More information on Nate’s educational initiatives can be found at the Institute for the Study of Energy and Our Future (ISEOF).
You can also find another excellent Reality 101 course by Nate here.
Reality 101 Short Course #1: Metacognition in the Anthropocene
Reality 101 Short Course #2: The Fossils that Power the Global Economy
Reality 101 Short Course #3: The Real Stock Market
Reality 101 Short Course #4: Finding Resilience in an Age of Turbulence
I don’t read ZeroHedge much anymore because they don’t understand and/or deny the relationships between energy, overshoot, and the economy.
Today the US Fed lowered the interest rate so I had a peak at ZeroHedge to see what the knuckleheads were saying. It seems we’re approaching a Minsky Moment.
Endgame: Starting In 2024, All US Debt Issuance Will Be Used To Pay Only For Interest On Debt
As we first pointed out back in March, when looking at the US ‘income statement’, most concerning by far is that for the first four months of fiscal year 2019, interest payments on the U.S. national debt hit $221 billion, 9% more than in the same five-month period last year, with the rate of increase breathtaking (see chart below). As a reminder, according to the Treasury’s conservative budget estimates, interest on the U.S. public debt is on track to reach a record $591 billion this fiscal year, more than the entire budget deficit in FY 2014 ($483 BN) or FY 2015 ($439 BN), and equates to almost 3% of estimated GDP, the highest percentage since 2011. In fact, as of June 30, US interest had already surpassed $600 billion.
In short: in the stylized cycle of the US “Minsky Moment”, the US will enter the penultimate, Ponzi Finance,phase – the one in which all the new debt issuance is used to fund only interest on the debt – some time around in 2024.
From that point on, every incremental increase in interest rates, which will eventually happen simply due to rising inflation expectations, will merely accelerate the ponzi process, whereby even more debt is sold just to fund the rising interest on the debt, requiring even more debt issuance, and so on, until finally the “Minsky Moment” arrives.
At that point, while we don’t know yet what the next reserve currency – either fiat, hard or digital – after the US dollar will be, we urge readers to own a whole lot of it.
In case you don’t understand any of this, let me simplify:
We are using more debt to fix too much debt, and not one of our leaders understands that fossil energy depletion is why we have to borrow
$3 $4 of debt to generate $1 of growth, nor that doing so is a really bad idea.
I wrote about the Red Queen’s race for diesel fuel here.
Tad Patzek today wrote about the Green Queen’s race for electricity.
Tad begins by pointing out that a recently update climate model is predicting more than 1 degree of additional warming than the previous model for our current CO2 levels. That’s bad news but seems consistent with what we observe every day in the news.
Then Tad gets to his main point:
…since 2004, the annual increases of total electricity consumption in the world have outpaced all electricity production by all PV arrays in the world…
This means that the Green Queen is not only not keeping up, she’s not even in the race. Except for one year, 2009, when the economy crashed.
And we haven’t even begun to replace the other 84% of fossil energy that we use for non-electricity applications like heating, fertilizer, tractors, trucks, trains, ships, planes, mining, steel, cement, glass, etc..
Thus, there are no other paths but to shrink, shrink more and transit away from fossil fuels.
Once again I observe that facts don’t matter and denial defines our species.
Extinction Rebellion is the most promising new global organization dedicated to forcing action on our ecological and climate emergency.
Their #1 demand is for governments to stop denying reality:
Government must tell the truth by declaring a climate and ecological emergency, working with other institutions to communicate the urgency for change.
Dr. Geoffrey Chia, in an open letter to Extinction Rebellion, commends them on their good intentions but points out that they are as deeply in denial as the governments they criticize.
One of your demands is that official bodies tell the Truth and declare a climate emergency. You were told by the IPCC last year that humanity had 12 years before it would be too late to do anything. That was a LIE. The fact is that it was and is already far too late to prevent global catastrophe. There is NO carbon budget left. These realities were apparent even back in 2013 following the IPCC fifth assessment report, when the only scenarios the IPCC could imagine where disaster could be avoided required time travel into the past or technologies which did not exist and certainly could not be scaled up even if they did exist (as expressed by climate scientists Dr Kevin Anderson and Dr Hugh Hunt). The science based facts behind these assertions are summarised here: 6.
Truth is determined by careful and comprehensive collection of accurate data, by hard objective scientific scrutiny using the principles of Physics, Chemistry and Biology, including mathematical analyses, which must not be polluted by political or economic vested interests. The IPCC processes had long been watered down by political interference, which seriously underestimated the magnitude and speed of global warming, in order to justify foot dragging by national so-called “leaders”.
