“The era of cheap & abundant energy is long gone. Money supply & debt have grown faster than real economy. Debt saturation is now a real risk, requiring a global scale reset.”"We are now in new era of expensive unconventional energy

[0R0 + 6,251]

2 hours ago, Anthony Okrongly said:

Moving on...

I don't buy this chart. I know it's showing something but I don't think there is any way to know what it's showing.  It could be showing that the terminal phase of society is the "consumption" phase. It's selective in what it shows.  And how did China have higher consumption than the U.S. in the 1960's.  I don't think anything significant can be read from this chart.  What I read is that Japan is a terminal demographic society and it has the 2nd highest consumption. Does that mean we are going terminal faster?  Probably not. Therefore I don't buy this chart.

They were showing high consumption as % of GDP. They were still having kids to 1980, so they were at max cost in 2000, with kids in college, when their baby boomers switched to saving for retirement so we see savings as % GDP rising to 2010. Then their truncated millennial generation hit 30 with more income and started spending like mad on their single child. Well, they are at 40 on average shortly, and will spend less as we go forwards. That it the point.

 

[ronwagn + 6,290]

On 2/11/2020 at 9:45 AM, Anthony Okrongly said:

No... and these aren't my opinions... they are based on the book "Sapiens - a Brief History of Humankind" by Yuvan Harari. What makes Homosapiens-sapiens (modern humans) different from not only all other animals but also from other "humans" (Homo-erectus, Homo-habilis) is our ability to imagine a reality and then ACCEPT that imagination as real. It's not about wishing.  This isn't "Think and Grow Rich" by Napoeon Hill. It's not a "personal" belief.  It's a "societal" belief that makes all human structures and realities. 

So what's really, really real?  Natural laws.  Entropy. If you don't generate 98.6 degrees at the same rate that the environment evaporates heat from your body then you will die. That's real. Work is real. It takes a certain amount of FORCE to push a 2,000 lb car 1 mile. 

F=mg(h/h2+d2−√) or something like that.

Those are real. Really really real. 

Humanity is not based on THAT. Monkeys are based on that, ants are based on that. Yes, monkeys have troops but their troops are based on family relations. Once you get past direct family relations you have to depend on imaginary structures. 

Humanity is based on the acceptance of imaginary structures. Tribe was a big one.... but how do you get past tribe?  The first way was God. Different tribes believe in the same GOD which binds them together. A variation is KING. But most Kings established their right to be King by invoking Divine Right.. .which brings us back to GOD.  

You can say we are a nation of LAWS, but laws are just an extension of the acceptance of imaginary Kings and Rulers who were put in place by an imaginary God.  The first written law was the Hammurabi Code.  It opens with him explaining how GOD made him king and how GOD gave him the laws... Moses is no different. He didn't come form the mountain top and say "Hey guys, I made up 10 rules!" no they were "Commandments from God." 

As an aside the SIZE of the human structure (empires and whatnot) is based on the ability to make larger and larger numbers of people believe in the shared delusion.  WRITING was a Giant leap in the size of human structures. Hence Hamurabi's Code was the first WRITTEN laws and it's closely associated with one of the first real empires. As writing expanded so did empires.  We now use TV and the Internet to spread imaginary ideas. 

That becomes "When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them..." ... "All men are CREATED equal." 

Who says all men are created equal? That wasn't true for 70,000 years. All men were not created equal... and ALL men were created WAY MORE equal than any woman."  So, humanity does not require equality. Equality is an evolving group construct that is accepted as reality. Humanity got along swimmingly with Kings, slaves, etc.  Rome was amazing!  Greece was incredible!  The Chin dynasty was spectacular!

That is the basis of ALL human endeavors - Leaders and Rules established by God.  Democracy, which is super-duper recent, is an extension of the replacement of God by Humans... it's an extension of "The Enlightenment." So ONE person cannot replace God... it takes ALL the humans to replace God.. or at least a majority of the good ones (male land owners) which over time (just because people decided to do it) becomes non land owners too, then women, and then minorities... but not children... Children are still slaves. They are still "owned" by their parents. They are incapable of making decisions.  So that's where the line is currently... 18 years old you're human... 17 years old you're a slave to your parents... No they can't BEAT you or KILL you, but even Hammurabi had rules about how slaves should be treated. The bad ones (criminals) are not "equal." The dumb ones (children) are not equal. The unestablished ones (illegal immigrants) are not equal.

So, the reality now is that all men and women (of all races and all sexual orientation) are created equal, but MORE equal than all humans under the age of 18 unless they have a felony or do not have legal status.... and they have to register in a certain way with these types of proofs of identity... if you do that then you're "equal." 

So, a man ... Henry Ford... starts a company.  Does he Declare It?  No, he files paperwork with the people who God allows to accept such paperwork.. in this case the courts. In the past it was the temple. Now that entity exists.  If Henry Ford dies does the entity die?  No. If Henry Ford fires everyone does the entity stop existing? No. It still exists. If all the cars ever made by Ford are destroyed Ford still exists.  Why? Because WE ALL ACCEPT that it is so. What is the literal difference between Ford Motor Company Existing or NOT?  It's a piece of paper. Did that piece of paper make FORD?  Nope.  It didn't make a single car. If I make a car does that make me Ford? Nope.  I can't BE Ford because they have the piece of paper.  If I try to file a piece of paper that says I'm FORD the priests at the courthouse will say NO. 

If I argue with you and say "I'm Ford." you will say "No you aren't." How do you know?  Ford is a Conjured Entity. 

When The United Nations passes Sanctions to stop the Banking Rights or Embargo Libya due to Gaddafi's violation of Human Rights... Every single aspect of that sentence is entirely made up. The UN is an imaginary entity, Sanctions are a made up thing, Banking and Money are human inventions, and embargo is nothing more than people agreeing not to trade with someone (up to the point where a Missile blows up your ship... but that brings us back to natural laws - explosives plus human flesh equals shark chum). Because a nation (Libya) completely made up, run by a ruler (Gaddafi made up) is violating "human rights" which is a construct. Humans have no rights. If I walk up to you and try to stab you in the eye, there is no "human right" that will stop it from happening... There might be a HUMAN that stops it from happening YOU. But there is no Right.

I can't kill you... that's you're HUMAN right?  

Can I lethal inject you?  You darn right I can!  We lethal inject people all the time. Did we lethal inject a HUMAN?  Now we get back to shared delusions... at what point do you lose your HUMAN RIGHT to be alive?  After a trial by your peers?  That's made up. You also lose your HUMAN RIGHT to live after your imaginary leader says something that another country's imaginary leader(s) don't like.  So our imaginary country sends a "Patriot" (are are patriots are we not?) missile to blow up your dirt hut and everyone inside it. Because they no longer have "human" rights. 

