The economy runs on energy, far more than it operates on growing debt. Our energy problems don’t appear to be fixable in the near term, such as six months or a year. Instead, the economy seems to be headed for a collapse of its debt bubble. Eventually, we may see a reset of the world financial system leading to fewer interchangeable currencies, far less international trade and falling production of goods and services. Some governments may collapse.~ Gail Tverberg from, https://ourfiniteworld.com/2021/03/20/headed-for-a-collapsing-debt-bubble/
I’ve been reading, and tagging here on my blog, Tverberg’s commentary for years. I don’t link to these things because I fancy myself Chicken Little. Rather, I link because she has really interesting and insightful things to say about energy.
At a 2.3% growth rate in energy, within 1000 years, assuming all energy is consumed on Earth, the temperature of Earth’s surface will have to become equal to Sun’s surface temperature.
~ Paras Chopra from, https://invertedpassion.com/can-an-economy-keep-on-growing/
It’s often really helpful to look at things from a different perspective. (Granted, “from the surface of the sun,” is not a perspective I would like to see from.) This little article is a fun read. It’s got a bunch of small, clear statements, some vertiginous graphs, a few videos—which, mind you, I didn’t look at all… caveat emptor there. Reading it would be like playing hopscotch where someone hid an alligator in the last square. As the Talking Heads put it, “Well? How did I get here? (chorus) Letting the days go by!”
It is increasingly clear that neither of these assumptions is correct. Despite the claims of epidemiologists, our best efforts have never been able to reduce the number of newly reported COVID-19 cases for the world as a whole for any significant period of time. In fact, the latest week seems to be the highest week so far.~ Gail Tverberg from, https://ourfiniteworld.com/2020/09/23/reaching-the-end-of-early-stimulus-whats-ahead/
It’s not meant as a doom-and-gloom quote. The article goes on to talk about how our economies really work and what’s really going on.
I’ve a tag for Tverberg for a reason. You should read everything she’s ever written—which would be hard because you’d have to also wade through the amazing, museum-piece that is The Oil Drum. I use that site as a litmus test for anyone who ever mentions “energy”—”Have you heard of The Oil Drum site?” If they have, then I’m really listening.
The authors note that a core resource of the digital economy is the data produced by users of services like Facebook and Google, which can then be used to train machine learning algorithms to do valuable things like precisely targeting advertisements or more accurately processing natural language. The current market treats data as capital: the “natural exhaust from consumption to be collected by firms” for use in training their AI-driven golden gooses. Lanier and company suggest an alternative: data as labor. Put simply, if a major platform monopoly wants your data to help build a multi-billion dollar empire, they must pay you for it. Offering a free service in return is not enough.~ Cal Newport from, https://www.calnewport.com/blog/2018/01/17/on-seriously-rethinking-the-digital-economy/
Well, that would change everything.
Imagine I changed the sidewalk in front of my house to have plates that moved slightly as one walks across it. I’ve rigged the plates to absorb some of the motion created during walking to generate electricity to offset my electric bill. Let’s assume further that the movement of the plates is barely noticeable. Perhaps something seems a bit “off” when you walk past my house, but nothing bad happens to you; you don’t fall and you don’t get tired, but you do work just a little harder when walking past my house.
What happens when we scale up that “harmless” little modification to include everyone, walking everywhere?
Today’s indications seem to suggest that an even more major recession than the Great Recession may strike in the not too distant future. Why should this be the case? Am I imagining problems where none exist? The next ten sections provide an introduction to how the world’s self-organizing economy seems to operate.~ Gail Tverberg from, https://ourfiniteworld.com/2018/07/11/the-worlds-weird-self-organizing-economy/
“Ten sections.” “Introduction.” Some thinking and integration of ideas will be required.
The reason for the strange behavior of energy prices near limits is because the system is very interconnected. It is a self-organized system that gradually changes over time. New customers are added over time. These customers are often also wage-earners. They decide what to buy based on their own wages, and based on other considerations, such as the prices of competing products and whether inexpensive financing is available.~ Gail Tverberg from, https://ourfiniteworld.com/2018/05/11/how-the-economy-works-as-it-reaches-energy-limits-an-introduction-for-actuaries-and-others/
Supply-and-demand is a model. There’s nothing wrong with the model. Does the model still fit reality as we approach the limits of how much energy our economy can consume? (tl;dr: it does not.)
The catch is that we are too close to the “edge” to be testing an increase in interest rates. Economies, below a certain “stall speed,” cannot repay debt with interest, and cannot hope to provide entrepreneurs with an adequate return on investment. Our low rate of growth is already close to this stall speed.~ Gail Tverberg from, https://ourfiniteworld.com/2018/02/21/raising-interest-rates-is-like-starting-a-fission-chain-reaction/
There’s a graph early on in this article that is, frankly, alarming.
When I put together a chart of per capita energy consumption since 1820 for a post back in 2012, there was a strange “flat spot” in the period between 1920 and 1940. When we look at the underlying data, we see that coal production was starting to decline in some of the major coal producing parts of the world at that time. From the point of view of people living at the time, the situation might have looked very much like peak energy consumption, at least on a per capita basis.~ Gail Tverberg from, https://ourfiniteworld.com/2017/12/19/the-depression-of-the-1930s-was-an-energy-crisis/
One of my rules-of-thumb is to thoroughly read everything written my Gail Tverberg.
Years ago, I found a web site called The Oil Drum which was a collecton of superlative thinkers all writing about things related to petroleum. Actually, it still IS a superlative collection, because they’ve left it up as-is to be an archive.
There has been a misunderstanding regarding the nature of our energy problem. Many people believe that we will “run out” of fossil fuels, or that the price of oil and other fuels will rise very high. In fact, our problem seems to be one of affordability: energy prices don’t rise high enough to cover the rising cost of producing electricity and other energy products. Adding wind and solar tends to make the problem of low commodity prices worse.~ Gail Tverberg from, https://ourfiniteworld.com/2017/01/30/the-wind-and-solar-will-save-us-delusion/
Presented without comment.