On Boneheads

You Bonehead

Yesterday, the leader of the world’s largest and strongest economy called his central banker a “bonehead” for not lowering interest rates below zero.

Today, the European Central bank (ECB), which according to Trump is not led by a bonehead, reduced interest rates and increased money printing:


The ECB reduced the deposit rate to minus 0.5% from minus 0.4%, and said it’ll buy debt from Nov. 1 at a pace of 20 billion euros ($22 billion) a month for as long as necessary to hit its inflation goal.

Trump and the ECB correctly understand that lower interest rates are required to stimulate growth, and yet rates are already near zero, which suggests real growth is no longer possible.

A non-bonehead would seek to understand the underlying reason growth is constrained. They might begin by reading today’s essay by Gail Tverberg in which she makes 11 important points:


[1] Our problem is not just that oil prices that are too low. Prices are too low for practically every type of energy producer, and in many parts of the globe.

[2] The general trend in oil prices has been down since 2008. In fact, a similar trend applies for many other fuels.

[3] The situation of prices being too low for many types of energy producers simultaneously is precisely the problem I found back in December 2008 when I wrote the article Impact of the Credit Crisis on the Energy Industry – Where Are We Now?

[4] In the right circumstances, a rapidly growing supply of cheap energy products can help the world economy grow.

[5] It is striking that the period of rapid energy consumption growth between World War II and 1980 corresponds closely to the long-term rise in US interest rates between the 1940s and 1980 (Figure 6).

[6] Starting about 1980, the US economy began substituting rapidly growing debt for rapidly growing energy supplies. For a while, this substitution seemed to pull the economy forward. Now growth in debt is failing as well.

[7] Since 2001, world economic growth has been pulled forward by China with its growing coal supply and its growing debt. In the future, this stimulus seems likely to disappear.

[8] The world economy needs much more rapidly growing debt if energy prices are to rise to a level that is acceptable to energy producers.

[9] The world economy seems to be running out of truly productive uses for debt. There are investments available, but the rate of return is very low. The lack of investments with adequate return is a significant part of what is preventing the economy from being able to support higher interest rates.

[10] Since 1981, regulators have been able to prop up the economy by reducing interest rates whenever economic growth was faltering. Now we have pretty much run out of this built-in source stimulus.

[11] The total return of the economy seems to be too low now. This seems to be why we have problems of many types, ranging from (a) low interest rates to (b) low profitability for energy producers to (c) too much wage disparity.

Having now learned that economic growth is constrained by the depletion of low cost non-renewable fossil energy, a non-bonehead would then focus on renewable energy to determine what is or is not physically possible, and the implications of trying to substitute fossil with solar and wind energy.

They might begin with this week’s essay by Tim Watkins and would quickly learn that the environmental costs of “green” energy are very high, that “renewable” energy is totally dependent on non-renewable fossil energy, and in any case only produces electricity which does not address the other 80% of fossil energy we depend on.


Having now attained an understanding that there is no possible way to resume economic growth, a non-bonehead would then ask what’s the consequence of attempting to force growth with printed money and negative interest rates? A quick review of history would show there is no free lunch and that monetary shenanigans ultimately destroy currencies which leads to wars and revolutions.

Finally, a non-bonehead would integrate all of the above with an understanding of the ongoing collapse of our planetary ecosystem, including the loss of a climate compatible with civilization. They might begin with this week’s interview with Phillise Todd, who has a good grasp of the big picture, despite her occasional and understandable (as explained by Varki’s MORT theory) lapses into denial.


Understanding now the intractable nature of our predicament, and comparing reality with what our culture believes, a non-bonehead would conclude they are a genetic mutant and that most of our species are boneheads.

When challenged with the criticism that all they do is discuss problems without offering solutions, a non-bonehead would respond with a clear plan:

What would a wise society do?

And the boneheads would ignore it.

30 thoughts on “On Boneheads”

  1. From @KeiserReport watch from 12:12
    With Roy Sebag of Goldmoney.com about negative interest rates – what is the invisible hand argument? What if negative interest rates are telling us that we are going to see a rapid decline in the world’s population? It would be the ‘invisible hand solution’ to the wealth inequality problem.