So, it's all fungible. Who gets to determine when you no longer have HUMAN rights?  A judge? A jury? A President? or a Captain in a Command Center operating on standing orders based on the "rules of warfare." 

You break everything down bigger than the laws of physics, thermodynamics, biology and and animal evolution and you'll find Imaginary systems invented by humans to justify what they want to accomplish - good, bad or indifferent. 

Which returns me to my original point... If you (or I) think we are anything other than surfs by some other name just try no participating in the shared delusions of our group... money, laws, work... If you do so the laws of thermodynamics will quickly catch up with you.

So yea, let's vote for Donald Trump (add all the imaginary adjectives you want here) or Bernie Sanders (add all the imaginary adjective you want here). 

P.S. according to Joiquin Phoenix Academy Award Speech we are now extending God given rights to other species. This has already been happening for a while with dogs in America at least, now we are extending it animals that we eat. We aren't extending it to ants yet.  Now you may disagree with that idea and I might disagree with that idea.  Right now the vast majority of people disagree with that idea.  But when that idea becomes the Shared Delusion then it will be just as real as "All Men are Created Equal," America, and the using a Visa Card to buy Groceries.

So, if you want to determine what is "real" vs what is "Made UP" then you just have to ask yourself... is if Fungible? If you can have a god that is different from my god, and what level of god there can occur then "god" is fungible. Therefore it's not real. All fungible things are human constructs. If it is not fungible... Entropy 98.6 degrees is not fungible.  All humans are THAT. If you stop being THAT for too long then you stop BEING. That's real. 

Work is real, if you don't apply this much force to that mass of a rocket then it isn't making it into orbit.  No matter what!  You can do it with solar power, use the most advanced calculus and broadcast it all over the world... not fungible. Work can be done by slaves, surfs, share croppers, employees, oil and gas, solar panels, water falling from a height... but it has to be done by something.  Why don't we have slaves anymore? Because we have oil and natural gas and coal. When the day comes that those things no longer exist slavery will come back in a big way. Now we trade our REAL work (ah hem) for Imaginary money. So, it's really no different than slavery from the ruler's perspective (free work). But the fact of the matter is that fossil energy does all our work.  We just crawl around, eat, poop, make babies and die while fossil fuels keep our body temp at 98.6.

 

WHAT THE HECK does this have to do with the original post?  

The original post has to do with DEBT and its effect on Energy. My point is that debt and the commitment of a society to accomplish ANYTHING is fungible. Money is Fungible.  What's not Fungible? The requirement for ENERGY to accomplish WORK.  Either humans do it, animals do it or energy sources do it. Right now we have a competition between the requirement for energy and the shared delusion of society that it can be accomplished without oil and natural gas and coal.  Which will win?  If Gas and Oil win then heaven and earth will be moved to keep getting it out of the ground - wars, changing the entire banking structure, nationalizing the field... whatever it takes.  If, on the other hand, shared delusions change the acceptance of the society to spend their effort on these types of energy then it will be abandoned.  Energy will come from elsewhere (solar, wind, nuclear,) and society will change to meet the energy availability (cars, population, air conditioning, industry).  Both are just as possible, and some combination will continue for ever. As energy goes away so will population, but it will happen slowly enough that no one will notice.  That's a whole new rant. 

 

Some combination of free competition and governmental interference decide what happens in society. Bernie Sanders would take over electrical generation (if he could) and thus control the whole ballgame for renewables (if that were possible).

https://www.politico.com/news/2020/02/02/bernie-sanders-climate-federal-electricity-production-110117

[ronwagn + 6,290]

On 2/7/2020 at 4:39 PM, KeyboardWarrior said:

Thank you for the encouragement and kind words. Sounds like you've had a very interesting experience in various industries. Are you self employed at the moment?

One example I'm already familiar with is steel mills that use the EAF. With that sort of power draw there's bound to be some incentive for home grown power 😁

Great comments by both of you. 

What is EAF?

[footeab@yahoo.com + 2,190]

1 hour ago, ronwagn said:

Great comments by both of you. 

What is EAF?

electric arc furnace

[0R0 + 6,251]

4 hours ago, Anthony Okrongly said:

1. Legacy Costs catch up with everyone eventually. In a no growth environment they catch up very quickly. That's true for companies and countries. I think your argument is valid that the U.S. is lagging Europe regarding the impact of those costs. But, it seems clear we are on the same road, particularly economically and governmentally. I think Trump will turn out to be a bump in that trend, but the overwhelming trend is toward rising regulation, rising regulatory costs (particularly environmental regulation), and growing central control (Healthcare, Financial intervention, education costs). Trends can be tracked through words... If you look at how much of the discussion centers around "the government," "regulation" etc now compared to 30 or 50 years ago it's obvious that the trend has gone to a governmentally centered U.S. 

2. All bets are off when we hit a demographic negative growth environment. It has never happened. I'm trying to think of a real example of population collapse and the only one that comes to mind is the Black Death in Europe, but it was followed by another population explosion, so that's not a good analogy. "Empty Planet" and the chart below show that. There is no expectations that fertility rates in the West will ever turn positive again. That means a permanently declining population. What is the economic model for that?

3. "Without huge exports aged populations have no way of maintaining growth." OK... so where does that leave the U.S.?  You have a couple conflicting arguments.  One is that China cannot live on growing internal consumption (due to rising standards of living) alone. And the other is that the U.S. is fine because we are an advanced "consumer" (80%) economy. We don't export much of anything. Energy exports are rising but that has a time limit. What does that leave?  So China cannot exist without exporting to us, but somehow we can exist without exporting to anyone?  What we are currently exporting in mass is U.S. Dollars. That's our export. We have incomes based on no production. We have debt. If the pattern holds then China can do fine switching to an import/consumer economy exploiting cheaper labor forces than itself for production (Africa for certain. Vietnam? North Korea is a ready source of slave labor).

4. You left out the population chart for the US.  The website is ironically called "Population PYRAMID" not "population worm." 

The only defense for the future of the U.S. is that "we've done OK so far" so the debt will never catch up with us. The demographic shift will never catch up with us. The legacy costs will never catch up with us. We will Invent our way out of it. The last 30 years all of our inventions (other than the internet and iPhone) have been in FIRE (Finance, Insurance and Real Estate).Financial assets and real estate go up because?? "America!" I'm trying to figure this out.

