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:
https://ourfiniteworld.com/2019/09/12/our-energy-and-debt-predicament-in-2019/
[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.
http://consciousnessofsheep.co.uk/2019/09/09/facing-our-inconvenient-truths/
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:
And the boneheads would ignore it.
un-Denial 
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.
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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.
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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.”
https://agupubs.onlinelibrary.wiley.com/doi/10.1002/2013EF000171
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Thanks, I’m a fan of Tim Garrett and have previously posted some of his work:
https://un-denial.com/?s=garrett%3A
Richard Nolthenius is another scientist that has promoted Garrett’s important work.
https://un-denial.com/?s=Richard+Nolthenius
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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?
https://iopscience.iop.org/article/10.1088/1748-9326/aa8467
and
The climate mitigation gap: education and government recommendations miss the most effective individual actions
https://iopscience.iop.org/article/10.1088/1748-9326/aa7541
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
https://headtopics.com/us/report-doing-your-part-to-stop-climate-change-now-requires-planting-30-000-new-trees-getting-40-00-6567525
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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.
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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.
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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.
https://www.peterrussell.com/blindspot/blindspot2.php
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.
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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.
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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.
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This essay by physicist Antonio Turiel is the first decent analysis of the Saudi drone attacks that I’ve come across.
http://crashoil.blogspot.com/2019/09/aceleracion.html
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.
Turel seems to agree with my prior speculations that we will never admit that peak oil is the root cause of our economic problems.
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Tim Watkins on resource depletion…
http://consciousnessofsheep.co.uk/2019/09/21/the-petty-crime-that-kills-the-green-new-deal/
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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.
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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”
https://onbeing.org/blog/william-deresiewicz-solitude-and-leadership/
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Thank you.
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Greta on boneheads (in denial).
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By Jerry McManus (h/t Apneaman)
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By xraymike79 – Greta Thunberg Speaks the Horrific Truth of Humanity’s Fate
https://collapseofindustrialcivilization.com/2019/09/28/greta-thunberg-speaks-the-horrific-truth-of-humanitys-fate/
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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.
https://www.patreon.com/posts/it-will-end-one-30260839
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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.
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Ron Patterson says world oil production for 2019 will be lower than 2018.
http://peakoilbarrel.com/usa-and-world-oil-production-4/
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By Panopticon: Our Energy Predicament
https://climateandeconomy.com/2019/10/02/our-energy-predicament/
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Tim Watkins on the UK’s failing electricity grid…
http://consciousnessofsheep.co.uk/2019/10/02/system-failure/
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By Steve St. Angelo – More Than 50% Of The Mighty Permian’s 2018 Oil Production Has Vaporized
https://srsroccoreport.com/more-than-50-of-the-mighty-permians-2018-oil-production-has-vaporized/
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Steve St. Angeleo on our flock of black swans…
https://srsroccoreport.com/more-black-swans-arrive-as-u-s-debt-balloons-800-billion-in-two-months
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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.
http://consciousnessofsheep.co.uk/2019/10/08/peak-oil-demand-is-now/
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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?
https://surplusenergyeconomics.wordpress.com/2019/10/13/156-actual-fantasy/
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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.
http://energyskeptic.com/2019/hydrogen/
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