By Tim Morgan: Why Mr. Trump can’t raise American prosperity

A must read by the brilliant Tim Morgan.

Essentially, two things are happening to the average American. First, his or her income is rising less rapidly than the cost of essentials, squeezing the “discretionary” income which is the real definition of prosperity. Second, increases in income are being far exceeded by increases in debt, and also by growing shortfalls in pension provision. So the citizen feels both less prosperous and less secure.

As SEEDS measures it, per capita prosperity was 10% lower in 2016 than it was back in 2000. Neither is this trend likely to reverse – by 2025, the average American is likely to have seen his or her prosperity decline by a further 8% in comparison with 2016. At the same time, per capita debt has increased by almost $54,000, in real terms, since 2000, a problem now being compounded by a rapidly-growing systemic shortfall in pension provision.

‘Conventional’ economics cannot capture any of this. A perspective which ignores both “borrowed consumption” and the trend cost of energy is baffled by popular discontent, in America and elsewhere. Moreover, ‘conventional’ analysis tends to be misled by the apparently-buoyant values of stocks, bonds and property. These values are misleading, because they cannot be monetized – the only buyers for homes, for example, are the same people to whom they already belong.

For as long as these issues are overlooked, popular anger is likely to go on taking ‘the experts’ by surprise.


The concept of prosperity needs to be understood clearly. Prosperity is not simply the size of someone’s income. Rather, it is the sum left over after essentials have been paid for. This means that prosperity equates to “discretionary” income, which is the sum that he or she can choose how to spend.

The fundamentally energy-based nature of all output creates a natural distinction between “two economies” – the real economy of goods and services, and the financial economy of money and credit. Used properly, the financial system can deliver many benefits. Equally, though, it can be harmful, if it diverges too far from the real economy.

The potential for harm is simple. Money functions only as a “claim” on goods and services, which really makes it a claim on surplus energy. Likewise, since credit is a claim on future money, it is really a claim on future energy.

Financial “claims” – money and credit – can be manufactured out of thin air, and we can create as many of these claims as we like. But, if we create claims that exceed what the real economy can deliver, the excess cannot be honoured. Therefore, it must be destroyed. Inflation is one way of doing this, though default is another.


America is by no means unique in experiencing downwards pressure on prosperity – the same is happening in many other countries, often more severely than in the United States.

The problems posed for America are twofold. First, the deterioration in prosperity makes it impossible for the President to improve the material prosperity of the average American – in attempting to do so, he is about as powerless as was King Canute when he tried to turn back the tide.

Second, the use of cheap money to ‘manufacture’ nominal economic growth is already creating an escalating level of forward risk. Just as Americans are getting less prosperous, they are also becoming ever more indebted, and face ever greater insecurity as provision for pensions deteriorates.

The time cannot be too far off, for America as for the world more generally, where the future (represented by the collective balance sheet) overwhelms the present.

By Alice Friedemann: German Military Study on Peak Oil

German Military - Peak Oil Study - 2010

Alice Friedemann summarizes here a 2010 study on peak oil conducted by the German military.

The original full report can be found here.

And what was the German government’s response to this excellent report on peak oil by their own military?

They increased their population with immigration.

Denial is amazing!


Today approximately 90% of all industrially manufactured products depend on the availability of oil. Oil is not only the source material for producing fuels and lubricants but is also used as hydrocarbon for most plastic. It is one of the most important raw materials in the production of many different products such as pharmaceuticals, dyes and textiles. As the source material for various types of fuels, oil is a basic prerequisite for the transportation of large quantities of goods over long distances. Alongside information technology, container ships, trucks and aircraft form the backbone of globalization. Oil-based mobility also significantly influences our lifestyle, both regionally and locally. For example, living in suburbs several miles from their workplace would be impossible for many people without a car.


Societal risks of peak oil

  1. Economic collapse
  2. Transportation restricted
  3. Erosion of confidence in state institutions

There are not sufficient alternatives to oil for transportation, so when oil grows short, there are likely to be extreme restrictions for private vehicles, especially in suburbs, resulting in a “mobility crisis” that would make the economic crisis much worse.

Scarce or expensive oil would drive up the cost of all goods. Our current international movement of goods has largely been made possible by the technological progress in the field of freight traffic (container ships, trucks, cooling systems), which are based on fossil fuels.  So trying to switch all modes of transport to alternative energy sources is much more complex with today’s common means of transportation and technology. Mobility on the basis of fossil fuels is likely to remain a long time.   Oil shortages could lead to bottlenecks in delivering food and other life-sustaining essential goods.

After peak oil, there would be significant differences from past food shortages:

  • The crisis would concern all food traded over long distances, not just single regions or products. Regions that are structurally already at risk today would however be particularly affected (see figure 6).
  • Crop yields also depend on oil. Lack of machines or oil-based fertilizers and other chemicals to increase crop yield would therefore have a negative effect on crop production
  • The increase in food prices would be long-term
  • Competition between the use of farmland for food production and for producing biofuels could worsen food shortages and crises.