This feels like the last days of Caligula to me. I'm watching mid-career professionals getting laid off left and right... AFTER going from an actual job to being a "contractor." But there is money everywhere. I truly don't understand it. I train dogs.  I had someone call me yesterday and say... "I just got divorced and lost my job and I'm moving.... please let me pay you $1,200 to take my dog for 2 weeks and train it because he is anxious." Phone calls like that cause my brain to hurt.  In the end I booked the dog but I simply don't understand this economy. 50 year olds are moving back in with their parents at an unprecedented rate. They say it's so they can "take care of them" but they seem to get the idea to take care of their parents with 30 days of losing their job or getting divorced, or both.

First, US population.

The NAFTA renegotiation was about capturing the Mexican market for the US because it is young and has lots of consumption coming up as supply chains migrate back to N Am and raise their incomes. That is why I used the N. Am pyramid. Note that the actions on the Trump side are not targeting Mexico any longer. That is because Lighthizer is in charge and he knows what demographics mean. 

Unlike other countries that have a disastrous record integrating immigrants, the US does very well at it, and is still largely empty and produces excess food and has its own energy. Immigration will break out again once Trump is reelected and doesn't need to placate his base.. If not, any Dem will do it for him or after him.  Which is why I don't worry about the US demographic as a mature country as much as I do EU China ASEAN. 

 

The trend you are observing towards more government taking over is driven by savings heavy demographics making government expenditure via debt relatively cheap. And the political support by retirees and near retirement people for government that promises to provide for them. It is when those boomers go into retirement that it breaks down. As Martin Armstrong puts it, the socialist movement is on its last legs, the last legacy holdouts in China Europe and the US Democrats, are now so destructive they will either collapse out of their own cumulative destruction of their economies, or be booted out. Look at Macron, who is facing strife on the street as he tries to reduce the burden of government pensions with higher retirement ages in the one EU country where demographics are not an utter disaster. China has a wildly free private market (including exporters) that provided all of the growth the CCP claims for itself. The SOEs and SOE  Banks took up the bulk of debt and bond issuance and the private economy had to survive on its own funding via shadow banking. Which the government suppressed trying to corral the activity into its control within the banks. The result is a collapse in private funding and economic activity other than stimulus. With the coronavirus handling crisis, the CCP is de-legitimizing itself despite the complete control of social media expression. The fact that they had gone so far in order to maintain control is an indication that their traditional means are not working and they are threatened by a loss of it in an expected economic contraction and financial event.  

The trend for more government also has a counter-trend from the Trump "business cloud"  that surrounds him, and the broader republicans. Note that the old moderate business republicans are gone from congress, what remains are hardliners. In the case of Europe, the EC sclerosis is pushing the main bulk of voters to anti-EC anti-EU anti-"globalization" and anti-government. Poland on the countering of EC influence eliminated the internal appointment mechanism of their courts so that the EC has no capacity to implement policy within Poland. So Poland is within the EU and independent of it. Others of this new right will win a major EU  country and do the same to keep EC decisions out of the realm of implementation. The EC and the mainstream administrative class political parties that built it as a non-compete government cartel is trying to grab ever more power now, before the populations revolt outright and cut the EC's hands (the courts) off, before tackling the heavy work of dismantling it as a political force and power center. 

Demographic shrink was demonstrated by Japan. We see what they did by moving production to target markets while maintaining at home just a core competence to build high quality production of robotic plant, high end R&D and to run the supply chain and manage the companies. Similar to what the US had done with its companies just on a much larger scale relative to its own economy. I estimate a 4X GDP foreign investment, 1.6 X GDP official. China can't do it. Hasn't done it. The US did it 30 years ago when the Gen Xers were too small a generation to staff production.  1/3 of SP500 revenue comes from abroad, along with proportional profits. While the repatriation tax was in place at the marginal tax rate, they kept the cash offshore in the Eurodollar banking system and that cash showed up as foreign capital flows into the US, (only a large minority of it). Now it seems to be running at about $750 Billion/yr of repatriation.

The FIRE economy is dead because its main feeds from the Eurodollar system - (1) petrodollars, (2) internal expansion of the Eurodollar system (EM investment), and (3) unrepatriated US corporate profits - are all gone. You can see it in this chart as current flows are down to <4% of GDP, and some quarters it is nearly 0. Much in contrast to the mid 2000's that were 10% of GDP and more. 

Other components of FIRE from real estate speculation by Chinese and European capital flight are winding down as the job appears to be done and as the business profits charts in China and EU show, the cash flows to feed this speculation are thinning. 

The globe in general demographic shrinkage is entirely new and we can't apply the Japanese model to the whole world unless we go find a rising demographic on another planet. The prospects for growth are in intensive growth rather than extensive growth. Higher quality and more technologically intense products and services, not more cars on more roads and more housing. The need for new infrastructure is just not there. There is a need in China to take down their existing housing in coastal industrial metros and replace it with much larger apartments about double their current size. The inland buildout has not been successful in pulling industry out of the coastal metros so the more spacious housing there is not helping. They very much do have a problem of LEGACY errors and a maintenance issue with their actual industrial regions rather than the hoped for expansions into the "new" inland empire.

The "new" China is going to have 1/4 of its population retire this decade.  There is no precedent even in Japan. It means reduced consumption now and negative drain on the financial system soon. Meaning that what Vincent Gave of Gavecal expects is a positive for the China financial structure in that the banks are "conservative" and based on funding from depositors rather than money markets, will not matter as the bank's assets are weak and being propped up by the ability to rollover unpaid interest. That only works while the public is pushing in money far more rapidly than they are taking it out. That stops abruptly, as does the capacity for stimulus spending, when the retired savers tap their holdings.   

The main items in a permanently shrinking demographic are that savings swings from positive to negative balances occur with some regularity but it depends mostly on how governments deal with allowing retirees to work, otherwise, most of the time, there is a savings overweight so long term real interest rates will remain low and often negative. Increased consumption is only possible at disproportionately low relative prices to wages. Which is the real economy mirror of low interest rates manifesting as low margins after labor costs; i.e. low ROI. Second on the list is the lack of infrastructure needs. Where populations are largely fixed in their locations, no substantial expansion of infrastructure and basic housing needs  are present. People who can afford to adopt suburban lifestyles may do so and increase infrastructure demands. But that has not been the case outside of the US Australia and France, at least not so far. The move towards renewables does require more infrastructure investment for the 20 year transition period, but the lack of other infrastructure needs may make that less of a burden. I know your "imperial decline" theory would imply that this transition from growth to maintenance is a problem, but the future world is not here yet, so it is equally everyone's problem.  

 

The US has no end of transport and new city expansion potential around the Mississippi basin and tributaries with road and (high speed?) rail.  The entire river network is navigable very cheaply for heavy industry and Ag. Millennials are in what appears to be a budding trend of moving out of hyper expensive coastal metros to raise their kids and drive their new SUVs and trucks all over the US interior. Watch the Pittsburgh area and the Ohio valley with their gas sucking industries, and similarly the Permian and other Texas areas for Millennial migration. Look at the Southeast too. I don't know where they will go later on, but their target is to be out of the Coastal metros.

