant pattern unfortunately.)

So if you promote degrowth and that starts being translated as maximizing your access to natural resources (so that you can profit from de-globalization, etc.) then there will be a mad rush for land, mountains with streams, forests, etc. Panic, perhaps fighting....the current elite would rapidly be supplanted.

It is just impossible. The idea of growth will always be attractive. Leaders will continue to promise it until we`re all living in tent cities and drinking rainwater and scavenging metal from old shopping centers. The scruffy tent-city mayor will emerge from his tent and give a speech on growth and a bright new tomorrow and everyone will clap. It is a religion.

if you understand life forms....biological entities.....they grow. They reproduce and just keep on doing so until they die off.

Almost but not quite. They grow, they reach maturity and stop growing, while in this stage they reproduce, they then grow old and die and the resources that are bound up in them are released back into the cycle of life.

There are life forms that curtail operations until conditions improve. Seeds, spores, hibernating bears, toads that encase themselves in caked mud. There are limits to how long such "seeds" can hold out, but they remain viable for long periods of time based on our life time. The only thing that comes close in our situation was the role of monasteries from the middle ages. has a lot of writers that consider this situation and how to survive. Ants seem to be organisms that are capable of looking out for themselves in an enlightened manner by the symbiotic relation with fungus and plants or aphids and plants. Sort of early ranchers and farmers. A useful metaphor may be to consider how the tadpole survives when the pool of water evaporates.

Some world leaders have been talking about measuring economic worth in a broader sense. So in a sense they are still following the growth religion, but they are proposing the idea that there are things of value which contribute to GDP, and things which contribute to GDP which are of negative value.

I am, like many others here, skeptical about long-term growth, regardless of policies. If the people, though, want growth, build as many nuclear plants as possible and develop an electrified infrastructure. Will it work? I may not think so, but tell the people this is what has to happen to even have a chance of growing through your (for example) children's lifetimes. Maybe they'll then wonder how important growth really is.

But even if you persuade people to end growth, doesn't that still leave you with a finite economy with everyone struggling to have limitlessly growing shares? That's the one I think my (& Keynes' & Boulding's) approach fixes, and it seems to solve several things at once. I'm not sure about the USA Today test, though, unless they could do it with "World Decides To Make Ends Meet" as the headline... ;-)

...the world now has between $400-700 trillion in debt and other assets that requires repayment...

No. The debt load requires servicing, at whatever interest rate. I don't understand why the staff here continue to ignore this. These servicing charges represent (approximately) an annual claim on world GDP. Show me the last time that outstanding world debt was zero. Debt is continually rolled over, as old debts are repaid and new debts are issued.

As to the argument that the demise of Bretton Woods has somehow contributed to unsustainable growth...did World GDP growth really accelerate that much with it's demise? That seems like a pretty straightforward way to check the premise.

servicing is what I meant. I fixed it. But if they can't be serviced then their repayment will also be called into question.

Im working on answer to your second question.

Point of this post isn't whether Im right or wrong but to see what TODers would recommend as policy.

second question

Plot debt against GDP and you will see that debt has raced ahead of GDP so any increase in GDP is "false". Look at "real" living standards, have they improved since the 70s? I doubt it.
IMHO a lot of things happened in the 70s, coming off the gold standard allowed the politicians to more easily hide what happened when debt was increased and/or interest rates were kept low. Trade with China was opened up which lead to the huge increase in outsourcing/globalisation as the 1 billion poor people could be utilied to undercut wages in the developed world.

In 1971, Congress passed the Federal Election Campaign Act which permitted Political Action Committees to make larger contributions to Congressional candidates than what was allowed by law for individuals. In short, Congress passed their own version of campaign finance reform that created the ability to have unlimited funding since there is no limit on the number of PAC's that can be created and nothing to prevent multiple PAC's from contributing to the same candidate. This (bad) legislation was intended to give the incumbent a definite edge over any challenger and help insure political dynasties.

In 1977, The Community Reinvestment Act (CRA) was passed. This act, as stated in its own words, "intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low and moderate income neighborhoods, consistent with safe and sound banking operations". What was intended, and what occurred through enforcement are two entirely different results. This Act would later become instrumental in the economic disaster of 2007.

The way I see it is that ever since Reagan opened the debt flood gates back in the early 80s the amount of "stimulus" pumped into the economy has been larger and larger each business cycle and the "recoveries" have not been proportional. We finally seem to have arrived at the point where no amount of phony money incentive is going to right the ship.
The problem is that debt was used as the rabbit for production to chase and production is based on the real world which has limits and so here we are.

Right, and if you were to consider that as "misinformation" about the scale of wealth being generated by the economy, wouldn't you be looking for a way to correct that misinformation once it's become clear that the economy can't pay the debts that accumulated?

Or does ownership take precedence over reality... maybe?

You and I have agreed on what needs to be done just I think that a different method would be better.
You say adjust debts to fit............I say that is not fair to everyone.
I say devalue the dollar INCREMENTALLY through a SERIES social credit to every citzen while debts stay the same and hence become much less significant.
That is at least fair to each citizen.
In addition, debt reduction sends the wrong message and I think would be creating a moral hazard on the order of Babylon.
We actually need a entirely new currency.
There are a lot of posts here that are flirting with a bunch of great ideas that might be able to be integrated into just such a system.

edit added clarity

Oh, yes, I agree with the first part of that too. Even in trying to describe the "scientifically correct way" to erase the misinformation that built up in finance over the last few decades in writing my proposal ( reset$.htm ), I recognized that once people see the necessity of doing something they'd probably take that simpler approach. I still think it's useful to have a scientific measure of how far the monetary system diverged from the physical system. That would gage how far the currency should be deflated.

Then maybe the rule would be for every country to simply print money enough to give everyone twice or three times their recent normal earnings in a lump sum... I think there are ways to ensure that it would mostly go to retiring debt or savings. That would include steering investments toward truly long term values and letting people know that one of those long term values is ending the "endless" growth of investments that pushed the system over the edge...

I'm not impressed with the new currency ideas I've seen though, since they all seem to do gymnastics that wouldn't solve the main problem. The problem is how people use currency, to continually compound investments, which stimulates continually multiplying searches for new ways to multiply either consumption or promises.

Yes basically we have to stop thinking in terms of one way growth and start thinking in terms of cyclical stability.
I also agree that there has to be some research done to determine where we are in the relationship of the paper economy and assets and the real economy and assets but it seems like that could just be done by kind of like taking a big inventory of the Nations capital and assets and then determining the new currency numbers off that. I know I am over simplifying but something along those lines.
Also, some of the currency ideas here don't necessarily promote growth.

I think that a necessity is to get people to understand that we live in a cycle just like everything else in the natural world and not in a exponentially increasing growth curve. The problem being that the current memes are all growth oriented.

The best way to make measurements of a complex system is with a group of whole system measures. Choices turn out to be judgement calls anyway, and different aspects of systems will show different behaviors that will be valuable to take into account.

How you make whole systems measures, though, can be more of a rigorous science. You want measures to correspond to the system's physical working parts, rather than to value laden measures promoted by some interest group, for example. So far I don't think I know of anyone else being careful about that. It's as if all the (presumed) other scientists like me who think systems are physical things with physical parts (rather than being some kind of blur in a statistical phase space...) are having as much difficulty getting the point across as I am.

What if the debt servicing were paid, but spent by the creditor rather than added to their lending to continually multiply the growth of the debt. Wouldn't that keep the debt from growing?

Wouldn't that also inject spending into the economies so businesses and governments could better afford to pay their debts? Wouldn't that actually be a necessity in a non-growing world if you didn't want to have debt growing ever faster than wealth kept in control only by repeated major waves of defaults?


For some reason this has occupied a lot of mental space, lately, along with the Redskins really stink this year.

Given enough time and a perfect world, the Fed (and other central banks) can monetize all the existing debt. That is, they can swap 'lent out of thin air' cash for old debt ... and just sit on it. The old debt goes to the Fed where it is forgotten. The cash is conveniently lent back to the Fed for interest that is also lent out of thin air. As long as the business recipient of the cash does not lend to others, the Fed can successfully monetize all the public and private debt. To the world outside of finance, the overall debt is contracting. Meanwhile, the Fed is simultaneously creating inflation. The inflation remains in the ambit of finance assets and ... stocks go up! Happy happy, joy joy!

Unlike you, me, and other businesses including regular banks, the Fed can monetize the debt service We have to pay our debts or face the consequences, central banks don't carry that burden. Depending on the rate of claims on funds, the Fed can also (theoretically) monetize both the Social Security and Medicare deficits and also not cause inflation. Over a long time - the Fed won't go out of business - currency depreciation will take care of the debts. $100 trillion in 2060 is about $60 in today's dollars. Time heals all wounds in the perfect world.

The real issue is the limits to this process. Without the cargo of interest, there is no reason not to 'borrow one's way out of debt'. This is in a perfect world, of course. The real world is different, actions must take place over time and be timely. Monetizing in a hurry ... could precipitate a currency crisis!

Another way to look at this:

There are two parallel universes; one is the physical economy where goods and some services are produced and the other is the financial economy superimposed on the other's back like the proverbial monkey on the shoulders of a junkie. Both economies are subject to a grounding rule; banks can lend money principal into existance. It cannot lend interest into esistance. Interest is the tax on borrowing that 'grounds' finance to the efforts of the borrower. Otherwise, he would also simply and endlessly borrow the interest as well as the pricipal and let his (massively expanded) debts die with him. At the same tine, industrial means suggests the borrower rarely pays the interest himself, out of his body. It is from the Earth's resources that this tax is wrested.

In the physical economy, the interest is the cost of materials, that increase as material demand increases with growth in physical economic activity. Demand cost can only rise - the phenomenon of 'falling prices' is because of averaging over an expanding market. More demand for resources always has resulted in raising aggregate demand. I suppose this aggregate demand drives inflation generally since the means to deal with it is to diffuse the demand by subdividing it with more and more 'money'.

In the financial economy, the interest rate ground should keep pace with the resource constraint in the physical economy. Unfortunately, the rise in rates is prevented through monetization. Rates remain low until aggregated demand for money causes rates to rise. One outside cost that effects money cost has been historically the rise in the price of oil. The increase in rates and money cost is usually fatal to finance since the leverage finance relies on is (apinfully) unprofitable when legacy long- term debt repayments are less renumerative than current short- term money costs.

Putting resource costs (physical economy) @ par with interest rates means rates will rise inexorably. I propose that this parity is impossible to overcome except episodically. The central banks can buy down rates for short periods, but not endlessly. The outcome is the ultimate end of finance as the 'mainspring' of growth.

I realize this is brief and 'sketchy' but the outcome rise in rates will make most of the G20's maneuvering pointless and irrelevant. Most of the past 20 years' economic growth has been inflation @ low yields/money costs. Take that away and what is left is fish farms and Chinese cities where zippers and umbrellas are made.

Not much real growth, in other words. As for consumption, that too is the child of finance and will fade away as the funds that drive it become too expensive.

The first thing the G20 must do is become more honest with each other about conditions. Growth is irrelevant, honesty is the basis of all human progress and well- being. The instant the world's first nations stop lying to each other and the rest of the world about conditions in that instant the current problems will be on their way to being solved.

A ruthless and unswerving honesty.

"the Fed can also (theoretically) monetize both the Social Security and Medicare deficits and also not cause inflation."

No it can't because these defecits are liabilites into the future and based on current costs, i.e. are not fixed costs regardless of what happens. If the money supply is increased then the costs of carrying debts will increase. If you look at Zimbabwe you will see that increasing the money supply did not lead to joy. Since the Fed has been in existence a dollar has lost around 95% of its worth but the debts have just got bigger.