    1. Thanks. I regularly watch Max Keiser. He has a good understanding of the what but a poor understanding of the why (thermodynamics, MPP and other genetic behaviors, etc.). His guest is a good example of not understanding the relationship between energy and wealth. He accurately predicts that population will rapidly fall but incorrectly assigns it as the cause of low economic growth rather than a consequence of low growth. We’ll be lucky if the population is 20% that of today in 100 years, let alone 20% less as his guest predicts. I’ve long thought we’ll be extinct before we acknowledge peak oil was a contributing cause of collapse and this guest provides a typical narrative we can expect to hear in the coming years.

      Liked by 1 person

      1. yes I felt it was interesting to see a discussion on the concept that negative interest rates were the ‘invisible hand solution’ to the wealth inequality problem and yes agree about lack of understanding on thermodynamics. I have failed to see how bitcoin can be promoted given the massive energy requirements for example. Definitely this is a complex topic, including population into economic and energy is not even where Tim Garret goes but I did find this article you may like which is relevant.
        “When growth rates approach zero, civilization becomes fragile to externalities, such as natural disasters, and is at risk for accelerating collapse.”


  2. I have to add that nothing is going to change until we change the way we think., and shift out from what Ronald Wright describes us as half evolved ice age hunters who prefer short term benefit to long term gains. Pretty much every system we create is a ponzi scheme and since the 1970s especially we have been financing the ever-accelerating decline of the natural world with debt
    Since the US jettisoning of the gold standard in 1971, we have seen a profound shift in the nature of capitalism. Most corporate profits are now no longer derived from producing or even marketing anything, but in the manipulation of credit, debt, and “regulated rents.” As government and financial bureaucracies become so intimately intertwined it’s increasingly difficult to tell one from the other, wealth and power—particularly, the power to create money (that is, credit)—also become effectively the same thing.
    Debt at near zero interest rate is a means of converting capital into income. Our recent increase in debt can therefore be viewed as energy that would otherwise have been available to future generations. We are aggressively impoverishing our grandchildren (and other species)
    Richard D. Wolff Professor of Economics Emeritus, University of Massachusetts on Boom Bust with straight talk on where the economy is at right now. Watch from 2.00 – 12.20.

    and surely the biggest emitter is the military?
    I can offer a simple solution. Instead of attributing a carbon budget to countries, do it to individuals, world wide, everyone. The calculation would need to include attributing emissions to wealth eg 7.1 ± 0.1 Watts to sustain each $1000 of global value. For every trillion dollars of global GDP we add, the concentration of CO2 increases by 1.7 ppmv. So as well a budget for number of children and there are recent publications offering suggestions eg. Limiting climate change: what’s most worth doing?
    The climate mitigation gap: education and government recommendations miss the most effective individual actions
    but for all the talk if there is a naked lunch moment when we are really required to engage what would be required now then if wealth were divided evenly among the nine billion people expected on this planet by 2050, the affluence of our western culture of endless growth would have to drop significantly. It’s doubtful that an entire civilization indoctrinated in selfishness would bear this without an epic tantrum. It would be a process of social maturation on a scale never before seen. It is, however, the way out of this mess, with compassion for ourselves and the planet.
    but for my suggestion to apply this carbon budget to individuals then that will motivate action without doubt, it will reduce inequality and also population. The problem is that when you run out of your budget then …..
    but that is a solution that is never going to happen.
    I would say appropriate action at this time is confined to mitigating the inequality and horror ie deep adaptation but otherwise Report from Brown Uni atmospheric scientist Dr. Lauren Moffat outlines options for doing your part to stop climate change

    Liked by 1 person

  3. Thanks, I agree with your interesting comments on debt.

    I don’t think we’ll see any voluntary change in a positive direction because on the issues that matter, like reproduction, consumption, and competition for status, our genes are in charge and we do not have free will.

    Having discovered Varki’s MORT theory I was initially hopeful that a scientific explanation for why we can be simultaneously intelligent yet in denial of obvious overshoot realities might lead to a breakthrough, but it’s clear now that denial of denial is too strong a behavior to break through.