The folks that cashed out of their expensive coastal metro housing have 1/3-1/2 the living costs in places like Texas, and sometimes even less than that. They don't need much income - which was being taxed away and deflated by living costs where they came from. 

Taking care of parents is a real issue, not just an excuse to save on housing costs when you lose a job. The idea is to save your legacy from having your parents spend it on long term care during a long term decline in health is a real motivator with actual benefit for everyone involved. 

There are indeed many mid-career folks getting thrown out. Some of it is bean counter fear of health insurance costs. Some of it is because the skills are out of date (who the heck specializes in PLC these days?) which upgrading of them the HR people don't want to invest in an older worker. Many workers in tech and engineering have been updating their skills on their own dime these past 20-30 years. As employers keep expecting to have a magical source of up to date talent and paying huge premiums for it when they poach them from competitors. 

Another side of it is that you can get people cheaper elsewhere, but not really by that much. The general price level for tech talent at the senior level is pretty flat around the world. Many software workers are moving from on premises work to telecommuting where they don't show up at the office at all. One I talked to is moving to Thailand out of the valley with a new contract that pays him nearly $100k less. He didn't want to live there any longer, though on $430k he most definitely could, he didn't want to have >$2mil tied up in his house and didn't want to pay local rents. Another had been working from home servicing his object oriented software company's regional clients. They had shut down marketing offices over a decade ago and set their people free to work from home and thus live where they will. He moved to a lakefront community more in line with his interests about 200 miles away as soon as his wife took early retirement. He also does web design as a private business. It actually pays better than his "real" job. 

 

As an aside, the current period of lack of oil (and other commodity) investment coupled with massive monetary stimulus now in China on top of the Fed and ECB, will create a spurt of sharp and likely inflationary growth as the China exodus resumes during the China recovery from Covid-19. Gold and the dollar look to break out (oddly) together. Intense Chinese inflation is looking particularly likely as their shutdown is creating more stimulus expansion coupled with shortages due to continued limited labor mobility and infection control regulations gumming up the works. 

[Anthony Okrongly + 114]

28 minutes ago, 0R0 said:

First, US population.

The NAFTA renegotiation was about capturing the Mexican market for the US because it is young and has lots of consumption coming up as supply chains migrate back to N Am and raise their incomes. That is why I used the N. Am pyramid. Note that the actions on the Trump side are not targeting Mexico any longer. That is because Lighthizer is in charge and he knows what demographics mean. 

Unlike other countries that have a disastrous record integrating immigrants, the US does very well at it, and is still largely empty and produces excess food and has its own energy. Immigration will break out again once Trump is reelected and doesn't need to placate his base.. If not, any Dem will do it for him or after him.  Which is why I don't worry about the US demographic as a mature country as much as I do EU China ASEAN. 

 

The trend you are observing towards more government taking over is driven by savings heavy demographics making government expenditure via debt relatively cheap. And the political support by retirees and near retirement people for government that promises to provide for them. It is when those boomers go into retirement that it breaks down. As Martin Armstrong puts it, the socialist movement is on its last legs, the last legacy holdouts in China Europe and the US Democrats, are now so destructive they will either collapse out of their own cumulative destruction of their economies, or be booted out. Look at Macron, who is facing strife on the street as he tries to reduce the burden of government pensions with higher retirement ages in the one EU country where demographics are not an utter disaster. China has a wildly free private market (including exporters) that provided all of the growth the CCP claims for itself. The SOEs and SOE  Banks took up the bulk of debt and bond issuance and the private economy had to survive on its own funding via shadow banking. Which the government suppressed trying to corral the activity into its control within the banks. The result is a collapse in private funding and economic activity other than stimulus. With the coronavirus handling crisis, the CCP is de-legitimizing itself despite the complete control of social media expression. The fact that they had gone so far in order to maintain control is an indication that their traditional means are not working and they are threatened by a loss of it in an expected economic contraction and financial event.  

The trend for more government also has a counter-trend from the Trump "business cloud"  that surrounds him, and the broader republicans. Note that the old moderate business republicans are gone from congress, what remains are hardliners. In the case of Europe, the EC sclerosis is pushing the main bulk of voters to anti-EC anti-EU anti-"globalization" and anti-government. Poland on the countering of EC influence eliminated the internal appointment mechanism of their courts so that the EC has no capacity to implement policy within Poland. So Poland is within the EU and independent of it. Others of this new right will win a major EU  country and do the same to keep EC decisions out of the realm of implementation. The EC and the mainstream administrative class political parties that built it as a non-compete government cartel is trying to grab ever more power now, before the populations revolt outright and cut the EC's hands (the courts) off, before tackling the heavy work of dismantling it as a political force and power center. 

Demographic shrink was demonstrated by Japan. We see what they did by moving production to target markets while maintaining at home just a core competence to build high quality production of robotic plant, high end R&D and to run the supply chain and manage the companies. Similar to what the US had done with its companies just on a much larger scale relative to its own economy. I estimate a 4X GDP foreign investment, 1.6 X GDP official. China can't do it. Hasn't done it. The US did it 30 years ago when the Gen Xers were too small a generation to staff production.  1/3 of SP500 revenue comes from abroad, along with proportional profits. While the repatriation tax was in place at the marginal tax rate, they kept the cash offshore in the Eurodollar banking system and that cash showed up as foreign capital flows into the US, (only a large minority of it). Now it seems to be running at about $750 Billion/yr of repatriation.

The FIRE economy is dead because its main feeds from the Eurodollar system - (1) petrodollars, (2) internal expansion of the Eurodollar system (EM investment), and (3) unrepatriated US corporate profits - are all gone. You can see it in this chart as current flows are down to <4% of GDP, and some quarters it is nearly 0. Much in contrast to the mid 2000's that were 10% of GDP and more. 

Other components of FIRE from real estate speculation by Chinese and European capital flight are winding down as the job appears to be done and as the business profits charts in China and EU show, the cash flows to feed this speculation are thinning. 

The globe in general demographic shrinkage is entirely new and we can't apply the Japanese model to the whole world unless we go find a rising demographic on another planet. The prospects for growth are in intensive growth rather than extensive growth. Higher quality and more technologically intense products and services, not more cars on more roads and more housing. The need for new infrastructure is just not there. There is a need in China to take down their existing housing in coastal industrial metros and replace it with much larger apartments about double their current size. The inland buildout has not been successful in pulling industry out of the coastal metros so the more spacious housing there is not helping. They very much do have a problem of LEGACY errors and a maintenance issue with their actual industrial regions rather than the hoped for expansions into the "new" inland empire.