"The first thing the G20 must do is become more honest with each other about conditions."
ROTFLOL it ain't going to happen that a politician becomes more honest about the future because it would be electoral suicide as the hydra's other head would promise sustainable growth, an end to boom and bust.... It would take a major black swan event for this to happen.

No. The debt load requires a period of hyperinflation (with mass bankruptcies and associated property redistribution) to bring it back to a level where it can be serviced with the new economy.

Shame about your savings, not much call for digital toilet paper.


Q: 1) Can you articulate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

A: 1) Yes: We are all doing a fine job of making a strong, sustainable and balanced growth as we pull away from the economic abyss. We need to continue what we are doing and keeping each other informed. No need to discuss any of this or heed any suggestions with/from the population or other economists. WTF do they know? Nada, nothing, zip …

Q: 1a) If not, what sort of 'economic triage' policy would you recommend? Think bold.

A: 1a) N/A; we all know better than anyone else (see 1 above).

Q: 2) What will it take for international economists, policymakers and authorities to understand that money/credit is not a resource, and does not on its own produce cargo?

A: 2) Your economists and policy makers (and of course ours too) understand reality better than any DS bloggers. Remember strong, sustainable and balanced growth is not only our destiny but our right!

Lynford’s Notes:

Don’t you people know … It would be unpatriotic to disagree with the World’s G20 Royalty and if you disagree with Obamason you must be a Repug right wingnut or worse ... maybe even a conservative! Stay close to your family and neighbors. Spend this time harvesting your garden, get enough firewood in for the winter, buy all the stuff for next year’s solar projects and try not to yell out FU AHs while it gets worse.

This G20 blurb reminds me of one of my former squadron’s motto; “Cranius Extractus Annus“ complete with a great Coat of Arms. Really, what did anyone expect from this meeting? Do you really think you will change their minds with logic? Be patient, Gaia will do it in due time.

Enjoy these interesting times.

1 Slam on the brakes. Growth is the problem, not the solution.

2 Nationalise all currencies.

3 Downgrade the value of human life.(except mine)
I hold it to be a self evident truth that no two humans are equal by any measure.

4 Find out how to fly this ship.
Apes have infested the bridgedeck.

5 Learn humility.
My God is the God of the Yawning Chasms. (See Chaos Theory)

6 Apply Intelligent Design to humans.

7 Issue permits to breed. If handsome acts like a monster, handsome is a monster. Use monsters for parts.

8 Recognise Quality. Quality trumps quantity.

9 The vote must be earned.

10 Divert resources from sub-urbanization to soil preservation and mycelia.

11 Feed fungi and earthworms our phosphate by-products.(use your imagination)

12 Remove sloth and sexual perversions from the deadly sins.

1) Can you articluate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

No. Sustainable and growth are mutually exclusive over long time frames. You might be able to combine strong, balanced and growth, but would eventually run into real limits and stop growing. You might also be able to combine strong, sustainable and balanced, but only in a new economic system that was not growth based.

1a) If not, what sort of 'economic triage' policy would you recommend? Think bold.

Globally, this is way beyond me. Even in the US, it is probably impossible for me (or perhaps anyone) to fully comprehend all the interconnected complexities we have created. Still, as a starting point, I would probably move to break the money is debt bond. Using some kind of system where the banks (including the Fed) can no longer create money, all money being created by the US government (Treasury) and spent into circulation (and to be removed through fees and taxes). Obviously, such a system requires replacement of all existing money, and the initial creation of sufficient money to basically retire most (all?) debts based on debt-based money.

There are a number of proposals for this type of system. Most are similar. I'm sure that all have problems. However, I don't think that the most common complaint, the risk of runaway inflation from government printing, is a legitimate one as long as government spending is limited to certain types of spending that actually create real value, either as real physical assets that can be used by the people of the country (infrastructure, etc.) or real research that can lead to the creation of new future assets.

Such a system probably also requires decoupling from globalization and protecting national resources by restricting the flow of capital out of the country. This is a touchy area and would require a certain degree to tender care to avoid all-out trade wars. The goal here is to protect one's own citizen workers and resource bases from exploitation, while maintaining fair and balanced international trade. I think this is possible, VERY difficult, but possible (at least in theory, probably not politically in my lifetime).

Additionally, such a system probably requires the adoption of a (oh-oh, here it comes...) net zero growth population policy (personally, I think it probably needs to be negative for a long time, eventually becoming net zero at some much lower level... but that's just me). More people use more stuff over time, almost by definition. Sustainability cannot be achieved without addressing population. This has to be achieved by some combination of reproductive self control and immigration control. I have no desire to debate the various options along these lines, as such debates can easily be joined elsewhere, nor am I qualified to do so. That said, the long term net of reproduction and immigration must be zero and policies need to be designed to ensure that any fluctuation is made to be net zero mean-reverting.

Oh, and all of this has no chance in heck of happening unless there is massive campaign/lobby finance reform, probably in the form constitutional amendment. Without removing the big business/organizational money from the political process, long term interests will always be subservient to the short term financial gain of Big Money.

I have no idea if that is bold enough. I do know that not one of these ideas has the remotest chance of ever happening in any conceivable representation of our current socio, political, economic system.

2) What will it take for international economists, policymakers and authorities to understand that money/credit is not a resource, and does not on its own produce cargo?

An act of God? A revolution?

Perhaps a small, but still enormously important, step would be for the US to appoint any of a number of the highly qualified steady-state economic minds to real positions of authority and power within the government's economic control structures. Here we are talking positions like Chief Economic Adviser, Sec Treas., Council of Economic Advisers, etc. Perhaps, with support from a strong President, such a person could begin to expand the debate and nudge the system towards reform and sustainability.

Again, wouldn't hold your breath.


but if you achieve all that and including elevating all the leading steady-state economic minds to positions of authority, won't that still

leave you with a finite economy and everyone struggling to have limitlessly growing shares of it? That's the one I think my (Keynes' & Boulding's) approach fixes, and it seem to solve several things at once.

Thank you for bringing up the "net zero growth" in population idea.

Many people on TOD agree with the idea that ever increasing growth in the number of people is impossible. Including me.

But some religions actually do forbid birth control.

So any proposal to go to a world view where no growth is possible will strike out first in the region of the brain where religion resides---from what I`ve seen this is mainly where the whole notion of identity comes from.

And you`re back in the "prisoner`s dilemma" territory.....I`m not going to limit my family`s size (or my tribe`s size) unless they (the other tribes) do and there is not guarantee THEY will. I cannot trust them because they are not one of "us". They might gain a numerical advantage and THEN our tribe will suffer. We`ll die out while they take over the cosmos! It`s a deep existential worry.

Reading several proposals here I`m really impressed, however!

How about a few simple things which don`t go against the Darwinian streak in our brains to fight for advantage (IMO this is the root of the "growth" paradigm): ban all (or almost all)plastic bags, make cars twice the price (half goes to the govt to use for public trans.), hefty tolls on roads but not bike paths, pay heavy fees for all garbage generated, laws limiting the sizes of shops to "tiny", heavy fees on all parking lots owned and operated. Major changes in zoning laws to encourage development of villages. Planting gardens that are good for the biosphere gets you a huge tax break...Size of orporations limited to 10 people. Etc. etc.

In other words, you don`t need to get rid of the growth paradigm. Talk it up! Hold hands with the damn growth paradigm and marry it even. It resides somewhere deeply inside the brain and it won`t go away anyway, but enact HEAVY penalties for continuing BAU. Everyone will hate the govt but the govt just smiles and starts talking about "balanced growth" and "sustainable growth" while they enact the stiff laws I`m suggesting.

It further occurred to me that additional steps are required. One important example would be a constitutional amendment to remove the equivalency of business/organizations with individuals.

In our current legal system, corporations/orgnizations are basically considered to be individual entities having the same rights as individuals. This allows organizations to apply free speech arguments to campaign donations, lobbying, property rights, and a myriad of other core individual rights.

This corporate/individual equivalency would need to be removed or severely curtailed. Without doing so, it would essentially be impossible to obtain meaningful reform in almost any area. As long as corporate advertising/marketing is protected speech, it would be virtually impossible to ban or limit such communication. Limiting advertising would be one of the key elements in any successful transition from a consumption-driven, standard-of-living-based, growth economy to a quality-of-life-based, steady state economy. The ability to apply huge monies, communication, sociological, and psychological research with mass market communication techniques would almost certainly overpower the government's ability to nurture system change. Essentially, similar arguments come into play in any conceivable circumstance in which the government would be trying to change the status quo for the good of the overall population, and doing so would cause financial hardship for Big Money in any of its forms.

So, organization/individual equivalency must be abolished or, at least, severely limited.


2) What will it take for international economists, policymakers and authorities to understand that money/credit is not a resource, and does not on its own produce cargo?

Mr Darwin has to work his magic.
I hope he selects for Quality, or a nasty virus might select for a healthy immune system,which would be a waste of a good crisis.

Mr Darwin doesn't care about the results .The results just ARE.

But I do get your point and tend to agree-until I remember that "quality" got us into this mess in the first place.;)

Given the opportunity , how many of us would exchange our statistical seventy five plus years of relative ease for twenty five or thirty years of hunter gatherer existence, even up , given the choice?

Very good, Arthur. I've often wondered that if sex was made more cranially difficult, we might be a more intelligent species - then I realise that it must have happened already. Then there's the little problem of half the people you know being below average, but if those below the line reproduce in greater numbers, more than half the people you know are below average. As I've just proved.

No two humans are equal. I follow, and breed with, those who are cleverer than I.
Quality and quantity.
We are pushing the limits here. I have found that there is a downside to brilliance.
The working mind dances along the edge of chaos.
Read "The Madness of Adam and Eve" by David Horrobin.

The human mind has got us into this mess..we have to push on through. The alternatives are real.

Proscribe omega 3 oils as a precursor to arachidonic acid for the general population. No quick fix but it might help.

The task is difficult enough without the need for opposites to be spelled so close to each other (prescribe vs. proscribe).

Oops! (Embarrassed blush)Thank you.

Like Magnus, general guidelines.

One overarching theme is to divert GDP from consumption (keep at current depressed levels or lower) to investment in energy producing (see mainly renewables & nukes) and energy efficient (everything from electrified railroads to insulation) infrastructure.

Redo tax code (and mortgages) to encourage energy efficiency. An efficient washing machine should cost no more than an energy hog, etc. A well insulated home with efficient HVAC, cube shape, shared walls, etc. will hold it's value better, so give it a slightly lower risk premium on the mortgage.

A "risk premium" on mortgages based upon their walk score (improved from today) and access to non-oil transportation (bicycling plus Urban Rail).

Tax carbon as one means of increasing efficiency and reducing consumption. I prefer phased in taxes to give some lead time to adjust before the tax level really bites.

Any nation w/o significant gas taxes should phase in significant taxes, and all nations should raise their gas taxes (except Norway with highest gas taxes in the world).

The first couple of years of such new taxes may not balance the budget, but the later years will create a budget surplus. This impending surplus will make lenders more comfortable in lending.

The goal is to have a new economy arise, with less consumption and more investment in semi-sustainable infrastructure. Higher GDP, but spend it on railroad tunnels (that last centuries) and not SUVs :-)


PS: if TSHTF, many of these consumption > infrastructure projects will still have some marginal value and may raise the level that "we" decline to.

A mule can draw a steel wheeled wagon through the railroad tunnel, so the tunnel will still have some residual value. A well insulated home with just a solar hot water heater, can draw a bathtub of hot water in the afternoon, open the windows that sunlight falls on, when it is shining, and keep the inside temperature slightly higher on a cold night than current McMansions. etc.

