Nicole Foss has one of my favorite minds on the planet.
She used to write prolifically on our predicament but perhaps after having said most of what she thought needed to be said, and then attending to personal preparations by leaving Canada for the much safer New Zealand, she now writes infrequently.
Today Nicole published a greatest hits summary of her and her writing partner Ilargi’s essays.
If you are seeking to understand reality then I recommend you spend some time reading her catalog.
If you prefer to learn by video, then you might enjoy this interview with Nicole.
Nicole Foss has completed a huge tour de force with her update of the Automatic Earth Primer Guide. The first update since 2013 is now more like a Primer Library, with close to 160 articles and videos published over the past -almost- 10 years, and Nicole’s words to guide you through it. Here’s Nicole:
The Automatic Earth (TAE) has existed for almost ten years now. That is nearly ten years of exploring and describing the biggest possible big picture of our present predicament. The intention of this post is to gather all of our most fundamental articles in one place, so that readers can access our worldview in its most comprehensive form. For new readers, this is the place to start. The articles are roughly organised into topics, although there is often considerable overlap.
We are reaching limits to growth in so many ways at the same time, but it is not enough to understand which are the limiting factors, but also what time frame each particular subset of reality operates over, and therefore which is the key driver at what time. We can think of the next century as a race of hurdles we need to clear. We need to know how to prepare for each as it approaches, as we need to clear each one in order to be able to stay in the race.
TAE is known primarily as a finance site because finance has the shortest time frame of all. So much of finance exists in a virtual world in which changes can unfold very quickly. There are those who assume that changes in a virtual system can happen without major impact, but this assumption is dangerously misguided. Finance is the global operating system – the interface between ourselves, our institutions and our resource base. When the operating system crashes, nothing much will work until the system is rebooted. The next few years will see that crash and reboot. As financial contraction is set to occur first, finance will be the primary driver to the downside for the next several years. After that, we will be dealing with energy crisis, other resource limits, limitations of carrying capacity and increasing geopolitical ramifications.
The global financial system is rapidly approaching a Minsky Moment:
“A Minsky moment is a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such moments occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money. The spiraling debt incurred in financing speculative investments leads to cash flow problems for investors. The cash generated by their assets is no longer sufficient to pay off the debt they took on to acquire them.
Losses on such speculative assets prompt lenders to call in their loans. This is likely to lead to a collapse of asset values. Meanwhile, the over-indebted investors are forced to sell even their less-speculative positions to make good on their loans. However, at this point no counterparty can be found to bid at the high asking prices previously quoted. This starts a major sell-off, leading to a sudden and precipitous collapse in market-clearing asset prices, a sharp drop in market liquidity, and a severe demand for cash.”
This is the inevitable result of decades of ponzi finance, as our credit bubble expanded relentlessly, leaving us today with a giant pile of intertwined human promises which cannot be kept. Bubbles create, and rely on, building stacks of IOUs ever more removed from any basis in underlying real wealth. When the bubble finally implodes, the value of those promises disappears as it becomes obvious they will not be kept. Bust follows boom, as it has done throughout human history. The ensuing Great Collateral Grab will reveal just how historically under-collateralized our supposed prosperity has become. Very few of the myriad claims to underlying real wealth can actually be met, leaving the excess claims to be exposed as empty promises. These are destined to be rapidly and messily extinguished in a deflationary implosion.
While we cannot tell you exactly when the bust will unfold in specific locations, we can see that it is already well underway in some parts of the world, notably the European periphery. Given that preparation takes time, and that one cannot be late, now is the time to prepare, whether one thinks the Great Collateral Grab will manifest close to home next month or next year. Those who are not prepared risk losing everything, very much including their freedom of action to address subsequent challenges as they arise. It would be a tragedy to fall at the first hurdle, and then be at the mercy of whatever fate has to throw at you thereafter. The Automatic Earth has been covering finance, market psychology and the consequences of excess credit and debt since our inception, providing readers with the tools to navigate a major financial accident.
The second limiting factor is likely to be energy, although this may vary with location, given that energy sources are not evenly distributed. Changes in supply and demand for energy are grounded in the real world, albeit in a highly financialized way, hence they unfold over a longer time frame than virtual finance. Over-financializing a sector of the real economy leaves it subject to the swings of boom and bust, or bubbles and their aftermath, but the changes in physical systems typically play out over months to years rather than days to weeks.