The "new" China is going to have 1/4 of its population retire this decade.  There is no precedent even in Japan. It means reduced consumption now and negative drain on the financial system soon. Meaning that what Vincent Gave of Gavecal expects is a positive for the China financial structure in that the banks are "conservative" and based on funding from depositors rather than money markets, will not matter as the bank's assets are weak and being propped up by the ability to rollover unpaid interest. That only works while the public is pushing in money far more rapidly than they are taking it out. That stops abruptly, as does the capacity for stimulus spending, when the retired savers tap their holdings.   

The main items in a permanently shrinking demographic are that savings swings from positive to negative balances occur with some regularity but it depends mostly on how governments deal with allowing retirees to work, otherwise, most of the time, there is a savings overweight so long term real interest rates will remain low and often negative. Increased consumption is only possible at disproportionately low relative prices to wages. Which is the real economy mirror of low interest rates manifesting as low margins after labor costs; i.e. low ROI. Second on the list is the lack of infrastructure needs. Where populations are largely fixed in their locations, no substantial expansion of infrastructure and basic housing needs  are present. People who can afford to adopt suburban lifestyles may do so and increase infrastructure demands. But that has not been the case outside of the US Australia and France, at least not so far. The move towards renewables does require more infrastructure investment for the 20 year transition period, but the lack of other infrastructure needs may make that less of a burden. I know your "imperial decline" theory would imply that this transition from growth to maintenance is a problem, but the future world is not here yet, so it is equally everyone's problem.  

 

The US has no end of transport and new city expansion potential around the Mississippi basin and tributaries with road and (high speed?) rail.  The entire river network is navigable very cheaply for heavy industry and Ag. Millennials are in what appears to be a budding trend of moving out of hyper expensive coastal metros to raise their kids and drive their new SUVs and trucks all over the US interior. Watch the Pittsburgh area and the Ohio valley with their gas sucking industries, and similarly the Permian and other Texas areas for Millennial migration. Look at the Southeast too. I don't know where they will go later on, but their target is to be out of the Coastal metros.

The folks that cashed out of their expensive coastal metro housing have 1/3-1/2 the living costs in places like Texas, and sometimes even less than that. They don't need much income - which was being taxed away and deflated by living costs where they came from. 

Taking care of parents is a real issue, not just an excuse to save on housing costs when you lose a job. The idea is to save your legacy from having your parents spend it on long term care during a long term decline in health is a real motivator with actual benefit for everyone involved. 

There are indeed many mid-career folks getting thrown out. Some of it is bean counter fear of health insurance costs. Some of it is because the skills are out of date (who the heck specializes in PLC these days?) which upgrading of them the HR people don't want to invest in an older worker. Many workers in tech and engineering have been updating their skills on their own dime these past 20-30 years. As employers keep expecting to have a magical source of up to date talent and paying huge premiums for it when they poach them from competitors. 

Another side of it is that you can get people cheaper elsewhere, but not really by that much. The general price level for tech talent at the senior level is pretty flat around the world. Many software workers are moving from on premises work to telecommuting where they don't show up at the office at all. One I talked to is moving to Thailand out of the valley with a new contract that pays him nearly $100k less. He didn't want to live there any longer, though on $430k he most definitely could, he didn't want to have >$2mil tied up in his house and didn't want to pay local rents. Another had been working from home servicing his object oriented software company's regional clients. They had shut down marketing offices over a decade ago and set their people free to work from home and thus live where they will. He moved to a lakefront community more in line with his interests about 200 miles away as soon as his wife took early retirement. He also does web design as a private business. It actually pays better than his "real" job. 

 

As an aside, the current period of lack of oil (and other commodity) investment coupled with massive monetary stimulus now in China on top of the Fed and ECB, will create a spurt of sharp and likely inflationary growth as the China exodus resumes during the China recovery from Covid-19. Gold and the dollar look to break out (oddly) together. Intense Chinese inflation is looking particularly likely as their shutdown is creating more stimulus expansion coupled with shortages due to continued limited labor mobility and infection control regulations gumming up the works. 

It's rare ... OK it has never happened.. that someone flooded me with a response that is so detailed and also so nearly incomprehensible to me. Thank you. I will use it as the basis of looking into these topics.  I have done no research on EU and you have some very granular information on China to which I completely defer. 

I have no response other than, thanks for all the great information. 

OK... now do the Fed and Repo. 

Edited February 20, 2020 by Anthony Okrongly

[Gerry Maddoux + 3,627]

ORO

You're wasting your valuable resources writing here. You need to be in some Think Tank somewhere. 

Maybe you are. If you're not, find one.

And I mean that as a fine compliment with no sarcasm whatsoever.

[0R0 + 6,251]

44 minutes ago, Gerry Maddoux said:

ORO

You're wasting your valuable resources writing here. You need to be in some Think Tank somewhere. 

Maybe you are. If you're not, find one.

And I mean that as a fine compliment with no sarcasm whatsoever.

Thank you.

I am intending on putting this together in a more formal way for pay. I am still assembling pieces and trial balooning what I find and how to write it up. This turned out to be a good place to actually get feedback. Your lot are not ones to shy from useful comments rather than economists countering with responses that repeat traditional economic models without addressing anything I say, or on the other hand gold bugs that are refusing to think about credit being a real thing even if it isn't denominated in gold. 

Besides which, my major concern is in whether gas oil and renewables are going to maintain low energy costs so that the main economic driver (other than demographics), the price structure, is really going to have the kind of positive tilt I am expecting.

[footeab@yahoo.com + 2,190]

4 hours ago, 0R0 said:

First, US population.

The NAFTA renegotiation was about capturing the Mexican market for the US because it is young and has lots of consumption SNIP

This has to be the biggest pile of uninformed illogical rubbish I have ever read.

Congratulations, is this opposite Wednesday or something?

[0R0 + 6,251]

6 minutes ago, footeab@yahoo.com said:

This has to be the biggest pile of uninformed illogical rubbish I have ever read.

Congratulations, is this opposite Wednesday or something?

Consumption coming up is what I said. You obviously want to hit something so you built a straw man to hit upon. 

Make a comment about what I actually said. I would appreciate that.

[footeab@yahoo.com + 2,190]

14 minutes ago, 0R0 said:

Consumption coming up is what I said. You obviously want to hit something so you built a straw man to hit upon. 

Make a comment about what I actually said. I would appreciate that.

I was going to go through point by point, in fact had it partially written and decided to truncate it all. The last nail was your blatant Lies about Poland, immigration which was at an all time HIGH in 2018, and not enough millenial workers for production in the USA. 