I'm thinking something along the lines of making certain choices economically prohibitive might be the way that works the best. Give people 6 months to choose something else to do that does not pollute/destroy/waste or face the consequence of most likely going out of business. So mountaintop removal and new coal plants goes first, keeping buildings lit all night, A/C to below 80 degrees, stuff like that - "proscribe" it somehow. The key would be to announce it with some short time for the bad guys to scramble for an alternative.

Then there's a host of people not actively destroying or wasting (say, schoolteachers) and they would just be required to cut emissions by 10% (use less water, less electricity, make it a game...).

Then there's the people working hard to make a difference: organic farmers, solar installers - they might get a pass on the 10% this year. They can be held up as using "best practices", and the way to get to where they are should be clearly encouraged, spelled out, facilitated in any way possible.

You could develop a plan to send willing unemployed people to the suburbs to start farming a half acre plot, and sell produce to their neighbors (see SPIN farming).

You would have to make the fines or taxes very large, and the incentives very appealing because this ship needs to turn around immediately, if not sooner.

If the cost of certain things (cars, makeup, Chinese toys, food with pesticides, you see what I mean) went up 10X in a year, and the price of alternatives (public libraries, bicycles, farmers' market food, etc...) remained the same, it seems to me people would complain loudly, but then they would get used to it quickly.

The model in my mind is that of my kids: when you say "no", all hell breaks loose, and gnashing of teeth and wringing of hands proceeds for several minutes. Then it's all over and they are busy doing something perfectly compatible with my sanity.

I'm still thinking if we cut back 10% of energy consumption in the next 12 months, and then plan to cut more after that, we could save the planet, and slow down oil consumption until we get a chance to enact a weaning strategy (winning, too).

The other thing we need is a good safety net for the folks who try something worthwhile but don't really make it - and another for those who resist too long...


I thought I would entertain you with an email response I received to a posting to a classifieds list I use occasionally to sell unused clothing and household items.

It was a spam response, linking to a work-from-home scam, and I won't quote it in full, but it illustrates how far we have to go :-

"I needed to let you know that you should not have to get rid of your items so that you can put food on the table. I know it probably sucks to have to clear out your belongings and I understand what it is like to make hard decisions in this global situation. Recently I was forced to sell my daughter’s Nintendo Wii just we could could make the mortgage. Those were most definitely the hardest times for the family. "

I'm crying for all the Wii's that are having to be sold....sheesh...(sarcasm)


A "risk premium" on mortgages based upon their walk score (improved from today) and access to non-oil transportation (bicycling plus Urban Rail).

There is a mortgage pilot program which takes commuting costs into account, esp urban vs suburban. Also, some MLS's are including energy costs in housing cost info.

Just makes sense.

Good News !!

Although a bit late.


If we're in overshoot how can we get more things for more people forever? We believed that? So what.

I want to challenge the premises of your questions but I'm not sure how. Produce might be the operative word. Make oneself useful to one's neighbors. There is no retirement. Nothing international without the natural infrastructure of regional and local trade is trully possible. World trade? Maybe.

Kunstler has the positive approach. Desite our beliefs and ideas, materialism isn't deterministic. Just is. The economy is the community and vice versa.
Catton in his way is positive, too. Survival would be scattered and pocketed.

This DOES seem positive to me. Cargo Cult on Wikipedia expains it nicely, and I would say one is negative if one's mind is captive to the rituals and "religion" of the growth-forever (albeit slow) belief.

Aw, man...I am using a couple Wile E Coyote slides for my ASPO talk!

Well I just got back from my first public Peak Oil related meeting.

I went to the meeting on finance and local currencies. I've come away convinced that local currencies are workable and readily doable esp if we continue to have hight unemployment.

Underlying this belief is the fact we have not lost our ability to create goods and services even dwindling oil does not change our innate ability to create value add goods and services simply changes the nature of the ones we create.

The answer seems simple fully decouple the real economy i.e the sale of goods and services from the fiat money supplied by the government. Of course at first its strongly tied via existing loans and esp taxes but at some point I can see the government buckling and excepting local currencies. Done correctly they will appreciate vs the fiat supplied by the government and you can readily pay any taxes in the nearly worthless fiat currency.

By decoupling ourselves from the approaching train wreck we effectively jump off the train.

The concepts behind local currencies are in my opinion sound and economic stress sufficient enough to ensure they get real support.

There is more to it but I've come back convinced that a workable answer is very doable for the financial side of the problem. Given my super doomer status I'm excited to see something I feel is a real solution and if you read my writings I'm not the most hopeful person in the world.

Its not a total solution but its a fantastic first step.

...but does dismantling the system either make it work better or identify what made it fail?

It seemd to me that any money system, whether barter credits or fiat, gold, etc, is simply more or less efficient at the same thing. Someone has to have to ability to adjust the amount of markers to keep the value of goods fairly constant.

However that's done doesn't seem to be what it is that would prevent global Ponzi schemes and such, which are just circular contracts and don't actually need money to work anyway. If we even got rid of money entirely I think people who know the trick would still create those kinds of schemes to tempt people into making multiplying circular promises, no?

Maybe we should just get rid of computers, because robbing people with a mouse click is how the collapse was orchestrated this time??

Ponzi schemes only require you to use new investor money as profit i.e take from new investors and give to all esp yourself !

In a warped way they are a very Robin Hoodish approach if the creator of one did not take such a huge cut.

Monetary systems don't solve this but what local currencies do is tie the amount of money tightly to the amount of goods and serives produced and overall wealth. You don't have complex financial instruments that create money out of trading money.

However it becomes really hard to keep one going since where are you going to run to with the currency ?
It tends toward fail fast and you have to add a conversion step to really extract the loot.

The nature of human greed insures that swindles will be around for a long time but if you think about it a bit the you should see that its much harder to execute a destabalizing swindle.

This of course assumes open book at the bank. Regardless of what you do banking must be transparent. And agian a simple local currency can be dealt with via true open books. In a sense everyone knows what you keep in the bank. It may only be via an anonymous number but all the amounts are there and its a book keeping exercise.

In fact all the things that are good about local currencies are the reasons Governments hate them as it ties their hands significantly.

It does make large project involving many areas one off specially financed projects but again thats not a bad thing they should be hard to accomplish starting at at the monetary system.

Armies for example esp standing one become very very hard to create and maintain.

All of this is in my opinion good stuff not bad.

Well, Ponzi schemes use a short cut version of the usual compounding principle, adding your fund "earnings" to its principle, converting all deposits directly into earnings. The illusion that makes them multiply is that people think they can leave their money in the pool to continually multiply, when it is actually being spent to pay out earnings to others.

If the institution of continual compounding returns were ended the correct way, rather than by general economic failures..., then Ponzi schemes would be much harder to operate. When people can't put in their money and "let it ride" (exponentially) any more, the fund has to return everyone's earnings to them regularly to be spent. That's what breaks the cycle. Then there would be no one leaving their profits in the pool to (appear to) endlessly multiply. Having continually multiplying ownership in a finite world is a problem.

See how that works? It provides a general restraint on spiraling investments, but different from how local currencies do it. Local currencies are good for local stability, and eliminate some of the ways uncontrolled speculative bubbles are created, but if you still allow investment they still allow continual multiplying ownership.

I have nothing against them at all for where a locality needs to recover from a wider ownership and money collapse, of course. I just don't see them as working to replace a world system that fails. With a 100% cash economy and money tied to material goods, you throw out lending secured by credit (contracts secured by trusted promises), so modern businesses could hardly operate. You'd also still have a political institution determining the money supply by a political decision making process.

Would you still allow investment? If so you'd still have some people lending their savings to earn money rent (interest) for investing them. As done today, if they also habitually add their returns to their savings, they'd continually multiply their ownership stake in the economy without limit. That could continue till the excessive concentration of wealth throws everything out of kilter again. Isn't that the problem the whole currency rearrangement was intended to fix?

Your explaining the other problem if you will of concentration of wealth local currencies don't fix that and I'd argue the fact that "wealth begats wealth" is not readily solvable. However it need not be a bad thing obviously to some extent the contributions made to charities by the super rich are good. Does it make up for the impact of the effects of their own wealth concentration ?

Doubtful. But any community that produces excess most of the time will generate excess wealth and excess wealth will concentrate thats a more fundamental problem than the monetary system. And I recognize its not solved or probably even solvable by the financial system.

However localization esp local currencies encourages reinvestment locally I'd argue the biggest problem with concentration of wealth is when the wealth is divorced from its source of concentration. You go form the texas oil man drilling wells literally in his backyard to a multinational company bribing government and making empty promises for the locals.

Stock holding companies where the stock holders are divorced from the day to day operations etc etc.

The problems arise when the concentration of wealth can no longer be correctly reinvested because its divorced from reality. Localization helps a lot as if the wealth is denominated in the local currency and not invested as needed its devalued and the local economy starts to suffer from wealth concentration effects.

I will say I don't have a full solution for this but I don't see any solution is possible with our present monetary system only after you stabilize both the economy and the monetary system and make it mostly renewable are you in a position to look at the what problems remain from wealth concentration.

I suspect that they are reduced to ones that are not structurally destabilizing in the same sense as a ponzi scheme if the money is not reinvested then the region suffers collapse and the wealth is lost thus the wealth concentrators are forced to recycle their wealth and thus dramatically slow the compounding problem and probably even stop it on average as the business cycles move up and down.

But its a problem for the future not for today. Wealth concentration and also its twin population are intrinsic problems we must solve but we are not even close to being in a position to tackle them until after we have a mostly renewable economy and local currencies are a very good fit for a renewable economy.

One step at a time.

The evidence to me is that it's actually a fairly quick and easy thing when it happens, reversing the polarity of the growth process, instead of reinvesting returns divesting them, and generally propagates naturally system wide where it happens. Lots of natural and managed growth systems survive their explosive growth periods that way.

I'd agree it's not readily possible to persuade people that it is a necessity for the survival of the system it operates in, particularly as it meets natural limits. Having "wealth begat wealth" in a zero sum economy would be a return to feudalism of the worst kind, I think. It's quite likely that the restraint on environmental impacts would become less and less rather than more and more too, wouldn't it? That's not a pretty picture.

I think we tolerated the distortions and collapses for hundreds of years because there was lots of room on a generous earth and the growth made it tolerable. That's over.

Wealth concentration is a direct byproduct of some people earning exponentially and others linearly, and that is what is persistently distorting the economic relationships and making them become ever more unmanageable. When returns are no longer compounded owners of wealth will still get earnings from it, but they won't multiply and destabilize everything else. Their assets would be prevented from collapse along with the rest of the economy. Without earned income to sustain it, Over time their concentrations of wealth would gradually but steadily diminish.

The details will inform how and at what rate it is done, but I think it's solving the intrinsic problems that guide the whole process, really. Anything short of that necessarily results in them making all other solutions impossible I think. For example, if we don't divert investment from compounding short term profits to long term sustainability, we'll simply use up all cheap resources with cheap consumption and be unable to invest in converting to using more expensive lasting resources. To redirect the investment goals like that, it seems you need to be led by solving the intrinsic problem.

I think there are near term dead ends approaching as the a whole system, designed to run on cheap energy, runs out of it and has no profits to invest in anything.

Really what you seem to be saying is that in a small more personal system it is much harder to cheat than in a large anonymous system.
This is the big point to be made and is tantamount to "I know where you live."