After oil shortages people will experience a lowering of living standards due to an increase in unemployment and the cost of oil for their vehicles. Studies reveal that only continuous improvement of individual living conditions provide the basis for tolerant and open societies. Setbacks in economic growth can lead to an increase in the number of votes for extremist and nationalistic parties.


Other likely consequences

Banks left with no commercial basis. Banks would not be able to pay interest on deposits as they would not be able to find creditworthy companies, institutions or individuals. As a result, they would lose the basis for their business.

Loss of confidence in currencies. Belief in the value-preserving function of money would dwindle. This would initially result in hyperinflation and black markets, followed by a barter economy at the local level.

Collapse of value chains. The division of labor and its processes are based on the possibility of trade in intermediate products. It would be extremely difficult to conclude the necessary transactions lacking a monetary system.

Collapse of unpegged currency systems. If currencies lose their value in their country of origin, they can no longer be exchanged for foreign currencies. International value-added chains would collapse as well.

Mass unemployment. Modern societies are organized on a division-of-labor basis and have become increasingly differentiated in the course of their histories. Many professions are solely concerned with managing this high level of complexity and no longer have anything to do with the immediate production of consumer goods. The reduction in the complexity of economies that is implied here would result in a dramatic increase in unemployment in all modern societies.

National bankruptcies. In the situation described, state revenues would evaporate. (New) debt options would be very limited, and the next step would be national bankruptcies.

Collapse of critical infrastructures. Neither material nor financial resources would suffice to maintain existing infrastructures. Infrastructure interdependencies, both internal and external with regard to other subsystems, would worsen the situation.

Famines. Ultimately, production and distribution of food in sufficient quantities would become challenging.

War.  Oil shortages are likely to be seen by importing nations as a national security issue leading to conflict, which could also emerge over renewable energy resources.

By Chris Martenson: Signs of Distress

What if there’s nothing wrong with the people who are anxious or depressed, but the exact opposite is true; those who are cheerful and chipper are missing the plot?


The world is edging closer to the final moments after which everything will be forever changed. Grand delusions, perpetuated over decades, will finally hit the limits of reality and collapse in on themselves.

We’re over-budget and have eaten deeply into the principal balances of all of our main trust accounts. We are ecologically overdrawn, financially insolvent, monetarily out past the Twilight Zone, consuming fossil fuels (as in literally eating them), and adding 80,000,000 net souls to the planet’s surface — each year! — without regard to the consequences.

Someday there will be hell to pay financially, economically, and ecologically as there simply isn’t any way to maintain these overdrafts forever. Reality does not renegotiate. Its deal terms aren’t compromisable.

For those who have the neural plasticity to actually see what’s happening around us, the changes are already here, blatant and frightening. Younger folks, with their fresher eyes and fewer ties to the past, can see them a lot easier than their elders.

The prosperity enjoyed by the past few generations — especially the Baby Boomers — was stolen from future generations. All the while, they pretended as if their borrowing-heavy standards of living were the result of sheer genius and intelligence; like trust fund babies who mistake being born on third base for hitting a triple.

Young people have sussed this out; and are now pulling back from many of the principal occupations of their forebears — like marriage, babies and buying homes and cars. This perplexes older folks, who are beginning to find themselves increasingly at odds with the generations following after them.

Humans can be very very smart, but the flip-side of our ingenuity is our capacity for self-delusion. We’ve very consistently preferred to look past our faults. That can work for a while, but eventually an incomplete view will lead to a complete disaster. For example: depleting our topsoils today to grow more eventually leads to a collapse of our food system tomorrow. Similarly, increasing societal complexity ultimately drains the resources out of an empire, until it withers and fails. Such is what we can learn from history. Each of these examples is rooted in the self-delusion that today’s actions don’t have real consequences.

Monetary printing experiments like those currently being run by the world’s central banks are the ultimate form of self-delusion. Money is the most potent form of social communication, underlying all contracts and agreements. Violate those and literally everything falls apart, as we are seeing happen in real-time in Venezuela right now.

Money printing and its other historical debasement equivalents, serve to cover up (barely) critical signals. Derelict ideas that should die a quick death, instead, persist. Mis-priced money leads mal-investment (e.g., Italian junk debt selling with the same yield as ten year US Treasury debt!!). Extremely unfair redistributions of wealth from the bottom to the top result. Every. Single. Time. This time is no different.

Imagine You Are a Smart Leader

Note: I make a distinction between being wise and smart. I wrote about wise leaders and citizens here. Today I am talking about smart leaders of citizens in denial.

Imagine you are a smart leader with a good understanding of science and engineering, like many Chinese leaders, and unlike our idiot Western economists and lawyers.

You know cheap money policies have created the largest bubble in history.