    Love the Onion, their satire is usually more accurate than the mainstream news.


  4. Too bad you’re “tilting at windmills” trying to get boneheads to see the point. Windmills (rather, turbines) are also the poster child of a society addicted to growth in any form. “Green growth” is literally the HEIGHT of absurdity now. When the NRDC, Greenpeace and The Sierra Club applaud the most visible industrial sprawl ever built, nature’s goose is cooked. At least The Nature Conservancy is studying energy sprawl, though their mitigation angle is comical.

    This NRDC article illustrates today’s clean energy delusions: https://www.nrdc.org/onearth/you-cant-stop-wind-these-folks-are-trying-anyway (pitting Big Wind against Big Oil, as if they’re separate entities). And this disturbing piece praises a skyline ruined by turbines: https://www.nrdc.org/onearth/horizon-cowboy-state-wind-turbines

    Aforementioned Wyoming is also building the biggest wind plot ever seen in America. Chokecherry & Sierra Madre will cover up to 343 square miles with ugly sticks and flashing lights. Cover that much land with close-cousin oil rigs and they’d call it an environmental tragedy, e.g. all the fuss over ANWR’s infrastructure footprint.


  5. Thanks.
    Yes indeed we may not have free will at all, and especially on a societal level but even on an individual level – consider that Doctors can tell people facing death to change. Yet only 1 in 7 succeeds in making lasting and successful behavior change.
    you can’t address an adaptive challenge with a technical solution. Information is a technical solution. telling what to do is trying to apply a technical solution to an adaptive challenge. These challenges can only be met by transforming our mindset and changing our behavior.
    See –
    Immunity to Change: An Exploration in Self-Awareness” By Scott J. Allen, Ph.D. Assistant Visiting Professor, John Carroll University
    “Kegan’s Constructive Development Theory” -Professor John E Barbuto
    “Immunity to Change: A Report From the Field” By Jonathan Reams

    It was never going to be the climate scientists who would provide the solutions to changing our behavior
    For our debate about our future it is important to understand, that we are talking about unbelievably forceful polarization, a civilizational divide. The privileged western white male still believes he can keep living in yesterday’s world.
    the challenges with #ClimateEmergency could only have been met with an adaptive approach – an efficient method for uncovering hidden assumptions, fears that hold us in one mindset, with which we must make peace before we can make good on our intention for change and adaptation

    However I agree with you that on the level of making societal change we may not have any control at all. For instance there seem to be physical laws to how systems evolve It can seem we are on a train, accelerating towards a crash and we are able to move around, look out, measure things but the driver is not to be found. the physics of this train we are on – Physicist Geoffrey West has found that simple, mathematical laws govern the properties of cities — that wealth, crime rate, walking speed and many other aspects of a city can be deduced from a single number: the city’s population. In this mind-bending talk from TEDGlobal he shows how it works and how similar laws hold for organisms and corporations.

    From the outset we should consider what is being asked, what kind of change is required and that it is requiring everyone to change or else those will surely end up like the Neanderthals
    Surely, if we do not fundamentally change the way we think, how we relate to each other and the environment then even if we were successful with mitigation now, the balloon effect will inevitably kick in down the track and we are here again later on.
    As Ronald Wright says in A Short History of Progress
    Each time history repeats itself, the cost goes up.
    from Joanna Macy – Let’s drop the notion that we can manage our planet for our own comfort and profit—or even that we can now be its ultimate redeemers. It is a delusion. Let’s accept, in its place, the radical uncertainty of our time, even the uncertainty of survival.
    Relax , nothing is under control
    Ps – thanks for the blog, your book recommendations and your comments. Stay around.

    Liked by 1 person

  6. This is a fascinating interview with the godfather of MMT (Modern Monetary Theory). He begins by explaining that he studied engineering but found it too difficult so he transferred to economics so he could get good grades. He then goes on to explain with great charisma and confidence that governments can print and spend as much money as they want without consequence. These idiots run our world.