Sure, that's probably the more important stabilizing factor in local economics in general, you know a whole lot more about who is doing what. It dismantles the larger economy, though, and since every product we buy comes from several continents taking thousands of different companies to deliver it, I don't think just scrapping that would work! ;-)

What I think has usually happened to local currency movements in the past is that after helping people get bye a local crisis, as soon as trust in the larger system is restored people go back to it. That might change this time, and retain a mixture of global and local currency transactions in some places.

One of the economic sustainability strategies is to create local circles of businesses whose employees live sustainably, since their employees are the main environmental impact of any business. That's a purpose that might result in people maintaining both the use of a local and global currency... well maybe.

Then there are all the good tax evasion possibilities that an private currency network allows too....!

The huge difference now is that most "currency" is cyber currency. So I don't know how that is going to impact things.
The other thing is that Americans in particular are going to have to take a hit in standard of living no matter what the outcome and start producing again.
I don't consider that a negative tough.
Tax evasion shouldn't even be a problem if the Nation is run right.
So much is debt burden and military rat hole spending.
Have the crooked corporations that profit off the wars pay the taxes.
We have an oligarchy and it needs to be taken down before any of these solutions will stick.

The thing people don't realize yet is that it's the compounding of investment earnings that drives 99% of the distortions, the direct cause of the "ownership economy" diverging from the "products economy". We just would not have the divergence of monetary and material wealth, nor the extreme distortions of power and influence without it.

For the people who now make their money using ownership to multiply ownership to prosper ever more grandly with no increase in work, "the gig is up", though. Continuing it as we run into natural limits will make the system as a whole collapse, again and again. The main problem is that nearly everyone on earth wants to be one of them, and is putting all their creative effort into promoting it. Not everyone can own ever more of everyone else's work, of course... ;-)

In this country we don't make the products we import them using phony money. It is back to work for americans again......which is a good thing.

Well yes, it would be, if people got to keep their own earnings. The world financial leaders have successfully prevented the collapse of most of our debts to it, though, and are all completely agreed that keeping everyone working ever more creatively for them is "doing the greatest good for the greatest number" as measured by their growing incomes... :-\

All this hands-on experimenting resulted in an explosion of grassroots awareness about the nature of money itself. As local groups and communities created their own local scrip currencies and exchange systems, they learned about economists’ deepest secret: money and information are equivalent – and neither is scarce! As money morphed from stone tablets, metal coins, gold and paper to electronic blips of pure information – the economic theories of scarcity and competition began to be bypassed by electronic sharing and community cooperation. Barter, dismissed in economic textbooks as a primitive relic – went hi-tech. eBay, the world’s largest garage sale, is an example of how to bypass existing markets.

People began to see how central banks and national money-systems control populations by macro-economic managing of scarcity, employment levels, availability of mortgages and car loans, via the money-supply, credit, interest rates and all the secretive levers and spigots used by central bankers. Even Nobel prizes were politicized as mathematicians in 2004 challenged the so-called “Nobel Memorial Prize in Economics” demanding its de-linking from the Nobel prizes and to confess its real name, “The Bank of Sweden Prize in Economics.” The mathematicians, Peter Nobel, grandson of Nobel and many other scientists object that economists misuse mathematics to hide their faulty assumptions – and that economics is not a science but a profession. The row over the 2004 Bank of Sweden Prize was because its recipients had authored a 1977 paper with a mathematical model purporting to “prove” why central banks should be independent of political control – even in democracies. Central banking too, is politics in even deeper disguise, as I describe in “21st Century Strategies for Sustainability.”

Today, rapid social learning about the politics of money and how it functions is revealing this key mythology underlying our current societies and its transmission belt: that faulty economic sourcecode still replicating today’s unsustainable poverty gaps, energy crises, and resource depletion. Climate change creeping upon us for 25 years is the latest media wake up call, and predictably economists quickly “captured this issue for our profession,” as a UK economics group put it (Henderson, 1996), to promote their pollution and C02 trading “markets.” In spite of such efforts, the defrocking of economics, the deconstructing of money systems and the growth of all the healthy local, real world alternatives is propagating widely. The World Social Forum launched in sunny Porto Alegre in 2000 by Brasilian reformers is one of many such worldwide movements. Argentina’s default in 2001 taught its citizens that they could trust their own local scrip, flea markets and electronic swap systems more than the country’s official currency: the peso. Argentina, Brasil and Venezuela have announced they will repay their IMF loans in full – to free their economies from “Washington Consensus” prescriptions.


There is no way to sustain growth.

Triage will happen, most frequently along the line where everything really is aligned: rich and poor.
The rich will allow the poor to starve, within nations or between nations.
The rich are already taking battle stations : gated communities, private islands, private cops, surveillance and data-mining.
The poor (and soon to become poor) in the west haven't an inkling of the war that is being waged against them. We are being fleeced. Using 1940ies production methods, we could have created a world-wide leisure society 50 or 60 years ago. We didn't because the rich fleeced us.
A hundred years ago, we could have started a world wide social revolution, putting the means of production into the hands of the producers, which might have defeated consumerism before it got really started. We didn't, because we got killed. In social conflict, in war. We got given bad names, like rabble, and the names we gave ourselves became discredited. Bit by bit, it became dishonourable to us the word 'social'. To prefer a communable approach to problems became a crime of communistic treason. And sooo out of fashion.

We could start a world wide social revolution tomorrow and - at least temporarily - solve or diminish most of the problems the world is faced with. It is very remotely possible.
In a catastrophe, people tend to show the best of themselves.
So the best we can hope for is a catastrophe big enough to start a world wide social revolution, but small enough to keep the rest of the earth going. Faint odds.

What will happen, is that the rich will do anything, everything, to stay in power. And food. And they will refuse access to the masses at the gate. Forcefully.
And given half a chance, the masses will not be forgiving.

Triage will be mainly on the rich/poor axis, but not undisputed.

Interesting times ahead...

Sure, I'd propose that policies guide the economy to mimic how many natural systems and the well managed projects that people do, limit their own expansion and reserve resources to complete what they started. Most growth systems don't have a hard and fast rule for continually multiplying scale like our economic institutions do. Without that the natural thing is to switch from scalar growth to qualitative growth. You don't see that if you think growth is a number. You only see it if you realize that growth is a process, and the only things that last are things that are built to last.


1) Can you articulate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

1) So, yes, if you allow that growth can switch from scalar growth to qualitative growth, from a system for expanding ever more rapidly to one for completing and integrating things with their environments. That's the process change that all growth systems that mature do it with. When you build a house, for example, you start with ever bigger pieces, capped off with a roof, and then the infill is with ever smaller pieces and then small finishing touches. You most particularly don't build ever bigger pieces till you run out of lumber and can't build the roof. That's what our economy is designed to do.

The policy that would do that would change how we choose what to build. To change from building ever bigger things to making what we've built of lasting value is how I see it. To do that you have to change how people decide what to invest in. The way I think I observe working in nature is similar to making the reinvestment of investment returns a privilege, not a right.

If the only returns on investment that were allowed to be reinvested (to multiply) are ones earned from long range sustainable development, the investment community would very quickly start to figure out what that is. There are problems with how to scientifically measure that and things, but the certainty is that ever multiplying investment in short term profits amounts a dead end kind of whole earth Ponzi scheme, and to have resource for investing in long term sustainability something needs to make it a fiduciary obligation of investors to do so. I call the general explanation of the model, "Economies that become part of nature".

1a) If not, what sort of 'economic triage' policy would you recommend? Think bold.

1a) The 'triage' I've been talking about since the collapse started is to mark down the unsustainably inflated debt to match the earning capability of the economy, and relieve the economy from obligations it could never have fulfilled in the first place. To me money and debt are "information" about wealth, and the information continued to grow by itself over the past ~40 years faster than the creation of real goods and services did. We should correct that imbalance by correcting the information error.

I call my approach "reset$", and have described how it could be done by presidential executive order, to mark down the debt obligations according to a schedule for how far the financial markets had diverged from reality when the debt was incurred. I think it's harder to unwind all that today than a year ago, but you could also just print enough money to do the same thing and forget the book keeping. That debt overload is what the whole economy is still struggling under, and why it didn't rebound with all the federal bailouts and recovery spending.

2) What will it take for international economists, policymakers and authorities to understand that money/credit is not a resource, and does not on its own produce cargo?

2) This one is harder... The amazing thing I find is that most sincere people, devoted to good works of any flavor as most sincere people are, are largely unaware that money and reality are connected. It's not that it isn't obvious that money is what we use to put a value on physical things, and use to give each other the right to do what we want with them. That's obvious. What seems unobvious is that "physical" isn't just a word defined by other words.

I think most people don't quite recognize physical reality, and are quite comfortable speaking and acting as if our opinions and cultural values are what determine the events around us. I think that's how you get a whole globe full of amazingly smart problem solvers devoted to solutions that make all our problems worse... Many of our words changed their physical meaning at some point in time and we didn't notice.

So, it's a problem. That well managed things that start with growth always switch from expanding to perfecting themselves, is what I'm hoping helps people discover they already know quite a bit about reality. I suppose it's a long shot...! ;-)

1) Growth on fixed resources is a matter of efficiency gains; what it used to take 1000 MJ to achieve takes only 993 MJ the next year, and so on. Given smoothing of high and low input years, you get steadily more output over time, if you don't accidentally eat away at some invisible reserve in the process.

Real monetary growth on diminishing fuels is nonsense, hyperinflation will destroy any attempts to money ones way out of that hole.

1a) A quarterly measure of outputs/inputs could be used as a salve for the egos of those in charge. "We may have only produced half as much, but we did it on 60% less fuel. Huzzah, 25% NuGrowth!"

2) Hyperinflation, the breakdown of the food supply chain, and the massive civil unrest that follows. Smart governments will strictly ration all supplies (fuel, electric, food) and dump the spare male population into huge building projects, like electrification of the rail and road networks, building insulation programs (to R40+ standards), sea-wall construction, and whatever else looks like it might save their country some energy costs in the coming year.

I have no answers to those questions because they are unanswerable in any context of realism. But, I do know what has happened is the rest of the World decided they wanted what the U.S. wanted too, so they started emulating our every move.

One of the reasons the recent economic meltdown took place, is because foreign countries bought into the purchase of our greed based mortgages as they were packaged and repackaged and sold throughout the world. But that's just one example. What about China going from being a country that cycles to one that is increasingly driving SUV's? Or India emulating our agricultural practices, and in the process using more water than their aquifers can be replenished by from annual rainfall, so their water table keeps dropping.

The U.S. set a very bad example by living high on the hog without a wit of interest as to how that may play out in the long term. Somewhere along the line the rest of the World wanted their Big Mac's, Ford Expeditions, Big screen TV's, super sized meals, interstate highways, disposable everyday products, massive energy consumption, etc. But the reality is only a small percentage of the world population can live like that if all the rest support our needs, but even then only for a brief period of time before we 'Overshoot' our resources.

When I read William R. Catton's 'Overshoot', it was after reading the best known peak oil books and it hit me like a ton of bricks. He explained in very simple terms and in many different ways that we were in overshoot. We were living via the false idea of phantom capacity -- acting as if more capacity existed than actually does. There is no way of stopping the full and unabridged final understanding by all humankind, of that folly.

Plan for it, then just do the best you can when collapse hits the fan.

You said be bold, Nate. Here's me being bold.

What Common Influence Peddlers Know, Which You Don't

I run the risk of doing damage by posting this here. These basic ideas are rather straightforward and easy to understand, which is why con-men and grifters can make a living off them without much effort. The damage comes from the fact that anyone, for any reason, may use and apply these methods, including any budding sociopaths we may have here.

I call another significant problem with my post, The Jump Problem, from the movie The Matrix. Briefly, everyone fails on their first Jump. By bringing these tools to anyone's attention, initial attempts at using these tools may fail, and may fail miserably.