You know there is not enough affordable energy left to grow out of the problem.

You know that austerity policies will cause a depression, at best, and will cause you to lose your job.

You know that thermodynamics and mathematics guarantees an economic reset in the not too distant future.

You know that there will be much less energy and other critical resources like food available after the reset.

You know that there will be much less credit available to purchase anything with after the reset.

You know that you will not be able to feed your people, and keep your job, without access to energy, food, and other critical resources.

You know that you cannot afford a massive military build-up to forcibly secure resources, and even if you could, the future shortage of energy to power it makes a big military an unwise investment.

You know that a few cheap nuclear weapons are probably sufficient to prevent someone with a bigger military from taking your resources.

You know that fiat currencies, like those every country uses, have value because they are a claim on energy that is expected to be burned in the future.

You know that there will not be enough energy in the future to fulfill claims made by fiat currencies, and therefore they will lose most of their value after the reset and will not be useful for purchasing resources.

You know that gold’s value comes from the energy that was burned in the past to produce it, and therefore other countries may exchange energy and food for gold after the reset.

What would you do?

You would print money to purchase gold from other countries with leaders that are too stupid and/or too deeply in denial to understand what is going on.

By Steve St. Angelo: CLOSE TO NEW GOLD STANDARD? Australia Exports Record Amount Of Gold To China


Australia and the U.S. continue to export the majority of its gold to Hong Kong and China. For example, Australia and the United States exported 121 mt of gold to Hong Kong and China during the first quarter of 2017. Australia exported 57.4 mt, while the U.S. exported 63.3 mt. Thus, Hong Kong and China received 55% of all Australian and U.S. gold exports Q1 2017.

By Ugo Bardi: When governments operate in “cheating mode”

Problems are frequently blamed on the other 50%, or immigrants, or Russia, rather than on pollution, resource depletion, and overshoot.

I often wonder if the elites are knowingly deceitful, or if they are in denial and believe what they tell us.

I suspect the latter.

It seems to be a general observation that, when facing a serious threat, the elites of a country can reason that the best strategy for them is to cheat the people and save themselves. In the present situation, the threat of global warming seems to be driving some elites to do exactly that. They deny the threat while at the same time maneuvering to save themselves by moving to higher grounds and equipping their mansions with air conditioning. For all they care, the rest of the people can drown or roast.

But, as the threat of climate change becomes clearer, the elites may discover that nobody can survive in an uninhabitable planet. Then, they may finally decide to try to do something to save the ecosystem from which we all depend. But it may well be too late.


It takes gigadenial to believe gigafactories will save us.

Isn’t it interesting that the only scenario that might keep us below an extinction threatening 4-6 degrees C, and the only scenario that is probable, namely economic collapse, is the only scenario that climate scientists have not studied?

Economic collapse is an important scenario to study because most people in the developed world consume far more of everything than is required to subsist and therefore could survive some level of economic collapse.

On the other hand, most people will not survive if economic growth continues as desired (or even if growth slows) because the size of our economy is creating a climate incompatible with civilization.

Economic collapse will cut CO2 emissions (good) but also sun blocking pollution (bad). It’s not clear which force is the most powerful. This means economic collapse could save us, or it could make things worse.

It would be useful to know if economic collapse is on balance good or bad when we are asked to vote for candidates that promise to continue to print money to avoid collapse.

In case you are not aware, the amount of money printed by central banks to prop up assets recently increased to about $300,000,000,000 per month worldwide. That’s about $1.50 per day for every person on the planet conjured out of thin air, and is the only reason things seem to be sort of ok, and why real estate and stocks continue to rise despite poor fundamentals.

Unfortunately the printed money is not increasing the incomes of the poor and middle class because we’ve used up the inexpensive fossil energy needed to increase productivity.

Rising asset prices and stagnant incomes means the wealth gap between the rich and poor is widening which is causing social unrest to build as demonstrated by recent unexpected election and referendum outcomes around the world.

It’s an open question rooted in emotions and herd behavior as to how much longer money printing will stave off economic collapse.

On the B.C. Election

There is an election soon in my province.

I decided to get educated on the choices and read the platforms of all the parties.

Not one party mentions the only issue that matters: human overshoot.

By overshoot I mean the combined and interrelated threats of:

  • social unrest and war resulting from the end of economic growth and soon to burst debt and asset bubbles caused by the depletion of affordable fossil energy;
  • runaway climate change and resulting disruptions to food production and human habitat;
  • unprecedented species extinction and fisheries collapse caused by human overpopulation;
  • unsustainable consumption of almost every resource used by humans.

Not one party has population reduction as their top priority.

Not one party even mentions the critical need to reduce our population.

Not one party discusses the need to manage a necessary and unavoidable contraction to our economy.

Not one party mentions the need to live on nature’s interest rather than its capital.

I was planning to vote for the Green party but even they don’t have a clue.

Denial is amazing.