  7. Very nice monologue today by Chris Martenson on the increasing rate of change of warning signs. He concludes by issuing one of his rare alerts and says he is moving his home because of increasing risks.


  8. This essay by physicist Antonio Turiel is the first decent analysis of the Saudi drone attacks that I’ve come across.


    Turiel thinks the most likely cause is sabotage by an internal group that opposes the Saudi leadership. He then goes on to explain that the loss of 5% of the world’s oil supply, if sustained, is a very big deal for the economy.

    When the 2008 crisis occurred, the fall in oil consumption due to the economic breakdown was only 2%, so you can imagine what effect on the activity can have a drop in available crude oil of more than double.

    Turel seems to agree with my prior speculations that we will never admit that peak oil is the root cause of our economic problems.

    It should also be taken into account that Saudi Arabia is probably already reaching, if it was not there yet, its maximum oil production. Years ago we commented that Saudi Arabia did not bring oil from its Manifa field to the market, even though up to 1 Mb / d of it could be extracted, because that oil was excessively contaminated by vanadium. It was hoped then that the new refineries, which would have to be ready at the end of the 20s, could process this crude. But the situation of Saudi production could not wait so long, and already in 2014 the Manifa field was put into production. How was the problem of its low quality resolved? Simply, mixing it with the rest of Saudi sausages, lowering the overall quality of its oil but keeping it at levels that were acceptable to the refineries. But after Manifa there are no longer any new sites left or expected. Attacks last Saturday will serve, among other things, to cover with a sheet the elephant that one of the world’s largest oil producers has already passed its peak oil . When the years pass and the production of Saudi Arabia never fully recovers, it will be alleged that everything is the fault of those destroyed facilities and with that we can hide the reality maybe ten years more and win another decade of excuses.


  9. Tim Watkins on resource depletion…

    The global economy has eaten its way through all of the best fossil fuel deposits in the same way as it has eaten its way through everything else it considered to be a resource on Planet Earth. Now we are left with the dregs; and they do not provide a sufficient energy return on the energy invested to continue to operate the global economy that feeds and clothes us; still less provide the massive expansion of resource consumption envisaged in a green new deal.



  10. The framework of thinking around ‘free will/not free will’ is creaky with inapt terminology. Of course there is no such thing as free will. There is no free anything.

    We have will, and can self-direct.

    But it’s expensive, and most of us can’t afford the cognitive dissonance required to self-direct.


    1. Sure language is not perfect but what I understand by free will is more aligned with freedom to decide. language well, lucky we are not discussing love for instance.
      In any case it is worth consideration here, to look at ourselves, what we can choose to do or not do as individuals and groups and socially so that we understand to some degree our limits. We after all are only conscious of a very small portion of our brain and reality. We are driven by trauma, social and environmental effects, and so much else that we can be wise to be forgiving each other and our self if we end up messed up. Please consider we are all dependent on each other and the environment.
      So we are asked by the social media now to look at the physics and Physicist Geoffrey West has found simple, mathematical laws govern the properties of cities – many aspects of a city can be deduced from a single number: the city’s population
      This is the physics – that many properties, that wealth, crime rate, walking speed and many other aspects of a city can be deduced from a single number: the city’s population.
      Other effects flow from population numbers and are predictable.
      Also global power production and global population grow together. It would be considered the physics says that without a population decline no Green New Deal can ever happen.
      That is the physics.
      So the question is what is the sustainable population for a technically advanced society without wars and major disease?
      Some have argued it is approx. 250 million global population.
      8 million for a hunter gatherer society.
      So I would suggest if there was any hope there we would have listened to Paul Erlich way back when, but in the end he joined the Titanic Club and was fond of flying his plane around. That tells me something.
      So individually we can choose but, Doctors can tell people facing death to change. Yet only 1 in 7 succeeds in making lasting and successful behavior change.
      you can’t address an adaptive challenge with a technical solution. Information is a technical solution. telling what to do is trying to apply a technical solution to an adaptive challenge. These challenges can only be met by transforming our mindset and changing our behavior.
      See –
      Immunity to Change: An Exploration in Self-Awareness” By Scott J. Allen, Ph.D. Assistant Visiting Professor, John Carroll University
      “Kegan’s Constructive Development Theory” -Professor John E Barbuto
      “Immunity to Change: A Report From the Field” By Jonathan Reams
      And the difficulty of making behavioural change increases dramatically when we talk about groups.
      Robin, I have said all this about free will and choices because it is what I can see is how it is and the facing of what is on our fork, the naked lunch moment is that moment of truth.
      Personally I also can see everything is interconnected, and the current situation we face ourselves in has led me to delve more deeply into myself and as Wendell Berry says
      ”It is only on the condition of humility and reverence before the world that our species will be able to remain in it.”
      This lecture below was delivered to the plebe class at West Point in October 2009.