These issues aside, the possible benefits of using these tools in order to build trust outweigh the costs. And these are desperate times which call for desperate measures.

Credible Authority
When presenting some new idea to someone, outline the problems first, like I did above. This establishes you as someone who understands the issues well enough to be able to lead with the primary objections to your very own new idea. This impresses people.

Similarity / Affinity
People are more likely to trust you if they find they are similar or like you, or they feel an affinity to you. I am more likely to be accepted on TOD by writing semi-academically than by writing like a troll or lacing my posts with expletives.

Trust can flow from cooperation. If you make the effort first to cooperate with someone else, they are more likely to trust you. Nate and other TOD readers are now more likely to trust me because I went to the effort of putting together a thought-out post like this in an effort to address a common problem.

We trust people who feed our egos and delusions by telling us things we want to hear. Nate, I like your style. So tell the truth now, Nate. Despite the fact that in the previous sentence I point out that it feeds your ego, did you not still feel some increased dopamine or seratonin from reading the phrase:

Nate, I like your style.

All human societies in recent history are based at least in part on reciprocation. Meaning if you do something for me, then I need to do something for you, and vice-versa. Reciprocation also works for taking, not just giving. If I take something from you, or deny you something, you likely won't have a problem taking something from me or denying me something.


I think this kind of approach is very useful dealing with such hot topics.

Our predicament is too wide, deep, networked, and turbulent for our monkey brains to comprehend. Layered on this complexity is an infinite number of psuedo issues competing for brain cells like creationism, illuminati, 9/11 conspiracies, and Michael Jackson.

Therefore the most probable path to change is a black swan crisis but this is not a wise path because it may lead to extinction of civilization.

There might be a long shot better path. It will require a respected leader with a simple message that citizens can understand and rally around. Here is one scenario...

While walking through the woods one day on vacation President Obama decides that his children's future are more important than being re-elected. He gives a surprise televised speech targeted at all adults of the world with the simple message:

"We are living beyond our means. What can't continue won't continue. We are almost out of time to avert a disaster for our children. All adults need to make sacrifices now for their children's future."

"Many many issues need to be addressed but a good start would be for all governments to have a balanced budget and all citizens to stop using debt to fund consumption."

He should then pledge to spend the remainder of his term using every power in his arsenal to balance the government books and to educate citizens on the other most pressing issues like reducing energy consumption and renewable energy construction.

He should then direct his audience to a web site authored by Nate Hagens and Jason Bradford for more information on the various problems and possible solutions.

Since the creation of the Federal Reserve System in 1913, the dollar has lost 95% of its value, as money (debt) has been created in response to demand for credit.

That statement doesn't mean anything, unless you live like an Amish person. People in modern economies in 2009 buy very few of the goods and services that people bought a century ago, while most of their spending goes towards products which didn't even exist as ideas in 1913. (What did iPhones sell for before 1913 when people used "real money"?) So long-dead people's perception of a dollar's "value" in 1913 has very little to do with how living people understand the dollar's "value" today.

Very good point. Comparing what a dollar would buy in 1913 to what is buys today can not be done because what is available in the market except for commodities is far different than what was available in 1913.

According to this website gold was about $20/oz. in 1913:

Now at about $1000/oz. the dollar has lost 98% of its value. But most of us can live without gold and few would argue that living standards and wealth in general have declined since 1913. The 20th century was a period of fast rising living standards even as the value of the dollar fell 98% in terms of gold.

So what is the relevance of a declining dollar due to debt/credit expansion? Not much. It is pretty obvious to me that debt and credit is a zero sum game from the point of view of the world economy as a whole. For each dollar borrowed there is a dollar lent. The question of whether the debt can be serviced by the debtor is the essence of the problem in face of flat/declining oil production.

It has become pretty obvious since July 2008, that there is a problem. Those segments of the economy heavily dependant on oil like autos and housing have collapsed, but there are large areas of the economy that are doing fairly well and overall life goes on not much changed for most people.

Government continues to grow like a weed. Health care continues to raise prices. Agriculture is doing fairly well due to ethanol/biodiesel.

IMO the value of the dollar compared to 1913 is largely irrelevant. Most people who knew the value of a dollar in 1913 are dead. The products that could be bought for a dollar except for commodities are different and in most cases much better than those available in 1913.

Are we going to compare a Model T to a new Ford Focus? Or a house built in 1913 often without electricity to one built today? And many of today's products didn't exist in 1913. To what are they going to be compared.

Each generation accepts the value of the dollar that they are born into. Being nearly 67 years old, it is hard for me to pay 59 cents for a candy bar, but younger people just take it as a given and life goes on. I suspect that life will continue to go on even as the dollar loses ever more of its value.

My question is: Can the value to the dollar in gold compared to 1913 go negative? If not, then it would appear that the value of the dollar in gold is about to level off. Having lost 98% of its $20 1913 value at $1000 gold, gold has to go to $2000 for the dollar to loose the next 1%, right? An following that logic gold would have to go to infinity for the dollar to loose all its value in terms of 1913 gold.

Or a house built in 1913 often without electricity to one built today?

I live in a neighborhood "built out" from the late 1830s till 1880s (mine was built on the site of a burned church, built 1937-38), so I can answer that question.

The 1913 house would be MUCH better built, with superior materials (many of which are simply not available or go for tremendous premiums) and *FAR* superior workmanship and overall better/more practical design. Later retrofitted with electricity (by 1913 common in city houses), central air and heat, etc.

We have more than 20x as many dollars today, so inflation also has to be figured in. Over half of my expenditures are for things available in 1913; clothing (I prefer natural fibers), food (I prefer old style food, not modern food chemistry), house renovations, electricity, natural gas (town gas back then), water & sewer, streetcar fares (7 cents then, $1.25 now, $1.50 next year#), soap, mortgage payments. All available in 1913.


# New streetcars in 1923/24, but otherwise a "like for like" comparison over time.

Do you know what else came into existence in 1913?
The 16th amendment to allow Federal income tax.
The whole thing was a banker scam to fleece the American people.
The taxes were basically to pay the interest to the Federal Reserve bank which is a private consortium of greedy, evil, selfish, psychopaths that have finally won and now it is game over.
I still can't believe that nothing is being done about this..............The Crime of the Century.
This lack of action proves we have no leadership and that the government is in bed with or being coerced by the banking oligarchy.
I just hope someone with some integrity in the upper echelons of the military finally takes it upon themselves to save the constitution and at least give the people a chance.

Have you ever tried to reason with someone under the influence of a cult? In our case it would be the cult of perpetual-growth in a finite world. The only world the cult members understand, relate to, and believe in is that which they have constructed for themselves -- concrete and steel, asphalt and astroturf, supermarkets and shopping malls, ipods and pc's.

The Wealth Gap and the Collapse of the U.S.

From the article linked on your post xray:

America is very much resembling the Developing World Dictatorships that we criticize and decry in the press. The once large middle class is being replaced by a peasant class.

Today we are slipping into an inefficient oligarchy with an increasing risk of civil unrest in the future.

I agree with your post and the article.

TOD has the most intelligent people.

Abolish corporate personhood.

Then every human will be liable for his or her misdeeds (in words and actions).

(I dare not go beyond that initial thought-o-gram. Not sure what comes next.)

This won't change until we have a major culture shift.

That shift can only be accomplished through education and media.
Both are entrenched in the Status Quo.

Great image, and I'll look for a way to use it, but even with "a major cultural shift" nothing will happen until we pay the most rudimentary attention to the functional working parts of the natural systems involved.

There are many examples of natural system economies that solve the same problem we have with grace and ease. Our problem becomes clearly not a matter of values, but that 99% of people believe the world operates according to our popular debates and that makes our efforts totally ineffective.

Take the simple fact, that adopting new technology that saves enough energy to eliminate an entire large power plant... actually always has and still does make the economy so energized that it builds 3, making a net gain of 2 large power plants. Our popular wisdoms are just completely misguided is the answer to that.

I think we're rapidly heading down the tubes because we're simply not paying attention.

Naturally there's an interesting cultural side to learning how to "pay attention" and a crop of new moral dilemmas too, but I think until we see what complete fools we're being there's no chance for humans to begin the real shift to experiencing reality.

I dont think there is any ultimate or total solution.

I am sure that the most important idea is to work with whatever tools, traditions and history the local society has available. I dont think the largest risk is lack of oil but bad political solutions and revolutions are an invitation for bad leaders and bad solutions.

My own simplification of the choises is that it stands between humansm and fachism.

Either long term thinking where people accept even lower consumption standards then the lack of for instance oil will give and work more for less pay to be able to create a better future for their kinds, grandkids or to have a society with the physical means of providing them with a pension.

Or short term solutions where people guard the size of a shrinking pie by stealing from other people or destroying their ability to consume with financial means or mass murder and the best ideological support for that solution is fachism.

The fachist solution is very dangerous since it can give large short term benefits for the people wielding the destructive power. And it can disguise itself as relocation of resources for the public good, with a shrinking definition of the public and an increasing sacrifice of non-people.

I expect that we will get a mosaic of these extremes with manny societies inbetween and that a key to both survive and live a good life will be to try to do good things while avoiding to become a sacrificial sheep for the hawks. The nations that have culture that can stay decent during harsh times will have a big obligation for keeping a nice culture going.

Be bold...OK

We need to introduce a one world government who will act for the benifit of all (ie stop the flow of wealth from poorer to richer countries) and at the same time prevent the bickering over what to do because they ( various sperate governments in existance now) have differing interests.

The two major problems I see are over population and over consumption.

Population needs to be brought under control be all and any means possible. Free sterilization and contraception to anyone who wants it. Volunary euthenasia for the terminaly ill, people with chronic disease or pain and the depressed if they refuse treatment. Better education for women in poorer countries. Some sort of punishment (I'm thinking of a fine) for every child a couple has after the first. Banning pro life groups and even a MSM ban on any religion opposing any of the above. All stops must be pulled out to reduce population but at the same time giving people a choice rather than it being an absolute enforcment by law.

Consumption needs to be bought under control by all and any means possible. Rationing of resources must be implimented. Fuel deployed to where its needed be it farm vehicles, freight ships or a car needed to get to work. Voluntary relocalization of people so they are closer to work and reducing fuel consumption further. greater use of rail for travel and transport. Rationing of electricity, gas, oil and even firewood for homes. Rationing of food and water will improve health not only of poor people not getting enough but obese people eating too much.

I could probably think of many more examples for both of the paragraphs above but I think that clearly indicates how far we need to take things.
Even if all this was introduced, if we dont succeed in reducing both population and consumption fast enough, we just offset the dieoff a bit further into the future.

Banning pro life groups and even a MSM ban on any religion opposing any of the above.

I have yet to meet a single person who is a member of a pro life group who is capable of giving a cogent definition of life, in the biological sense, let alone how something as complex as an ecosystem actually works. Banning such groups would definitely fall into the BOLD category. I'd be for it but GOOD LUCK WITH THAT!

Anyone wanting to improve their understanding of latent totalitarianism should take the time to parse the previous posts in this thread.

As a confirmed anarchist who has never voted in his life you will understand how hard that was for me to write.

I wouldnt say it was complete totalitarianism though. I tried to give people a choice where it was possible rather than being forced by government.

As I see it this is the only option to prevent a die off although if this plan was ever implimented it would likely cause civil infighting by those who feel their freedoms have been infinged upon.

That civil infighting might be a better option though than state verses state warfare.

A prolifer knows life when he sees it.

The thing that most people, including some phd's I know , fail to realize is that the pro life folks are fighting about where the line is drawn in the dirt as much as a bab-er fetu-er infa- well what ever it is ,anyway.