The reason we have not yet experienced the full horrific consequences of 415ppm CO2 (in reality, there is a much higher CO2 equivalent, around 500ppm) is because of time lag due to thermal inertia. Atmospheric temperature rises have been buffered by the cool oceans and the melting ice masses. Those buffers are being exceeded, they are being overwhelmed, as every second passes. If you think the unprecedented shocking weather extremes over the past 15 years were disastrous at barely 1 degree Celsius atmospheric global average temperature rise, there is far more and far worse to come. More than 4 degrees rise is irreversibly baked into the cake based on EXISTING greenhouse gas concentrations. That is as certain as the law of gravity. Hell is coming no matter what. The best thing you can do is get ready for it. But time is short and you must act NOW before the imminent global economic collapse steals away all your options.
Let us consider the absolute best imaginable outcomes for your group. What will happen if you are immediately 100% effective today in achieving all your social and policy goals?
- Even if all carbon emissions cease today, the world is still committed to more than 4 degrees Celsius eventual global average temperature rise which will render large scale agriculture impossible. This means civilisation, the hallmark of which is the existence of cities, will no longer be possible. Small scale agriculture in a few selected climate resilient pockets may still be possible.
- Large scale carbon sequestration is a fantasy and will never be undertaken because our bogus economic system will not allow for it and even if we can develop those technologies, we will not have the energy resources to do it. Geoengineering insanity will cause more problems than they address.
- Immediate cessation of emissions will also mean immediate curtailment of global food production which is almost entirely dependent on fossil fuels. This will cause billions to starve. In the medical management of patients, knowingly inflicting harm is not an option. However allowing nature to take its course (in some cases – such as untreatable terminal cancer) is acceptable, indeed unavoidable. As a matter of course, billions will die this century due to oil/resource depletion, ecosystem collapse and climate catastrophe and the consequences thereof (warfare, epidemics etc). Inevitable near term economic collapse is also absolutely certain due to institutional fraud and impending energy collapse. It is those events which will most effectively and drastically curtail carbon emissions, not your activism.
There is absolutely nothing you can do about the looming general die-off. You can however take steps to reduce the likelihood that you and your family and friends will die horribly in the next few decades. Please note that nobody’s survival is guaranteed. All anyone can do is increase the probability of their survival.
The remainder of Chia’s letter is a little too over the top with hyperbole for my taste but the gist of his advice to extinction rebellion members is probably correct: It’s too late to save civilization, focus on saving your members.
Here is another post by Geoffrey Chia that I thought was pretty good.
Gail Zawacki in her latest excellent essay introduces “Themist”, a new name for doomers, that tiny group of mutants with defective denial genes, that I belong to.
Gail succinctly summarizes why we Themists
believe know what we believe know, and discusses a new trend to blame Themists for causing civilization’s imminent collapse.
I’m a Themist and proud of it. Come and get me you denying idiots, I’m right here.
1. Consciousness and Denial
In tandem with consciousness, humanity developed a deeply embedded penchant for denial. It’s a terrific survival strategy that evolved to help blind us to the pain of animals we hunt and eat, the terror of the victims of wars we wage on our neighbors, the monstrosity of slavery, the injustice of male chauvinism, the senselessness of death, and ultimately the fearsome gaping maw of meaninglessness in the vast unfeeling universe.
Our denial, entrenched in our genes, also enables – even requires – us to believe fantasies, to embrace spirits, to shun truth, to subscribe to the illusion of free will, to follow charlatans, and to pretend our hopes and prayers can shape reality.
Fact: there exists no natural mechanism that will slow the acceleration of anthropogenic global heating in any timeframe useful to life on earth. It is only reasonable to expect that it’s going to get hotter and hotter, faster and faster, for at least hundreds of years. Even if anthropogenic emissions cease today or in a decade, heating will still increase at an accelerating rate. Amplifying feedbacks such as albedo and forest die off and methane release from melting permafrost combined with the longevity of CO2 already released assure an uninhabitable climate in the fairly near future.
Once you understand that greenhouse gases will continue to trap energy from the sun as long as they persist, everything else – climate sensitivity and latent ocean warming and inertia in the system – is so much hoohah. The idea that technology yet to be invented will remove CO2 is no better than a religious tenet, and it will never be deployed at a scale that matters given the vast quantities that have already been released (and continue to be released).
3. Humans are incapable of change
As convincing as the physical effects documented by science are, it’s also and crucially ever more irrefutable that humans are simply not equipped to behave any other way than to grow without voluntary restraint, until we deplete the resources we need to survive, and overwhelm the environment with pollution until it is so toxic that it is poisonous to virtually all forms of life. We are basically an invasive species with no more self restraint than yeast.