      “listen to yourself, to that quiet voice inside that tells you what you really care about, what you really believe in”


  11. By Meteorologist Nick Humphrey – It will end one way or another (h/t Apneaman)

    I must admit, after awhile I find myself stumped as what can be said further about abrupt climate change and ecosystem collapse. The data and trends are out there. We are moving this planet quickly from the cyclic ice age era into a Hothouse era. Extremes in weather and long-term climatic phenomena are worsening and will continue to do so because of the inertia in the climate system. Carbon dioxide continues to rise rapidly, as does methane, nitrous oxide and other powerful greenhouse gases, pushing the climate system ever further. Extinctions are ongoing and will accelerate as climate change becomes an ever more dominant driver (pollution and habitat destruction have already been going on for a very long time).

    At this point, the choice remaining seems to be a global effort to do whatever actions required to show compassion for the survival and fair treatment of fellow humans and other species on this planet as climate chaos and ecosystem damage worsen (the only option really just being degrowth) vs. business-as-usual (BAU) – relentless economic growth via increased energy use which favors an increasingly fewer people. Looking at the monstrous rise in the carbon dioxide equivalent concentration (inclusive of all greenhouse gases) from 397 parts per million (ppm) in 1984…the year of my birth…to near 500 ppm in 2019…i’m assuming “more of the same” has been chosen by policymakers of the world. I’m looking forward to watching the melting Arctic be exploited for oil and natural gas to keep BAU going (sarcasm there).

    BAU will end one way or another. Based on the trends, decision-making and the Earth System’s recent behavior, it will end because civilization can no longer handle its own destruction and pollution, nor Earth’s amplification mechanisms. Humans will perish at accelerated rates. The shame is, of course, that other species who cannot handle the changing environmental and pollution conditions will also perish as well.



  12. This documentary on the machines used to install large offshore wind turbines is worth a watch. It’s jaw dropping amazing how we are able to deny the reality that renewable energy is not renewable. Even the producers of the documentary completely missed the irony that they witnessed first hand.


  13. Ron Patterson says world oil production for 2019 will be lower than 2018.

    Okay, what’s happening in the shale oil patch? Well, it’s petering out. Look at every state above where the primary source of oil is shale. They are all petering out. Not just one but every damn one of them. And there are prognosticators out there, the EIA, IEA, BP and a dozen others, who are predicting shale oil to continue to rise for the next 20 years.

    I, for one, just ain’t buying it.



  14. By Panopticon: Our Energy Predicament


    Oil, gas and coal provide around 85% of our energy needs directly and are intrinsic to the production, maintenance etc of nuclear, hydro and renewables that make up the remaining 15%.

    Since around the turn of the century, less and less ‘energy profit’ has been flowing through the system from these fossil fuels. Oil in particular has been growing more and more expensive to extract, and we can see this in the rapid fall-off in capex productivity that the major oil firms have experienced since around 2000, with each barrel of oil getting more and more expensive to produce.

    This is important because the global economy is an energy system upon which we superimpose a monetary system (and then pretend that it is the money that matters). Standard neoclassical economics completely overlooks the centrality of energy in economic growth but it is common sense if you really think about it. In the natural world, an organism needs to earn more calories than it expends in sourcing its food or it will die of starvation. Likewise, no economic activity can take place without energy and no economic exchange is worthwhile unless there is an ‘energy profit’ embedded in it.