[0R0 + 6,251]

4 hours ago, Anthony Okrongly said:

It's rare ... OK it has never happened.. that someone flooded me with a response that is so detailed and also so nearly incomprehensible to me. Thank you. I will use it as the basis of looking into these topics.  I have done no research on EU and you have some very granular information on China to which I completely defer. 

I have no response other than, thanks for all the great information. 

OK... now do the Fed and Repo. 

That is why I am posting here. Point out what is incomprehensible. I will try to be clearer. 

I have a simple analysis for the Fed and Repo. I may have posted it here. 

There are two thresholds that the Fed hit that would cause a repo malfunction. Neither of which was apparently considered when the Fed ran up rates while tightening reserves. I call it a double barreled approach to creating disaster.

The first threshold is soft and conditional. When IOER (the rate the Fed pays for banks holding excess reserves) is close to or higher than most of the treasury curve, then banks prefer to hold on to reserves to fill out their excess capital requirement instead of treasuries. In which case, when the yield curve nears inversion or well into it, the banks require about 10% of M2 in reserves.  It isn't a legal requirement, but they will simply hold onto those reserves and will not lend them into the repo market. During Dec 2018 and again in Sep 2019, this threshold was hit as Fed funds rates went up and treasury rates fell to nearing inversion in Dec 18 and after the Fed lowered rates the treasury yields fell even further to inversion in Sep 19.  

The second threshold is that US financial market participants need clearing money - checkables and physical currency to carry out transactions same day. Those must be fully reserved. However, the Eurodollar system also needs both repo (other side of the repo is checkable cash) and its own US checkable accounts. As it happens, the Fed did not ask Eurodollar foreign institutions what they needed or were doing, nor bothered to calculate it out and subtract it from their reckoning of available reserves (checkable accounts and repo volumes of foreign banks). 

There has been a building up or foreign repo and checkable foreign owned deposits since before the Great Financial Crisis. The Fed didn't pay attention, since they just ignore the Eurodollar market despite it being sometimes  a bigger dollar market than the internal US market. So whenever Eurodollar markets are stressed for dollars they do repos in large volumes in the US. If you subtract those from reserves, then we were below 0 free reserves for the internal US market. All had been used. 

So we can see in this chart, where total reserves are in drab green, the 10% of M2 is light blue, Red is foreign repos, and cyan is foreign checkable accounts. So we subtract the foreign cash assets and repos from reserves and we have Net domestic reserves in purple. In Sep 19 (last quarterly data point on this chart) we see that net reserves were 0. Hence all hell breaks out in the Repo market. 

Don't worry about the negative values before the GFC, as the banks were allowed to borrow reserves as needed, so they were never important till the crisis.  

   

[0R0 + 6,251]

16 minutes ago, footeab@yahoo.com said:

I was going to go through point by point, in fact had it partially written and decided to truncate it all. The last nail was your blatant Lies about Poland, immigration which was at an all time HIGH in 2018, and not enough millenial workers for production in the USA. 

I didn't comment about the current level of immigration, but about not worrying about US demographic aging because it would not be a problem later on.

I don't know what is wrong about Poland. I am not there and may not have understood it properly. 

I was talking about insufficient Gen X workers in the 1990s not Millennials. Millennials are plentiful. 50% more than Gen Xers. 

 

[footeab@yahoo.com + 2,190]

2 hours ago, 0R0 said:

I didn't comment about the current level of immigration, but about not worrying about US demographic aging because it would not be a problem later on.

I don't know what is wrong about Poland. I am not there and may not have understood it properly. 

I was talking about insufficient Gen X workers in the 1990s not Millennials. Millennials are plentiful. 50% more than Gen Xers. 

 

Tons of workers in the 90's.  No one had any problems hiring.  A little thing called robotics was dropping number required to such a gigantic extent we had our pick of choosing and this only accelerated into the 2000's when the many industries decamped fully.

Either you enjoy utter absurd hyperbole, or lying for some reason.  The topper is the 50% more millenials than X.

[Douglas Buckland + 6,308]

On 2/13/2020 at 4:50 AM, ronwagn said:

I only care about big engines in trucks. To each their own though. Have fun. 

Who said anything about ‘big engines’?

[0R0 + 6,251]

6 minutes ago, footeab@yahoo.com said:

Tons of workers in the 90's.  No one had any problems hiring.  A little thing called robotics was dropping number required to such a gigantic extent we had our pick of choosing and this only accelerated into the 2000's when the many industries decamped fully.

Either you enjoy utter absurd hyperbole, or lying for some reason.  The topper is the 50% more millenials than X.

I like to use the cutoff for gen X at 1960 which would make them a large generation near that of the boomers, but that is not how most demographic thinkers refer to the latchkey kid cohort. They delineate the 1965-1979 period for GenX  about 3.3 mil births per year. Millennials were born at a rate of 4 mil per year, and the cohort is delineated at 1980-2000. Which is 5  years longer. and  about 80 mil vs. 50 mil for GenX. 

Do not disagree about robotics and automation. Definitely what you would expect to do if you were facing 1 mil fewer work entrants per year coming off the crest of the baby boomers entering the labor pool. And  you would ship out the more labor intensive work since by the late 80s you knew that the extra babies (4 mil/yr up from 3 mil) being born would create additional demand. 

[Douglas Buckland + 6,308]

2 hours ago, 0R0 said:

I didn't comment about the current level of immigration, but about not worrying about US demographic aging because it would not be a problem later on.

I don't know what is wrong about Poland. I am not there and may not have understood it properly. 

I was talking about insufficient Gen X workers in the 1990s not Millennials. Millennials are plentiful. 50% more than Gen Xers. 

 

....but how many Millennial workers does it take to equal one Gen X worker?😂 

[0R0 + 6,251]

Just now, Douglas Buckland said:

....but how many Millennial workers does it take to equal one Gen X worker?😂 

3 in China and 1 in the US.

[ronwagn + 6,290]

19 hours ago, Douglas Buckland said:

Who said anything about ‘big engines’?

I was looking at a picture of a sports car. They usually don't have small engines. I do realize they often have superchargers and ram air stuff that is way over my head. I could be confusing muscle cars with sports cars. I am actually a van guy with a Nissan NV 3500 and 5.6 Liter engine. Not big by pickup truck standards or even muscle cars these days. 

[ronwagn + 6,290]

On 2/14/2020 at 4:55 PM, Gerry Maddoux said:

Bingo!

Unless new technology and manufacturing come up with something better. I don't see it happening before natural gas plays a greater role. What frustrates me most is that the world is flaring off so much of it. 