Now if we on this site here , being obviously well educated and scientifically literate as a grouop, can carry on conservations about forcible borth control ,euthanasia, limiting family size by law,and other such proposals ,then I ask:

Why are we suprised when someone takes the time to unplug Grandma argument seriously?

You don't have to have a phd to understand political creep-the camel's nose in the tent.

I am an ardent pro gun advocate for this exact reason -once the other side gains control of the battle field as it exists TODAY- banning a rifle that only LOOKS like an assault rifle(lacking the real difference-a genuine automatic fire feature)tomorrow they want a further incremental ban on another feature , or a registration and liscence procedure so intrusive and clumsy as to be a near defacto ban -there is A FINAL SOLUTION they have in mind all right ,and any close reading of thier INTERNAL( meaning for thier own consumption ,not for general or public distribution) literature reveals that it is simply, the outlawing of the possession of a firearm-except by THIER COPS.
( I will not argue that there are not gun nuts who would like to own thier own tank if they could afford one, because there are some that would take their argument that far.)

The obvious problem-that the cops might decide they are tired of being low paid servants and opt for overlord status-never occurs to the modern anti gun element.

I am most assuredly not advocating censorship of any sort but these things do bear thinking about.

When half the people who comment about die off advocate doing nothing to stop it ,I understand thier TECHNICAL argument very well, and TECHNICALLY I agree.

But as a thinking group living social animal,well aware that people who DO NOT THINK THIS WAY are reading commentary written by people who read sites such as this one-

I have NO PROBLEM understanding why the environmental movement is viewed with suspicion by some and as the devil's pet project by others.

In the name of (fill in the name of your favorite -Jesus comes to mind pdq)think about some couple who have kids and grandparents reading about die off and thinking THESE MANIACS WANT MY KIDS TO STARVE?

And we vent about the politicians playing the cards we hand them on a silver platter?

This would be a lot funnier if it weren 't so serious.

Voluntary euthanasia for the depressed if they refuse treatment.

I'm feeling much better now...honest.

Hi Nate, All,

1) Can you articulate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

No. It seems we suffer under many delusions, one of which might be called the delusion of potency. That is, the idea that we have built, understand, and can control the world economy, and that we could meaningfully make major structural changes if only we were wiser/pay attention to our ecological predicament/ stopped vested interests.
The global economy is self-orgainising (ie evolves through the interaction of a myriad of semi-autonamous actors and instutions without overall plan, becomming more and more integrated, complex and coupled over time). This economy seems to be semi-stable under certain ecological constraints (energy flows, certain material flows, climatic stability etc); internal constraints (trade/investment intergation through debt; evolved technological dependencies; behaviors & worldviews etc)-provided we/governments do nothing to destabilise the system. If governments start mucking about with deep features of the system they are likely to crash it with chaotic and possibly devistating consequences. It's a catch 22.

1a) If not, what sort of 'economic triage' policy would you recommend? Think bold.

An international emergency trade system that could operate to allow some basic goods to be traded when, as i suspect, we see the complete and utter collapse of the international financial system which intermediates all trade. I am unsure as to how it might be run, though an international version on a 'mutual gurantee society'(MGS) as described by Chris Cook (Nordic Enterprise Trust) might provide a model. Not convinced by an energy backed currency in general (too much to go into here), however is might be used as a unit of account in a MGS.

2) What will it take for international economists, policymakers and authorities to understand that money/credit is not a resource, and does not on its own produce cargo?

Any announcement by authorative encumbent economists, politicians, policy makers that the systems' time might be up will precipitate the collapse in the system.
Think of the paramater 'The percentage of people who believe economy will crash, effectively for ever' (which the bond market might read as-you'll never get paid in anything worthwhile) . At the moment very few people believe this-we are at the shallow tail of an S-curve which is somtimes used to model the change in time of some market sentiment.

One can imagine a re-enforcing feedback process: Emperical (authorative announcements; bond defaults; energy/ food price rises; accellerating land/ turbine price inflation; bank failures; currency shocks)--Sentiment (Fear; confidence; self/group protection)--Action (paper 'asset' to real asset conversion; borrowing from 'suckkers'; default)--. A G20 announcement would be a turbo boost to the Emperical element and likely massively accelerate the feedback process. That is we rapidly start moving up the shoulder of the S-curve. However, it will be pretty clear to market participants that there is a very small 'conversion window'-there as a very small productive base of renewable infrastructure manufactures (with low ramp up rates for new build factories), basic farm tool makers, willing sellers of land etc to which we might convert all our cash, bonds, and Tesco shares. For countries, whose first priority will be to their own citizens-a scramble for few base assets is most likely, not an outbreak of universal love and sharing. The growing collapse in the bond and equity market, and growing opacity with respect to money valuation will collapse bank balance sheets, the financial system and world trade.

We are indeed trapped (i remember a song lyris ''gun at my back, blade at my throat, I keep on finding hate mail in the pocket of my coat'')
The G20, lets hope they appreciate their good fortune as least: somtimes we have to admit defeat and find a little corner where we can make a small difference.

A very interesting campfire, thanks all.

I believe that a major part of the problem comes down to our relationship with time. Nate has lectured on the principle that humans discount the future and live predominately in the now and almost-now. (I don't have a link to his work, perhaps someone can post it?)

Ever since the early rail companies in Britain needed to co-ordinate their schedules humans have been hooked on 'standardized time', rather than 'seasonal time'. Prior to the rail companies keeping co-ordinated, synchronized clocks at each station the principle of dividing up the day into segments was personal, not standardized. People would agree to meet 'at noon' or 'at dusk', not at 12:35pm or 'twenty to six'. An individual could keep track of his 'time' by virtue of a pocket watch but it was not guaranteed that he would be synchronized to others.

Today, the human relationship with time is a constant battle. We are slaves to time in everything we do. We try to conquer time by having out of seasonal fruit or applying face creams to 'roll back the years' but the harder we struggle against time the stronger the shackles become.

I posit that it is our relationship with time which is the underlying cancer of our GDP growth quest. With the creation of interest-bearing money we have put time limits on our labour – limits which are for ever decreased as the interest increases. Interest on debt is really a call on time in the future. The real value of a bar of gold is not that it is a shiny metal which makes nice jewellery it is that the same bar of gold will not rust away or deteriorate in any way even over hundreds of thousands of years. (note the large Saxon golden treasure find in a field in England recently). The real value of gold is that time has no power over it. It is 'immortal'.

Our GDP growth based economy is not only a product of our inability to think long term but also because we have no appreciation of time. We are no longer anchored in the seasons and years, rather the minutes and hours of modern life. Everyone has to do everything now. The new product must be rushed to market to beat the competition. etc...

This has been a hastily cobbled together 'mind dump'. I am in the process of writing a more thorough essay but I hope it adds another dimension to the discussion.

Interesting insight.
I think that big disconnect resdies in the way economics and finance work on a linear model and the natural world works on a cyclical model.
Or maybe the cyclicality of economics is about to be re-established and that is the reason for the impending collapse?
All we have to do is synch back to nature and think in cycles..............easy right? sarcasm as if you needed to be told.

Check out part 3b of yesterday's Financial Sense Newsletter podcast if you want to further explore "seasonal" cycles in the economy.

I have followed Harry Dent since the early 90s.
Read "The Great Boom Ahead" and acted on that info.
I even subscribed to his new letter for a while (worthless).
His whole message is the baby Boomer population bubble and the rest is sort of common sense.

I just had a completely random thought.
I bet one of the reasons that the Roman Empire lasted so long was because when they built their infrastucture they intended it to last for 1000 years.
I believe there is actually an inscription on a Roman built bridge that say's something like: " This bridge will stand always and forever" This statement gives an insight into the mentality that built Rome.
When Americans build something they build it to be repaired constantly and last 10 years. That is also probably one reason we didn't last very long as an Empire (not that empires are good, I am just making an impartial observation).

The Romans had a culture of Quality.

We have a culture of junk.

I looked up the bridge.

It is a road bridge across the Tagus River at Alcantara in Spain and dates from the 1st century CE.

The actual quote is " Will last for always throughout time".
Just to be accurate.

The railroad tunnels dug by Chinese coolies in the 1870s are still in service, with no end in sight.

The new Swiss Trans-Alp tunnels have a maintenance schedule; (from s;ightly uncertain memory) down 36 hours every 4 years, a week every twelve years, and a complete rebuild of the track and signals every 100 years.

Design capacity is 300 trains/day, at 100 to 240 kph.

The St. Charles streetcars in New Orleans were built in 1923/24 and may have just 75 years left. The new ones for Canal Street should last 4 or so centuries.

Best Hopes for Durable Infrastructure,


That's the way to do it!!


I'm with you on the value of "forever" infrastructure and goods.

Once you grasp the true value of the street cars and the tunnels, the ground is prepared for the paradigm shift away from future discounting immediate consumption -if you own a share of that tunnel ,you own something likely to be useful forever, versus a fistful of cash or electrons which certainly will sooner or later become worthless.

The great books can be read again every few years forever and thus are worth infinitely more than movie tickets.

If a pension is owed in the form of an actual share of the output of electricity of a wind farm, it can never be inflated away and the odds hundreds of times (my wag) higher that electricity will be a useful commodity a few decades down the road that stock in a corporation which might fail for countless reasons.

My $0.02: a model predicated on the assumption of inifite growth must go, as it is clearly unsustainable. In a zero- to low-growth economy it must also follow that the pool of money within the system must be more-or-less constant, as money represents a claim on real-world goods and services, the amount of which is to remain steady. So, if the total amount of money must remain steady, then it follows that money cannot be created as debt and/or that debt cannot bear interest charges. If "usury" is permitted, then those with fractionally larger amounts of financial assets will begin to consume a greater and greater share of this monetary pie thanks to the magic of exponential growth due to compound interest. This situation would result in an elite few with a superior claim on the majority of financial assets, a situation ripe for class conflict, social injustice, and societal decay.

My prescription: nationalize the banking system, eliminate the Fed and fractional reserve banking, and eliminiate the creation of money as debt. In its place, socialize the creation of money, wherein money is created by government spending and extinguished by tax collection, and private moneylending at interest be banned as usury. Strict laws, with clear transparency and public oversight, would exist to monitor and control monetary policy for the public good, not private gain.

My prescription: nationalize the banking system, eliminate the Fed and fractional reserve banking, and eliminiate the creation of money as debt.

How would you effect these changes? Overnight? By decree? By Congressional vote?

You know this is all academic because the people in the position to effect any of these hypothetical changes are the very ones that will lose big time because of them.

Nothing short of forceful removal of the corrupt thieves is going to be the first step toward any type of reform.

So what we really need to be talking about first is how to get control of the Country back from the organized crime ring that is now in charge.

It would have to be done by Congressional vote, just as it was an act of Congress in 1913 that created the Fed in the first place. I would recommend starting a new currency unit that would be the basis of the new publicly owned monetary system, to delineate it from the old dollar order. The new public banking system would be erected, probably by nationalizing a subset of existing banks, prior to the new currency launch. The public system would ensure distribution of the new money, and ensure basic banking services are available to the public throughout the changeover. There would be mechanisms in place for the public and corporations to exchange the old dollars in deposit accounts for the new currency, with rules in place that would prohibit trash, such as trillions worth of CDSs and CDOs, from getting exchanged for the new money. By controlling convertability, we would be able to clean up the existing mess created by widespread financial fraud by basically stamping CANCELLED on the unwanted dollar-denominated crap and closing all defunct private banks at the same time who still exist because of such fraudulent "assets". Such a scheme would allow the old debt-based dollar order to be wound down in a controlled fashion, with a new system rising in its place but minus private control over money creation, minus money created as debt and minus a system based on institutionalized usury.