Financial crisis can be expected to deprive people of purchasing power, quickly and comprehensively, thereby depressing demand substantially (given that demand is not what one wants, but what one can pay for). Commodity prices fall under such circumstances, and they can be expected to fall more quickly than the cost of production, leaving margins squeezed and both physical and financial risk rising sharply. This would deter investment for a substantial period of time. As a financial reboot begins to deliver economic recovery some years down the line, the economy can expect to hit a hard energy supply ceiling as a result. Financial crisis initially buys us time in the coming world of hard energy limits, but at the expense of worsening the energy crisis in the longer term.
Energy is the master resource – the capacity to do work. Our modern society is the result of the enormous energy subsidy we have enjoyed in the form of fossil fuels, specifically fossil fuels with a very high energy profit ratio (EROEI). Energy surplus drove expansion, intensification, and the development of socioeconomic complexity, but now we stand on the edge of the net energy cliff. The surplus energy, beyond that which has to be reinvested in future energy production, is rapidly diminishing. We would have to greatly increase gross production to make up for reduced energy profit ratio, but production is flat to falling so this is no longer an option. As both gross production and the energy profit ratio fall, the net energy available for all society’s other purposes will fall even more quickly than gross production declines would suggest. Every society rests on a minimum energy profit ratio. The implication of falling below that minimum for industrial society, as we are now poised to do, is that society will be forced to simplify.
A plethora of energy fantasies is making the rounds at the moment. Whether based on unconventional oil and gas or renewables (that are not actually renewable), these are stories we tell ourselves in order to deny that we are facing any kind of future energy scarcity, or that supply could be in any way a concern. They are an attempt to maintain the fiction that our society can continue in its current form, or even increase in complexity. This is a vain attempt to deny the existence of non-negotiable limits to growth. The touted alternatives are not energy sources for our current society, because low EROEI energy sources cannot sustain a society complex enough to produce them.
We are poised to throw away what remains of our conventional energy inheritance chasing an impossible dream of perpetual energy riches, because doing so will be profitable for the few in the short term, and virtually no one is taking a genuine long term view. We will make the transition to a lower energy society much more difficult than it need have been. At The Automatic Earth we have covered these issues extensively, pointing particularly to the importance of net energy, or energy profit ratios, for alternative supplies. We have also addressed the intersections of energy and finance.
4 thoughts on “By Nicole Foss: The Automatic Earth Primer Guide 2017”
Fear not: I’m sure herb spirals or rocket stoves or the Voluntary Simplicity Movement or the 100-mile diet or the Health & Wellness Movement will save our sorry asses! Oh…the bewildering age of fix-it-ism! Newsflash: Scale is in its death throes.
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The reason she does not write much anymore is that she has lost all credibility. For much of the 2009-2014 timeperiod, she continued to have pound the table urgency and “certainty” that deflation was to commence in the months ahead and would be so bad that when the bottom hit it would only be recognized by those “from 100 years ago in a war torn country”. 90% off home prices, the dow Jones would hit 1,000, Obama wouldn’t survive his first term.
Problem is, none of that happened and those of us who sold everything and rented waiting for the bottom are now trapped in an endless cycle of rising rents and home prices we can no longer afford. Moreover, her timing is terrible. She left the UK in the YEAR 2000 for Ontario because she was certain it was on the brink of collapse. She then said you need to “buy yourself a learning curve” so she went to Ontario 5-7 years before collapse to learn how to use the local environment to her advantage. Well if you need to buy yourself a learning curve and prepare for imminent collapse, there is no way you up and move to New Zealand.
Bottom line she is now been wrong for the better part of 20 years. Whats the point of a midlife person preparing for something that may not hit until 10 years after you die of old age? Sorry but the woman while remarkably intelligent, is a charlatan with no accountability. She should be avoided by all costs.
A lot of smart people made predictions that have not yet come true. Nicole was among the smartest and most precise in her predictions. None of these people imagined that central banks would respond by printing trillions of dollars and lowering interest rates to zero for over 10 years. Nor that the clever monkeys could do so without destroying the monetary system. My own view is that central banks have delayed the day of reckoning, but when they eventually lose control, as the physics and mathematics says they must, the correction will be much more painful than had they allowed the system to reset in 2008.
I beg to differ! Things are collapsing all around us! Watch Wealthion and hear what they are saying! Watch Chris Martenson! ( Peak Prosperity) We are in trouble! She is absolutely correct on peak oil. Nothing on earth last forever. We need to have no debt and money! Being resilient now and having a community is what we need to all strive to accomplish! Working together makes a difference! God Bless! MV