Category: Overshoot

Our Place in the Universe

The goal of the universe is to degrade energy. Life is one of the universe’s best inventions for degrading energy because it replicates until it has used all available resources. Humans use their unique brain power, which emerged after a rare mutation for denial of reality, to out compete other life. But the losers would do the same thing if they could. A dead planet seems to be consistent with what the universe wants.

By Nate Hagens: Limits to Growth: Where We Are and What to Do About It

Here are a couple more excellent talks by Nate Hagens. He is now concluding his talks with some modest advice on what people can do to prepare.

The Converging Economic and Environmental Crisis (10 July 2014)

Limits to Growth: Where We Are and What to Do About It (15 October 2014)

Why Are We Printing Money?

It’s a simple question.

You’ll hear different simple answers depending on the politics of the speaker. Talking heads on the news will usually say it’s to stimulate growth or to create jobs.

It’s also a big clue.

Large scale money printing has been tried many times in history and it never ends well.  We can expect modest inflation at best, high inflation, social unrest, and war at worst. We’ve been printing full steam for 5 years. They must know it’s risky. They must have a good reason. What’s the real reason?

Could it be?

1) The government is unable to borrow sufficient funds to cover their large deficit without causing interest rates to rise, which would force large cuts in services, and so makes up the shortfall with printed money.

2) The government is worried that if they stop printing the stock market will fall because it has become dependent on easy money. And they don’t want the stock market to fall because then people feel less wealthy and spend less.

3) The government wants to encourage retirement accounts to switch from low risk interest bearing investments to high risk equities, thus stimulating the stock market and increasing investment in companies that might create growth.

4) The big banks are in trouble and are dependent on money printing from which they skim fees and carry trades to rebuilt their reserves.

5) The government wishes to debase the currency to improve export competitiveness.

6) The government seeks to cause inflation as a means of reducing real levels of public and private debt because they know the underlying economy is struggling to service its high debt level.

7) There is little or no real growth which means the money supply is not growing fast enough to cover interest owed on existing debts, and given high debt levels, a large deflationary collapse would occur without a continual injection of new printed money.

There may be some truth in all 7 possibilities, but I discount the first 5 because we’ve had government cutbacks, high interest rates, stock market crashes, bank failures, and competitiveness problems in the past, and we recovered just fine.

I also discount 6) because inflation will cause interest rates to rise which will be a very big problem for governments with high debt.

That leaves 7) which I think is the main reason.

We’ve bumped up against limits to growth.

The Big Picture on One Page

Flation

 

  • our incomes are not rising…
  • which prevents us from increasing our already high debt…
  • which prevents us from affording higher oil prices…
  • which prevents an increase in oil production…
  • which prevents an increase in productivity…
  • which prevents an increase in wealth creation…
  • which prevents our incomes from rising (see above)…
  • which prevents the money supply from increasing…
  • which threatens our ability to pay interest on existing debts…
  • which threatens the value of debts…
  • which threatens a deflationary collapse…
  • which threatens social unrest…
  • which threatens politician’s jobs…
  • which guarantees money printing will continue until it can’t…
  • which erodes the value of our retirement savings…
  • and someday (probably after a crash) will cause fierce inflation…
  • which will make food and other necessities very expensive…
  • which will create social unrest…
  • which will threaten politician’s jobs…
  • which will encourage despots…
  • and thanks to geology…
  • it will cost more next year to produce the same quantity of oil…
  • and the year after…
  • and so on until it costs 1 barrel of oil to produce 1 barrel of oil…
  • and then we will use 100% renewable energy…
  • just like the Romans…
  • except we have to feed 7 billion instead of 100 million…
  • and producing food will be a challenge…
  • with most of the good soil, fish, and forests gone…
  • and an unstable climate…
  • and rising sea levels…
  • and scarce fertilizer…
  • and wars between tribes over remaining resources.

What to Expect as We Collapse

What are we likely to experience as we collapse?

  • unemployment will rise
  • incomes will fall
  • interest rates will rise
  • stock and bond prices will fall
  • real estate prices will fall
  • credit availability will decline
  • trade will decline and may become sporadic due to credit system problems
  • fewer imported goods will be available — think about how few durable items are manufactured in Canada
  • food prices will increase due to less availability of imported food and consequent higher demand for local food
  • large-scale industrial food production may be disrupted due to rising interest rates and supply chain problems however governments will probably make it a priority to keep big agriculture going
  • energy prices and consumption will fall as fewer consumers are able to afford it
  • the upper bound on energy flow rates will decline because lower prices will not support expensive extraction like tar sands and fracking
  • total economic activity will shrink in parallel with declining energy consumption
  • air travel will decline or stop for all but the rich
  • many cars will be abandoned as operating costs becomes unaffordable and resale value approaches zero
  • roads and infrastructure will fall into disrepair
  • electricity may become intermittent in some regions
  • social unrest and crime will increase
  • tax rates will increase, tax revenues will decline, demand for social programs will increase, and governments will be forced to choose between more social unrest now due to deflation, or more social unrest in the future due to inflation — most will chose inflation
  • the severity of the pressure on governments will result in collapse or hyper-inflation for some countries, especially those will no indigenous energy or goods to trade for energy
  • war between countries competing for scarce resources and/or seeking scapegoats is probable
  • everyone will experience hardship but farmers without debt will probably do best

The collapse will likely occur in steps and will continue for about 100 years until all affordable fossil fuels have been extracted at which point civilization will resemble medieval life, assuming we have not gone extinct through famine, disease, or wars.

Layered on top of this economic and social chaos will be a rapidly changing and violent climate that will disrupt food production and cause economic damage. We can expect a warming impulse with unknown but likely negative consequences when aerosol particulates drop with declining industrial activity and air travel.

By Nate Hagens: Navigating through a Room full of Elephants

Many people understand pieces of our predicament. Very few understand all of the pieces.

Nate Hagens has the best big picture understanding of anyone I know.

Nate has a new blog called The Monkey Trap that he set up after the The Oil Drum closed down.

Over the years I have collected a large library of books, articles, and video. If I had to chose only one item that best explains what is going on, this talk by Nate Hagens would be it.

Enjoy.

And here is a different version of the same talk targeted at a younger audience with less background knowledge.