A few parting quotes:

Woodrow Wilson (1916):

A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the Nation, therefore, and all our activities are in the hands of a few men... We have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.

James Madison:

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance

Thomas Jefferson:

I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.

You are talking my language.
Now how do we get it done?
There is going to have to be a coup or it won't happen.

So long as Congress is corrupted by Big Money, I don't see a hope in hell of such sweeping changes ever happening. I think we would need either a total system collapse, wherein the existing elite are discredited and their power wiped out, and / or a revolution in order to change who holds the right to print money itself. By going to a system that eliminates money as debt and bans the concept of interest bearing loans payable to private institutions, you basically take away the cash cow that keeps billionaires secured in their positions of privilege. There is NO WAY the rich and powerful are going to stand for such a re-ordering without a huge fight.

The only realistic method is military coup d'etat.
Things are no where near bad enough yet and actually aren't even that bad on Main Street.
The only thing that is bad is the behavior of the criminals on Wall Street and the governments lack of action to correct this.

How would you effect these changes?

Which is why smoke and mirrors is the preferred tool.
Our engagement with China was supposed to make them more like us.. In our hubris we forgot that it could work the other way around. So get ready for a period of increasing inequality... Until China decides to make a large percentage of us their low wage puppets.
Seriously part of that may be the solution to decelerating the growth, to reduce the wage gradients between China and the US. At what ration does it stop making sense to manufacture shoes in China - 1:100 1:20.The world can run out of poor people too just like any other resource, or atleast smart poor people that can self organize into complex systems.
Reducing income gaps in the US: Same problem how do you do it? Can it be done by say 'Universal food stamps' after universal health care is tackled, How many of the older unemployed will continue to stay motivated to find a job if they could get say the current equivalent of $500 in food stamps. A straight check for $500 will just make everything else more expensive. a $500 in food stamps states that work towards mindless consumption is optional.

Matching grants from Mexico to attract 'Rich' Seniors - or 'Free health care in Kerala'
The culmination of placing value only on 'productive assets' is that babies and old people are not desirable - This trend is your friend let us not fight it. Emigration of people to a low consumption country will be how to put it 'environmentally friendly' like eating only plant based food. Maybe Medicare will help you along with a $20,000 seed money to send you off to India, or Costa Rica will welcome you with incentives like Kentucky might attract a Car plant.

A Chinese solution - to say buy up Vancouver,Sydney or parts of CA, and impose high density living, by buying 10 million citizenship vouchers(for $100 Billion). Might in fact be another 'environmentally friendly' idea. They keep China 'undeveloped' and escape the high energy drain, while maximizing the build infrastructure of CA like freeways, frozen food, shopping malls.

... "money created by government spending and usury banned"

This is exactly how it happened in medieval Europe. Usury was banned by the RC church.
The feudal lord would 'spend' by commandeering the local resources of land and labour. Economic speciality was rare and usually only by patronage.

As an aside, and in no way intended as indorsement of the policy, the Jews were persecuted in europe prior to Hitler because they were free to lend at interest... Only Christians were barred - sometimes by pain of death. Islamic sharia law also bans usury, interestingly.

It seems we are all in agreement that interest bearing debt is bad - nay, evil. Perhaps our mistake is to forget the collective wisdom of many world religions on the issue of money and debt.

(to the usual suspects, please don't use this post as an excuse to have your usual rant against religion..)

A serious push for underground and bermed housing.
Any house sold must have solar hot water.
Turn off the streetlights that are on all night when no one is around.
Start using all that daily discarded styrofoam etc. for re-insulating purposes.
Fix the damned stoplights that are wasting about 100K gallons of gas a day (here in Reno at least).
Electrified rail and rebuilding of streetcars.
More scooters and e-bike retrofit kits.
Make it illegal for housing associations to ban clothelines.
Term limits and public funded elections.
Taxes on currency trading (etc.) and a stop to instant electronic trading.
Local hog farms to use the masses of food we throw out. (Esp here in Nevada with its buffets)
Free community experimental colleges for disseminating and encouraging 'lost' technologies and skills.
Neighborhood tool centers and lending libraries.
Cut our energy use by 10% in a year.
Public discussion and implementation of grey-water re-use.
CCC type local community projects.
Community built solar ovens, heat boxes, and co-operatively bought/shared PV systems for neighborhood use and sharing.
Research into low-pressure solar turbines.
Chain gangs.
Physician assisted suicide for those in terminal pain.
Legalize, regulate and tax all drugs.
Deposits on all non-recycled containers.
Hefty deposits on bottled water.
Building new power plants (when needed) in industrial and housing sectors to recapture the wasted heat.
Direct PV use for grinding grains, doing mechanical work, and revving up flywheels.
A pig tax for conspicuous consumption.
Free birth control and counselling.
Serious recycling efforts.
Local built pellet stoves using compressed bio-waste.
Banning GMO's
Make it illegal to advertise prescription drugs (don't ask your doctor, (s)he already knows....)
Guillotine the Banksters.
Outlaw usury and high interest rates.
States must wean themselves from Fed assistance, Cities from State assistance, and all of us from City aid. It won't be there shortly.
Churches which enter politics should lose tax exempt status.
Vote out all the incumbents, and let the chips fall.
Turn out the lights when you leave the room!!!

Economic specialty was rare and usually only by patronage.

"Every" village had a blacksmith, tinsmith's might travel around. Cobblers/harness makers (leather workers) were common, copper, silver and gold smiths in the larger towns, tailors and potters were around and so forth.

Then there were priests, soldiers/warriors, sheriffs, etc.

Certainly <10% of the population was "economically specialized", but I do believe that specialization was common.


One specialty that either went out of vogue or extinct was 19th century hatters:

Mercury used to be used in the making of hats. This was known to have affected the nervous systems of hatters, causing them to tremble and appear insane. A neurotoxicologist correspondent informs me that "Mercury exposure can cause aggressiveness, mood swings, and anti-social behavior."

Ergo "mad as a hatter"

It might be a damaging thing to get rid of the growth paradigm--or even to try thinking in that way. It reminds me of the Puritans trying to get rid of sex.

Enjoy the growth paradigm! Love it and make it your own while you.....

enact lots of laws, penalties and fines which help people to make the correct choices that will leave the planet a cleaner place.

Paranoid`s analogy to her children responding to new rules seems correct to me. (I'm also a mother.) People are ready for new rules, they`re scared of what`s happening in the economy and they`re scared of what they see happening with the planet, with their water and with their air.

The govt has to step in and help. But they don`t have to say "no growth"......although that might be the result, who would care?

1) Can you articulate a concerted policy response that would indeed lead to 'strong', 'sustainable', and 'balanced' growth?

The first thing to do would be to eliminate futures markets. There should be for immediate delivery only markets. Products should fetch a real market price. The distortions caused in pricing by speculators using margin on both the short and long side are not representative of economic activity, they are purely gambling. I believe that much of our third world problem would go away if fair prices were paid for commodities. This would also help local economies. Today, the US has lot's of timber but very little of our lumber is produced here anymore, that is criminal. Prices are manipulated down on futures markets and supported by exploiting foreign countries.

Second thing to do would be to eliminate the interest attached to money. No money should ever require interest be paid on it's mere existence. The amount of interest being paid in the world today probably is in excess of 10% of the world GDP. This is due to the fact that so many people carry several years income in debts. Consider for example the typical mortgage. It is usually four times income and that is only the home debt. Interest is swamping the productive output of the world because interest is never created along with the debt. Therefore, interest payments always come at the expense of some other purchase of an item of real production.

Finally, exchanging value for value by using money that has intrinsic value is the final component of the system. No we don't have to go back to gold and silver coins although they should certainly be directly available in proportion to a digital currency. We have a digital currency today but it's undisciplined. A real backing to a digital currency that constrains it's growth would ensure value for value exchanges and thus money would no longer be a hot potato.

This final leg can only be accomplished if all paper forms of gold and silver were eliminated. Once paper gold is eliminated, the real price of gold will emerge and it would be many thousands of dollars. Now granted, this would make some people very wealthy but how is that any different than all the high-tech and oil millionaires that were made in the 20th century?

False promises to pay going under the guise of fiat money and financial instruments have sucked the productive life out of the economy and without destroying them, we will never have growth, nor will we have any sustainable economy.

Yes, Think Bold

"1a) If not, what sort of 'economic triage' policy would you recommend? Think bold."

Since you asked us to focus on the middle question that is what I will do, but allow me this disclaimer: I do think many of the initial assumptions you began with are flawed: So far, we have seen no evidence whatsoever of a shortage of any "real wealth" in this so called "crisis", not in food, minerals, oil, gas, coal, fertilizer, lumber, airports, shipping ports, rail lines, schools, colleges, buildings, houses, cars, trucks...on and on and on. In fact, the problem has been an oversupply of almost all of the above, creating pricing instability and then potential deflation.

Now, to triage, and make no mistake, since my take on recent events is very controversial, so will my prescribed triage be...a sort of a "Dr House" kick in the backside/slap in the face to our corrupt idiotic system. Let's keep this organized, here are the main points:

(a) First, treat this imagined ailment for what it is, severe over-reactive hypochondria. Most of the nations of the developed world have fallen in love with "being sick", licking their wounds, and feeling picked on and sorry for themselves. They need to be brought out of this self pity party can't tell a severe hypochondriac to get out of the doctor’s office with no treatment to re-adjust them to the real world, or they will just try to find another doctor who will offer them drugs and sympathy, which is exactly what they (and we) are seeking.

(b) In relation to the above, best use is placebo therapy, which is mostly what we are getting from the current governments of the developed countries. Despite what many think, this is exactly the correct therapy, sympathy, and actions which have no real or only marginal effect. This is good, because the damage done by most of the real drugs prescribed to treat an imaginary ailment would be much more harmful than the psychosis it would be treating.

(c) The real ailments of massive, MASSIVE corruption in the banking community/investment community/fund management/brokerage/derivative trading community/insurance annuity community/mortgage banking/commercial paper community however MUST be treated. This can best be done not by regulations (because the people writing the regulations do not know what they are doing, and because the regulations can never be matched worldwide...meaning that money will be forced into corners of the world even more unstable than the current environment, and there is risk of "vaulting" money to avoid new regulation, choosing only the safest/most stable easiest to watch investing environments. This would be catastrophic at a time we need risk investment to fund a complete restructuring into the 21st century. The idea that we have too much technological advance is to me so idiotic I cannot even imagine how it could occur in a sane mind. Our energy, information, housing, transport, agriculture, even military system is so primitive it should be a humiliation to all of us. We have been able to use even basic high school science in a sane way to make the advances that everyone was certain was coming not long after WWII. Instead, we have become cowards, afraid to attempt any thinking that is "out of the box". I never get depressed about "peak". I often get depressed at the wasted talent, wasted time, and lack of access that the so called "modern world" is capable is barbaric.

So to immediate prescriptions:

(d) A "traffic light" system of investment oversight: Risk assigned by outside auditers and boards (more than one, and from all backgrounds, not just the Ivy League intellectuals, whom are now so discredited it astounds me they are employable. Green is government bond/annuity/money market fund/credit union safe, that can only lose money if the government or century plus old firms collapse in unison. Yellow is blue chip stocks, corporate bonds, mixed bonds backed by mixture of hard assets (gold/real estate/energy resources/solid municipal bonds, etc. Red is everything else...small stocks, derivatives, non mixed hard assets (commodity trading, etc.), small stocks, the NASDAQ, etc. All investments would have to assign itself first a color, and then once any scale is reached, would be assigned a value based on the above scale. The scale would be overseen by the above outside boards/auditors/depositors, with every meeting and every document public...unless a court gave a document an exception based on intellectual property protection. Absolute transparency is the goal, and clear labeling of risk the means.