    The global economy as whole needs to be growing at a rate of around 3% per annum, and (bar the odd recession) has been doing so since around 1850. If it falls below this level of growth for too long, the financial system is likely be paralysed by loss of faith in fiat currencies and cascading defaults.
    Unfortunately we are now deep into an era defined by *energy-constraints*, and indeed by a wide variety of resource-constraints and other growth-limiting factors like pollution and climate change.

    The stagnant wages you mention are a symptom of this insufficient energy-profit. So is the increasing surreality and complexity of our financial system, as it tries to compensate and maintain growth. Negative interest rates are a tacit admission that some economies can no longer offer a return on investment. The political polarisation and geopolitical/trade friction we are seeing are also symptomatic of too many claims on a shrinking/degrading resource-base.

    Unfortunately workers with stagnant wages find it hard to afford the goods and services into which energy products (primarily fossil fuels) go. They can add debt or buy things on long-term payment plans but sooner or later they start getting tapped out. I believe we are about at that point now. This in turn weakens demand for energy products and oil, coal and gas prices fall too low for producers. Again we are seeing this now.


  15. Tim Watkins on the UK’s failing electricity grid…


    …we may have a low-carbon system; or we may have an uninterrupted 24/7/365 system; or we may have a (relatively) low cost system. What we cannot have is any two of these; let alone all three.

    Given the severe income inequality in the UK, cost can no longer be ignored. Low incomes are already translating into falling demand across the economy; which, in turn, has caused demand for electricity to fall (empty shops and restaurants no longer need to turn on the lights and heaters) with the result that electricity supply companies are no longer profitable. Barring a redistribution of wealth on a scale that would have made Stalin blush, there is simply no means by which the UK government will be able to meet its climate and energy security aims. Which is why, at the end of the day, the politicians will collude with the regulator and the grid operator to pretend that the 9 August outage was merely the result of a freak lightning strike.


  16. By Steve St. Angelo – More Than 50% Of The Mighty Permian’s 2018 Oil Production Has Vaporized


    Even though the companies drilling and completing wells in the Permian added 2,493 new wells so far in 2019, overall production from these two years only increased by 221K bopd (221,000 bopd). Thus, of the 1,308K bopd of the new output brought on in 2019, 1,087K bopd was already lost due to the massive decline rate of 2018’s production.


  17. Steve St. Angeleo on our flock of black swans…


    The rate at which black swans are showing up in the world should scare the hell out of people. But, unfortunately, everyone seems to be lost in the highly complex technology of I-phones, computers, social media, and the telly to notice that something is definitely wrong. The current situation reminds me of a famous scene in the Monty Python movie, The Holy Grail, where a guy is banging a bell and saying, “Bring out your dead.” Let me explain.

    The scene in the movie takes place in England or Europe during the Black Plague, and due to the staggering amount of deaths, carts were used to pick up the bodies throughout the city. Yes, this is indeed a macabre subject matter, but Monty Python takes a serious situation and turns it into a comedy. However, the point I am trying to make is this… death is a very tragic and emotional part of life that impacts family members, friends, and coworkers. But, in this Monty Python scene, there is so much death, that it almost becomes numb to everyone.

    And, that is precisely what I see now in the public. There are so many warning signs, or black swans, that no one seems to notice. Everyone has become… QUITE NUMB to it all. So, when the U.S. Government adds $814 billion of new debt in a little more than two months, the public yawns as this is no big deal…

    Some shale oil experts say that there is no BIG DEAL taking place in the Permian in 2018, because every year the wells decline 50+%. However, what seems to be overlooked is the massively STEEP Annual Compounded Decline Rate that is now reaching 70-75%. I don’t know about you, but if you come across a hill that declines 75%, that should be relabeled as a “CLIFF,” not as a “HILL.”

    So, why do I continue to focus on the Oil Market?? Without oil, the entire economy grinds to a halt. And, for those who believe we can transition some oil usage to coal or natural gas, how do you think we extract and transport the coal? Massive trucks, barges, and large trains that are powered by diesel transport most of the coal. Furthermore, without liquid petroleum, the 40,000 natural gas shale wells that were drilled, completed, and produced in the United States since 2009 would not have been possible.