[Wombat + 1,028]

On 2/7/2020 at 5:10 AM, KeyboardWarrior said:

Alright Meredith. I'd like to see where you find $1 per installed Watt. I'd also like to know what the power company is charging per industrial kilowatt hour, and how long it will take them to pay off their solar panels. 

Also, let's keep it to the Western world please. Saying that China can produce solar panels for $1 a watt is equivalent to saying that precious metals from the Congo are cost effective because for some reason it's cheap to extract there. 

Then give me your opinion on this: Would using solar energy to create hydrogen and to power the haber bosch process be a profitable business opportunity? I had a great big discussion with Nick W on this subject yesterday. The results were very pleasing for me. 

Using solar and wind to create H2 MUST be profitable because Australia will be doing so soon. 20GW set-up on WA coast being built.

[Wombat + 1,028]

On 2/7/2020 at 11:20 AM, Gerry Maddoux said:

Expensive oil, eh? Try rolling an oil barrel into Starbucks and load it with your favorite latte. It'll cost you $3,700--despite the fact that while oil requires a million years to mature, coffee beans get right to it. Peasants grow most of them. They're easy to harvest, ship, roast and brew. Then drive out to an oilfield--ANY OILFIELD--and see what goes into harvesting a cup of oil. 

I have heard so much bullshit about expensive oil that I think I'll throw up the next time. And "expensive oil" had very little to do with the financial crisis. As I recall that was taking about a hundred million mortgages, slicing and dicing them into tiny pieces, putting them together in packages that no one could undo and selling them for a massive profit. No one went to jail. 

I don't know where you're from Geoff, or how old you are or even what level of education you have. And I'm not trying to pick a fight. But before you go talking about "expensive oil," at least visit an oilfield. I suspect you use plastics. Maybe pharmaceuticals. You likely learned to drive an ICE vehicle. Maybe you've had a surgical procedure. You couldn't have done any of those things without oil products. Please! For Christ's sakes, I don't mind if you go say this stuff at a cocktail party, but try not to insult us, will you.

Gerry, the reason oil seems expensive to the average Joe right now is because the cost of housing so high these days. Whether you think the price of oil is expensive or not depends on whether you own your own home or not?!?

[Wombat + 1,028]

On 2/9/2020 at 7:08 AM, 0R0 said:

The subprime mortgages were not the actual problem, it was the structure of the investment in mortgages in general. The financing came from outside the US, and the main driver of the global leverage buildout was China's externalization of its credit and monetary bubble. Regulatory interference from applying  the Basel III regulations made a small crisis into a huge one by amplifying distressed market signals into the marks of bank balance sheets, essentially disabling the bank's mechanism of stabilizing financial markets by trading discounted assets of distressed institutions on thin markets and marking them up to fair value on their balance sheets. 

The system as a whole was way overleveraged. Insufficiently capitalized and nearly entirely unreserved in the US. It was setup for a fall. But the capital flows of 10% of GDP annually and above 2004-2007 were the real culprit and were funded from China's activity in the Eurodollar markets and by China's suppliers reinvesting their petrodollars and other commodity revenues into the system. 

The subprime section was tiny compared to the overall mortgage market. There are still 15 million out of the original 25 million dead Jumbo mortgages that are still non performing and still on the books. Most of them in CA. They are kept from foreclosure in order to save bank balance sheets. It is called, extend and pretend. It is similar to Chinese financial policy that is zombifying their economy. 

I am not a fan of "mark to market" accounting rules either. Plays havoc with profits of commodity-producing businesses as well and just because analysts too lazy to read a balance sheet? Maybe they don't know how?

[Douglas Buckland + 6,308]

2 hours ago, ronwagn said:

I was looking at a picture of a sports car. They usually don't have small engines. I do realize they often have superchargers and ram air stuff that is way over my head. I could be confusing muscle cars with sports cars. I am actually a van guy with a Nissan NV 3500 and 5.6 Liter engine. Not big by pickup truck standards or even muscle cars these days. 

Actually Ron, they are often small engines in these things these days! The electronics, fuel injection, engine mapping, super/turbocharging lets you really get a lot of power out of these smaller engines - it’s impressive if you are an old muscle car gearhead!

I got my wife a little A4 Audi a few years back, with the little 1.8 liter turbo. I only drive a car once a year, Chinese New Year from Kuala Lumpur to Johor Bahru (all highway). This little A4 goes like stink! I have the speeding ticket (caught on camera 😖) to prove it!

[Wombat + 1,028]

On 2/12/2020 at 3:45 AM, Anthony Okrongly said:

No... and these aren't my opinions... they are based on the book "Sapiens - a Brief History of Humankind" by Yuvan Harari. What makes Homosapiens-sapiens (modern humans) different from not only all other animals but also from other "humans" (Homo-erectus, Homo-habilis) is our ability to imagine a reality and then ACCEPT that imagination as real. It's not about wishing.  This isn't "Think and Grow Rich" by Napoeon Hill. It's not a "personal" belief.  It's a "societal" belief that makes all human structures and realities. 

So what's really, really real?  Natural laws.  Entropy. If you don't generate 98.6 degrees at the same rate that the environment evaporates heat from your body then you will die. That's real. Work is real. It takes a certain amount of FORCE to push a 2,000 lb car 1 mile. 

F=mg(h/h2+d2−√) or something like that.

Those are real. Really really real. 

Humanity is not based on THAT. Monkeys are based on that, ants are based on that. Yes, monkeys have troops but their troops are based on family relations. Once you get past direct family relations you have to depend on imaginary structures. 

Humanity is based on the acceptance of imaginary structures. Tribe was a big one.... but how do you get past tribe?  The first way was God. Different tribes believe in the same GOD which binds them together. A variation is KING. But most Kings established their right to be King by invoking Divine Right.. .which brings us back to GOD.  

You can say we are a nation of LAWS, but laws are just an extension of the acceptance of imaginary Kings and Rulers who were put in place by an imaginary God.  The first written law was the Hammurabi Code.  It opens with him explaining how GOD made him king and how GOD gave him the laws... Moses is no different. He didn't come form the mountain top and say "Hey guys, I made up 10 rules!" no they were "Commandments from God." 

As an aside the SIZE of the human structure (empires and whatnot) is based on the ability to make larger and larger numbers of people believe in the shared delusion.  WRITING was a Giant leap in the size of human structures. Hence Hamurabi's Code was the first WRITTEN laws and it's closely associated with one of the first real empires. As writing expanded so did empires.  We now use TV and the Internet to spread imaginary ideas. 

That becomes "When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature's God entitle them..." ... "All men are CREATED equal." 