After that, let folks invest. No bailouts, no matter the size of the failure. The regulations would be geared to redundancy , with enough INDEPENDENT banks, credit unions, lenders, brokerages, so that competition would be restored, with anti-monopoly laws clearly enforced. If banks invested in level red investments, they would have to put it in their advertising in any medium. If funds, such as the Madoff Ponzi scheme were audited from the outside, they would have to show where EVERY DIME of their supposed investments were to the public, and justify the color they were assigned. The outside auditors and boards would have to justify the assigned color they allowed, and if the firm failed, would be held liable as a group, and dismissed immediately if they could not defend the assignment they allowed.

The above system would be paid for by fees from the investment community and by fees collected from state and federal taxes, PERIOD. The above structure would be deemed critical to economic stability and therefore would have to be funded, with the system overseen by the GAO and the Congressional budget office, who would issue a clear quarterly report to the public on all known investment vehicles in the U.S. It would be expected that our major trading partners would create a similar system, or as nations they would be level red from the start. The firms of each country could be different than the rating of their home country if they created and enforced the level of transparency and oversight required.

One last thing, and now let's get really controversial: Non-profit organizations modeled after credit unions and co-ops would be ACTIVELY encouraged, nursed, and given all the opportunities to be born and succeed currently given to for profit institutions. Banks that have collapsed would be looked at for possible conversion into credit unions, and businesses in trouble would be looked at for possible conversion into not for profit co-ops. Creation of co-ops would be taught in schools, business colleges and through the media as the next step forward away from the speculator fueled theft-ocracy we have allowed for the last third of a century. Insurance and health care would become increasingly co-op oriented, banks would be replaced over time by credit unions, and even crucial manufacturing and mining/extraction industries would be re-organized as co-ops. This would allow the depositor/owners of these firms to govern the firms, be rewarded with realistic returns, correctly scaled to the returns of the firm they are depositor owners of. The "risk" sector would still exist, MUST still exist, as would the corner crap game or betting on football on the weekends, but they would be clearly labled as what they are, a crap shoot. No one is allowed to be "bailed out" if they lose their property and savings betting on pro or college football. Unless they are mentally disabled, they know the risks. The same should be true of Wall Street type risk investment. It would amaze many that I still see the speculator/risk trader as a needed part of the economic ecology, just as snakes and leeches serve a purpose in the natural ecology. But we clearly label dangerous animals for what they are.

So there. It is obvious by my prescription above that I see the current so called "crisis" as mostly a kabuki theatre, not caused by shortages of energy, natural resources, food, talent, labor, etc. In fact, if there is any danger it is that we have far too much wealth and are dealing not with problems of scarcity at this time, but with problems of abundance, a problem I see as becoming greater and greater with each passing year. And....(sigh) I fully realize how out of sync that puts my thinking with most of the folks here...I may have posted on the wrong board. But a variety of opinion won't kill you...that's why I am here. :-)


I don't think there is much point in drafting policy for the G20 until the ruling cadres in all of these countries have a verifiable LSD experience. Or peyote for those not inclined to synthetics.

Otherwise work locally, and network everywhere.

This is peak oil related but off topic to the article - sorry. Recently another TOD poster, cslater8 suggested a connection between the price of oil and the Dow. I hope he's out there tonight to see this. So I did a Google search to find out if there was a way to overlay graphs of each to compare them over time. I tried to paste in the graph, but it didn't take, but here is the link:

This will show a graph for the Dow. Then if you click on 'compare' on the right and select CBOEoil, it will overlay graphs of both. It appears they have been moving in unison. You judge for yourself. I tip my hat to cslater8 for his incite.

Maybe the muckie mucks of TOD should be aware of the apparent link between these two valuations.

The connection between Dow and oil is true, but that may be mostly a currency valuation effect. If the dollar declines the nominal price of both oil and Stocks go up (as do the prices of everything else in nominal dollars) because it takes more paper to buy the same amount. That is why even at $75 or $80 per barrel oil is right now still give away cheap when figured as a percent of average income. (brief aside: Why is no one talking about the amount of cash that will be freed up by the astonishingly low natural gas prices? If nat gas stays below $5 per million BTU, everything from cars to furniture to fertilizer to food to home and industrial power and heating will be cheaper to extra cash injection that will pour into the economy over the next year...)

It is only in the last 5 to 7 years that I have really learned to take into account currency value in a mature way...I could have made so much more money if I had understood it better earlier in life...:-(

A case can be made (it has been made by some) that the recent declines in prices (stocks and commodities) from all time highs was simply a currency re-pricing, and that the full effect of the U.S. dollars declining status from the days after WWII when it was the only truly global currency had to one way this may be a very good thing for the world in the long term, as multiple global currencies somewhat insulate certain nations and regions from a worldwide currency collapse if we do not allow too much derivitive "house of card" building.

This is the best argument for local as well as global investing, further diversity in income stream being a good hedge for my area for example the mortgage collapse never really happened, and home prices adjusted down maybe 10 or 15 percent for a short time, this after having risen more than 80 or 100 percent in the last one got hurt in the housing bubble here if they had owned the property for more than 5 years unless they borrowed massively against it, so investing in mortgages locally has been a good investment even now, you would have still beat the Dow or the S&P index with real estate over the last decade...

Many people misunderstand the idea of diversity...if you are diversifying into things you cannot possibly understand (such as CDO's invested in mixed baskets of mortgage backed paper from around the world) you are not insulating yourself from risk, you are simply tying all the risk together in one prices begin to slide in California or Denmark and your CDO's collapse even though your own home has not dropped in price at all. Much of the so called "diversity" in funds and debt backed obligations simply spread the cancer quicker once it invades the world economic body. Many of my associates, who were always nervous about investing too much too far from home have actually fared very well during this "collapse".


Yes you are correct that most of the price"increases" in assets are due to a "lower" dollar.
But the statement about 80 dollar oil as a give away is wrong.
No one is getting raises to offset the loss of buying power of the lower dollar.
Anything that we import is going to cost more in absolute terms because the big reckoning is upon us and from here on out the American cost of living is going to continue to increase as the global economy continues to even out.
We had it good for a long time but now we have to expect other inhabitants of the planet to try to get theirs and we are going to have to work for ours again. I don't see this as a bad thing at all.
Most people in this country aren't all that happy the way they live now anyway.

We still need to destroy the current criminal monetary system and replace it with one that doesn't reward usury and promotes relevant investment in real improvements for the good of all and not paper games and gambling.
Without that first step we will get nowhere.

I knew that the rally on the DOW and the rise in oil price after its lows began together in March but I had no idea they were so closely related like that!

Thanks for the info.

Hey, way to go Perk Earl. Thanks so much for the two overlapping graphs of the Dow and oil prices. I was certain of their connection, but nothing like graphs to get an immediate comparison.

Note: After loading that website it takes a few moments to fully load, then click on the Compare button on the right, then on CBOE Index, then on CBOE oil index and it will show both the dow and oil price graphs.

I really think this graphic should be noted by TOD writers, and used as a source for later articles. Thanks again Perk.

1. Strong, sustainable and balanced growth is an impossible goal. There’s nothing sustainable about exponential growth on a ball. We just can’t practice flatland economic theory on a ball with limited dimensions forever. If we were flatlanders living on a plane we would have infinite resources, infinite space for infinite reproduction (fun) of more polygons and circles, and infinite room to pollute. We could just move away from our center of origin in concentric circles to conquer new territory. But we’re not flatlanders, we are 3D creatures living in 3 physical dimensions on a sphere hurtling through space.

a. Regarding the U.S., I’d focus on spending resources on building light rail and subways in inner cities. This would be European or Japanese style mass transportation. At the same time I’d focus on physically reversing urban sprawl. Cities need to be denser.
b. I’d also immediately work on a gas tax. As the old saying goes, “better late, then never.”
Of course I’d have to be a dictator to make this happen, and naturally, I’d be assassinated early on.
2. The high priests we elect would need to stop listening to their economic oracles to dummy up, but that’s not going to happen until after either we collapse, or things slowly decline far enough along to third world status.
Most of the clowns running the show right now are greedy, some are ignorant, and science illiterates – at least in the U.S., and have an interest in maintaining the status quo, until the ground falls out from under us.

As long as there are bread and circuses we will not collapse. So I guess that leaves the slow grind to Banana Republic Status.

Economic triage: we need to put into place a plan to de-globalize, and and a return to true "market" economies (moving away from capitalism). Limit the size of corporations (means breaking up all large corporations in place today), remove all free trade agreements, and stop spending money on war. Instead funnel that money into rebuilding our rail infrastructure (and stop spending money on highways and stop bailing out car companies) and manufacturing within the US so we can supply our own goods. Spend money on retraining people for rail and alternative energy construction. Disallow any new construction that relies on car-transport (e.g. new suburbs). Tax large corporations to incentivize small to medium companies, and make it attractive for these companies to do business in "downtown" areas, supported by public transportation systems. Create a Tobin tax to dis-incentivize high-speed currency transactions which undermine our financial system.

What will it take? Going back and understanding market theory and the limitations that MUST be in place for markets to work effectively in a democracy. Disassemble all existing, capitalist based economic programs of study and teach sustainable market theory. Send all economists and CEOs back to school to learn how to do this.

Nate, there's been a lot of discussion of how to overcome resistance to change. I think a lot of it's been pretty unrealistic.

We need to stop butting our head pointlessly against those who will be hurt by a transition to renewables (and other new ways of doing things) - that's the path to the paralysis we see now. We need to find ways to buy out/compensate those who will be hurt.

A classic story: Manhattan needed more cab drivers, but faced resistance from the current drivers, who would face more competition. The solution? Giving the licenses to the old drivers, so they could sell them and get the benefit of the new resource. It accomplished the result, and yet the existing drivers were happy.

To be sure, or to reassure, the NYT, Scientific American, Huffington Post and other trusty sources give us plenty of Cheap Oil propaganda right now

The basis goal is the cargo cult of perpetual economic growth, though to be levered by Cheap Oil

As the inventor of what I call "Petro Keynesian Growth" its in fact necessary to have oil prices at so-called high levels, to generate the runaway economic growth process called "Petro keynesian Growth". This happened in 2004-2007 and aborted in 2008

Crgo cults dont take any notice of trifling and boring stuff like oil geology or long term environment damage, sometimes irremedial, from gung-ho oil and natural resource extraction and production

But they have to take account of investment and spending costs to work the growth magic

For oil and gas, the IEA regulrly publishes industry-based estimates for world oil and gas industry spending needs rising to $ 1 000 billion a year by 2016, not including OPEC national oil companies' spending

Can you have cheap oil with that ?

Next, we have the cargo cult of green economic growth featuring green energy spending, to prevent a Biblical-style flood "about 2075" (talked about, and shown on government friendly media since about 2005; climate change terror is replacing Bin Loony and the Boxcutter Boys, it seems)

This green energy spending need was estimated in a report to the 2009 Davos Forum as averaging $ 515 billion a year through 2010-2020

Can you have cheap energy with that ?

Add the two, that is old oil and gas spending, plus new green energy spending, and the bottom line is maybe $ 14 000 billion of energy capex and spending through 2010-2020

This is so unreal it is not worth talking about directional drilling and reservoir porosity and similar technicalities: the financing of energy in the next decade is a black box of fantasy, exactly like the "Keynesian recovery" spending through 2008-2009