This is where even the most dire voices about climate change often err. It’s not libertarianism, or capitalism, or western civilization that has led us to this predicament – rather it is humanity’s exponential growth, in numbers and complexity, in technological capability, medical advances, and consumption. The imperative to grow and consume is primordial and we cannot eliminate that biological trait despite our desire to believe in free will.
4. Apocaloptimists attacking doomers – as worse than deniers
Overwhelming evidence – that impacts are faster and sooner than predicted, that tipping points have been irrevocably crossed, that amplifying feedbacks are beyond human influence, that global warming is run amuk with no natural mechanisms or magic technology to ameliorate inexorable heating – is leading more people to conclude that civilization (if not our species and most others) is doomed. Right now, there is an increasingly vocal contingent who are vigorously attacking the nebulous doomer community.
Much of the sniping and scapegoating begins with the hostile accusation that doomers, merely by existing, are encouraging inaction. This is patently absurd, since inaction has been and remains the default position ever since humans first noticed that burning fuel has consequences. No contribution by doomers towards defeatism accounts for the ever-increasing Keeling curve that measures CO2 concentrations, or the refusal of governments to meet climate treaty goals.
5. No fun
An especially pernicious assertion by this “shoot the messenger” crowd is the common claim that doomers are secretly desirous of a catastrophic end for humanity. I doubt there is a single doomer who finds any comfort whatsoever in either the inevitability of extinction or their own individual role in it. Every doomer I’ve ever interacted with, and there have been many, has agonized and mourned – and some have even gone crazy with grief and guilt and committed suicide. It’s not fun being a doomer, which is why there are so few of us.
Many doomers began as former devoted progressives, who fought long and hard before awakening with enormous ambivalence to the sad verity that humanity is not going to change. I personally learned about the tenacity of denial the hard way, first from trying to alert the world to the death of trees (a massacre that seemed perfectly obvious to me over a decade ago but invited unending ridicule) and second, from encountering so many “light” doomers – who will forever remain convinced, no matter how much archeological evidence refutes it, that the noble primitive and peaceful and sustainable indigenous savage was ever really a thing.
Something big has recently changed in our culture.
We no longer accept any unpleasant reality, no matter the costs of denying it, nor the benefits it might return in the long run.
For example, parents who do not permit their children to play unsupervised for fear of a scuff. And school teachers who no longer fail anyone and mark all students as above average. And high schools that fly their students to Europe rather than make them sweat on the West Coast trail. And universities that have dumbed-down their curriculums. And citizens who refuse to accept election results and blame fictional demons rather than questioning their own beliefs. And environmentalists who promote green growth rather than austerity and population reduction.
Recessions function like the safety valves on a pressure cooker that prevent a dangerous explosion. Recessions used to be viewed as a normal event that purged malinvestments and poor performers thus allowing healthy re-growth in the next cycle.
Today we are unwilling to accept any downturn. As soon as the markets start to drop the central banks step in to prop them up. Extraordinary measures have become ordinary. The absurd has become normal.
We’ve removed most of the safety valves and the pressure is building. Soon the pressure will be so high that we’ll be forced to remove the last safety valve and start handing out printed money to citizens, thus risking a repeat of the Weimar event and its terrible consequences.
It’s not like we need to abandon capitalism and free markets. To the contrary, all we need to do is let markets function the way we pretend they function.
I understand all the thermodynamic reasons that we might not want to let a recession take root, but I ask you, how is delaying the inevitable going to make things better? It’s not. It’s going to make things much worse.
Our only choices are do we want to fall from a higher elevation later, or climb down from a lower elevation sooner?
Where are the adults?
The Fed Stops Pretending by Peter D. Schiff
The elephant in the room that no one wants to acknowledge is that the “unconventional” policies that were introduced to fight a “once in a century” crisis are now the conventional policies of choice to combat the normal fluctuations of the business cycle. But zero percent interest rates and quantitative easing only worked a decade ago because people thought they were temporary. If they knew that the policies were permanent, the dollar may have plummeted and the resulting inflation may well have overwhelmed any benefits the stimulation delivered. But the naïve belief that the Fed could reverse course, unwind its bloated balance sheet and normalize interest rates, kept the game going and kept the dollar strong. Now that the illusion may about to be shattered, the dollar may not survive the next round of enhanced QE and ZIRP.
QE4 will have to be larger than the three earlier rounds combined, as the annual Federal budget deficits could exceed 3 trillion. However, while China, Russia, and many emerging market nations were eager buyers of Treasuries during those initial rounds, they may likely be sellers of Treasuries during the next round. That means none of the inflation created to finance QE would be exported. So the big price increases next time may take place in the supermarket rather than the stock market. Americans would finally be forced to deal with the adverse effects of inflation that we have been spared for the past 10 years. It’s not going to be pretty.
Hat tip to Panopticon for his excellent daily posts on the economy and climate.