  18. Tim Watkins, in one of his best essays, explains that peak oil is happening now, but rather than shortages we should expect continued economic turbulence and people becoming poorer.


    What neither the oil geologists nor the techno-utopians foresaw is that both “peak oil” and “peak oil demand” are essentially the same thing. As the cost of extracting oil has increased, so generalised demand has slumped across the economy; ultimately feeding back into a decline in demand for oil. As oil producers implement production quotas in an attempt to shore up prices, demand declines even further; forcing prices down and making potential new production unprofitable. But all of this is occurring within an economy in which people still drive around in petroleum-fuelled cars, and continue to buy products made from and transported with oil. Only at the margins, where millions of former consumers join the ranks of the precariat do we see the decline in demand for oil for what it is. For now, these people are like the canary in the coal mine, warning us of what is coming. But for now at least, the majority can cling to the fragile belief that technology will save the day.


  19. Tim Morgan explains that in 10 short years we’ve quadrupled the assets we should have let burn in 2008 from $70 to $300 trillion. It’s amazing that not one monkey in charge understands what’s going on. If it’s not genetic denial, what is it?

    In response, the same wise people, those whose insights caused the crisis in the first place, now counselled yet more bizarre gimmicks, the worst of which was that we should pay people to borrow, whilst simultaneously destroying the ability to earn returns on capital. Nobody seems to have wondered (still less explained) how we were supposed to operate a capitalist economy without returns on capital – and that, by the way, is why what we have now isn’t remotely a capitalist system based on properly-functioning markets.



  20. Alice Friedemann explains that hydrogen energy is like homeopathy. I’d argue that hydrogen is worse. At least with homeopathy you often have a strong and very real placebo effect.


    At some point along the chain of making, putting energy in, storing, and delivering the hydrogen, we will have used more energy than we can get back, and this doesn’t count the energy used to make fuel cells, storage tanks, delivery systems, and vehicles.32 When fusion can make cheap hydrogen, when reliable long-lasting nanotube fuel cells exist, and when light-weight leak-proof carbon-fiber polymer-lined storage tanks and pipelines can be made inexpensively, then we can consider building the hydrogen economy infrastructure. Until then, it’s vaporware. All of these technical obstacles must be overcome for any of this to happen.33 Meanwhile, the United States government should stop funding the Freedom CAR program, which gives millions of tax dollars to the big three automakers to work on hydrogen fuel cells. Instead, automakers ought to be required to raise the average overall mileage their vehicles get — the Corporate Average Fuel Economy (CAFE) standard.34

    At some time in the future the price of oil and natural gas will increase significantly due to geological depletion and political crises in extracting countries. Since the hydrogen infrastructure will be built using the existing oil-based infrastructure (i.e. internal combustion engine vehicles, power plants and factories, plastics, etc.), the price of hydrogen will go up as well — it will never be cheaper than fossil fuels. As depletion continues, factories will be driven out of business by high fuel costs35,36,37 and the parts necessary to build the extremely complex storage tanks and fuel cells might become unavailable.

    The laws of physics mean the hydrogen economy will always be an energy sink. Hydrogen’s properties require you to spend more energy than you can earn, because in order to do so you must overcome waters’ hydrogen-oxygen bond, move heavy cars, prevent leaks and brittle metals, and transport hydrogen to the destination. It doesn’t matter if all of these problems are solved, or how much money is spent. You will use more energy to create, store, and transport hydrogen than you will ever get out of it.

    Any diversion of declining fossil fuels to a hydrogen economy subtracts that energy from other possible uses, such as planting, harvesting, delivering, and cooking food, heating homes, and other essential activities. According to Joseph Romm, a Department of Energy official who oversaw research on hydrogen and transportation fuel cell research during the Clinton Administration: “The energy and environmental problems facing the nation and the world, especially global warming, are far too serious to risk making major policy mistakes that misallocate scarce resources.


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