Who says all men are created equal? That wasn't true for 70,000 years. All men were not created equal... and ALL men were created WAY MORE equal than any woman."  So, humanity does not require equality. Equality is an evolving group construct that is accepted as reality. Humanity got along swimmingly with Kings, slaves, etc.  Rome was amazing!  Greece was incredible!  The Chin dynasty was spectacular!

That is the basis of ALL human endeavors - Leaders and Rules established by God.  Democracy, which is super-duper recent, is an extension of the replacement of God by Humans... it's an extension of "The Enlightenment." So ONE person cannot replace God... it takes ALL the humans to replace God.. or at least a majority of the good ones (male land owners) which over time (just because people decided to do it) becomes non land owners too, then women, and then minorities... but not children... Children are still slaves. They are still "owned" by their parents. They are incapable of making decisions.  So that's where the line is currently... 18 years old you're human... 17 years old you're a slave to your parents... No they can't BEAT you or KILL you, but even Hammurabi had rules about how slaves should be treated. The bad ones (criminals) are not "equal." The dumb ones (children) are not equal. The unestablished ones (illegal immigrants) are not equal.

So, the reality now is that all men and women (of all races and all sexual orientation) are created equal, but MORE equal than all humans under the age of 18 unless they have a felony or do not have legal status.... and they have to register in a certain way with these types of proofs of identity... if you do that then you're "equal." 

So, a man ... Henry Ford... starts a company.  Does he Declare It?  No, he files paperwork with the people who God allows to accept such paperwork.. in this case the courts. In the past it was the temple. Now that entity exists.  If Henry Ford dies does the entity die?  No. If Henry Ford fires everyone does the entity stop existing? No. It still exists. If all the cars ever made by Ford are destroyed Ford still exists.  Why? Because WE ALL ACCEPT that it is so. What is the literal difference between Ford Motor Company Existing or NOT?  It's a piece of paper. Did that piece of paper make FORD?  Nope.  It didn't make a single car. If I make a car does that make me Ford? Nope.  I can't BE Ford because they have the piece of paper.  If I try to file a piece of paper that says I'm FORD the priests at the courthouse will say NO. 

If I argue with you and say "I'm Ford." you will say "No you aren't." How do you know?  Ford is a Conjured Entity. 

When The United Nations passes Sanctions to stop the Banking Rights or Embargo Libya due to Gaddafi's violation of Human Rights... Every single aspect of that sentence is entirely made up. The UN is an imaginary entity, Sanctions are a made up thing, Banking and Money are human inventions, and embargo is nothing more than people agreeing not to trade with someone (up to the point where a Missile blows up your ship... but that brings us back to natural laws - explosives plus human flesh equals shark chum). Because a nation (Libya) completely made up, run by a ruler (Gaddafi made up) is violating "human rights" which is a construct. Humans have no rights. If I walk up to you and try to stab you in the eye, there is no "human right" that will stop it from happening... There might be a HUMAN that stops it from happening YOU. But there is no Right.

I can't kill you... that's you're HUMAN right?  

Can I lethal inject you?  You darn right I can!  We lethal inject people all the time. Did we lethal inject a HUMAN?  Now we get back to shared delusions... at what point do you lose your HUMAN RIGHT to be alive?  After a trial by your peers?  That's made up. You also lose your HUMAN RIGHT to live after your imaginary leader says something that another country's imaginary leader(s) don't like.  So our imaginary country sends a "Patriot" (are are patriots are we not?) missile to blow up your dirt hut and everyone inside it. Because they no longer have "human" rights. 

So, it's all fungible. Who gets to determine when you no longer have HUMAN rights?  A judge? A jury? A President? or a Captain in a Command Center operating on standing orders based on the "rules of warfare." 

You break everything down bigger than the laws of physics, thermodynamics, biology and and animal evolution and you'll find Imaginary systems invented by humans to justify what they want to accomplish - good, bad or indifferent. 

Which returns me to my original point... If you (or I) think we are anything other than surfs by some other name just try no participating in the shared delusions of our group... money, laws, work... If you do so the laws of thermodynamics will quickly catch up with you.

So yea, let's vote for Donald Trump (add all the imaginary adjectives you want here) or Bernie Sanders (add all the imaginary adjective you want here). 

P.S. according to Joiquin Phoenix Academy Award Speech we are now extending God given rights to other species. This has already been happening for a while with dogs in America at least, now we are extending it animals that we eat. We aren't extending it to ants yet.  Now you may disagree with that idea and I might disagree with that idea.  Right now the vast majority of people disagree with that idea.  But when that idea becomes the Shared Delusion then it will be just as real as "All Men are Created Equal," America, and the using a Visa Card to buy Groceries.

So, if you want to determine what is "real" vs what is "Made UP" then you just have to ask yourself... is if Fungible? If you can have a god that is different from my god, and what level of god there can occur then "god" is fungible. Therefore it's not real. All fungible things are human constructs. If it is not fungible... Entropy 98.6 degrees is not fungible.  All humans are THAT. If you stop being THAT for too long then you stop BEING. That's real. 

Work is real, if you don't apply this much force to that mass of a rocket then it isn't making it into orbit.  No matter what!  You can do it with solar power, use the most advanced calculus and broadcast it all over the world... not fungible. Work can be done by slaves, surfs, share croppers, employees, oil and gas, solar panels, water falling from a height... but it has to be done by something.  Why don't we have slaves anymore? Because we have oil and natural gas and coal. When the day comes that those things no longer exist slavery will come back in a big way. Now we trade our REAL work (ah hem) for Imaginary money. So, it's really no different than slavery from the ruler's perspective (free work). But the fact of the matter is that fossil energy does all our work.  We just crawl around, eat, poop, make babies and die while fossil fuels keep our body temp at 98.6.

 

WHAT THE HECK does this have to do with the original post?  

The original post has to do with DEBT and its effect on Energy. My point is that debt and the commitment of a society to accomplish ANYTHING is fungible. Money is Fungible.  What's not Fungible? The requirement for ENERGY to accomplish WORK.  Either humans do it, animals do it or energy sources do it. Right now we have a competition between the requirement for energy and the shared delusion of society that it can be accomplished without oil and natural gas and coal.  Which will win?  If Gas and Oil win then heaven and earth will be moved to keep getting it out of the ground - wars, changing the entire banking structure, nationalizing the field... whatever it takes.  If, on the other hand, shared delusions change the acceptance of the society to spend their effort on these types of energy then it will be abandoned.  Energy will come from elsewhere (solar, wind, nuclear,) and society will change to meet the energy availability (cars, population, air conditioning, industry).  Both are just as possible, and some combination will continue for ever. As energy goes away so will population, but it will happen slowly enough that no one will notice.  That's a whole new rant. 

 

There is a tribe in India that don't squish ants. When they harvest their crops, they do not disturb the soil so that no microbes are hurt!