Australian Housing Affordability

Housing affordability is attracting the attention of politicians as concern rises that a housing bubble has made homes too expensive. So far, none of the discussions have really addressed the problems. Several key points can be made here from a futurist perspective.

The housing problem…..

Sitting on the left wing agenda is the view that negative gearing of investment properties is a necessary step to making housing more affordable. Government is short of cash. You can see this happening in most liberal democratic countries around the world and should merely be seen as another tax grab. For this reason alone politicians will close the negative gearing window.

Cancelling negative gearing will have the long term effect of driving up rents causing a severe shortage of rental properties. That wont affect the politicians however who vote for the negative gearing “reform” as they will have disappeared into retirement.

Pre-2016 election talk suggested a grandfather clause to existing investment property holders. The time between initiating the legislation to when it goes into effect creates a window for people to grab up properties for investment purposes. The short and sharp buying frenzy in conjunction with this kind of policy or news would be typical of a major long term top for Australian property markets. This kind of event is common in financial markets when changes of trend occur at the end of a long term market. Policy or news has caught up too late. It always results in a major reversal. We might anticipate the peak of the Australian property market would last decades.

Other proposed measures include first home owners being allowed to access superannuation to form a deposit. When first home owner grants were introduced in 2000, property prices for new homes jumped by multiples of the $7000 grant. This reflected the increased purchasing power an extra $7000 had on loan to valuation ratios. If super is allowed into the equation we’ll see property prices once again jump higher as builders respond to improved loan ratios.

Part of the affordability solution……..

One issue that never gets discussed is the supply related issues created by government themselves. In many capital cities around the world, including Australia, housing affordability is often the unintended consequence of regulatory bottlenecks where zoning, building regulations and permits choke the flow of new supply and drive up the cost of housing. Clearly this needs to be addressed and would go a long way towards addressing the affordability issue.Another issue under the microscope where investors hold a property seeking only capital gains by leaving the property untenanted. If governments must be seen to be doing something, a tax on properties untenanted for longer than say 3 months would take the heat off buyers as they realize the benefits renting over buying bring in an overheated property market.

Suffice to say the long term direction of Australian property values are coming to a head in conjunction with other Australian and global social, political and economic issues. Housing affordability is just another issue along with many others whose origins lie decades in the past and whose solution cannot be answered by politicians or central planners

 

Pendulum of Government Overreach has Peaked

The pendulum of government overreach has peaked in most liberal democratic countries around the world (for now). The major political events of 2016 have shown increasing resistance to government given the rising number of breaches in civil liberties and failure of government to identify and respond to the disenfranchised members of their societies.

Many segments of society have felt themselves becoming impoverishment. At the same time they have watched the hubris, greed and failure of politicians to deliver solutions to resolve the various politically made crises. One of the recurring questions that will emerge is the role of government in the lives of people.

By the time politicians’ hubris has completely evaporated, the nature of liberal democratic countries will have changed. We see major risk of political, economic and social upheaval occurring between now and 2028-2033 This phase may extend before social, political and economic stability becomes the norm. As always the pendulum will one day swing again towards increasing government involvement in the lives and affairs of ordinary people.

Plan for Colonizing Our Solar System

Futurism / ET posted:

In Brief

In an interview with the Washington Post, Amazon CEO Jeff Bezos reveals what he thinks will be the future of humanity when we eventually colonize space. He talks about a plan for colonizing our solar system with nuclear reactors in space, populations in the millions, and more.

Developments Unveiled

While Elon Musk’s SpaceX is the public face of the private space industry, there are other major players trying to bring humanity closer to the stars. Richard Branson’s Virgin Galactic has been working on its own rocket technologies, and Jeff Bezos, CEO of Amazon, has been revealing more on the work they’re doing over at Blue Origin.

The previously secretive Blue Origin has been announcing more of its milestones in its space ambitions. It successfully landed the same rocket four times in a row, with the end goal of reusable rockets that will lower space travel costs.

The company has unveiled its own rocket, the “New Glenn,” which dwarfs any of the rockets being developed today. Bezos announced that the Glenn will be ferrying astronauts by the end of the decade.

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Blue Origin

Along with the engineering developments Blue Origin has announced, Bezos has also shared his predictions on human colonization of space, in an interview with The Washington Post.

Human colonization of space

In the interview, Bezos sees humans spreading out across the Solar System. He envisions “millions of people working and living in space.” But to do this, Bezos notes that we will have to figure out how to extract and manage the resources we can get from space, since Earth alone won’t be able to provide the materials for space colonization.

Bezos also says we will have to figure out how to harness nuclear technology in space, citing it as a viable alternative to solar power that will dim out as you move farther from the Sun. In fact, moving out into space would not just be a dream, but an imperative. We will have to move heavy industry outside of Earth, in order to preserve it. He envisions the Earth being “zoned” as residential and light industrial.

But does he think we will see space colonization in our lifetime? “Not in the near term… Eventually Mars might be amazing. But that’s a long way in the future.”

Source: http://futurism.com/jeff-bezos-just-revealed-his-ambitious-plan-for-colonizing-our-solar-system/

72 common things ten years from now not existing today

72 Stunning Future Things 1

How many things do we own, that are common today, that didn’t exist 10 years ago? The list is probably longer than you think.

Prior to the iPhone coming out in 2007, we didn’t have smartphones with mobile apps, decent phone cameras for photos/videos, mobile maps, mobile weather, or even mobile shopping.

None of the mobile apps we use today existed 10 years ago: Twitter, Facebook, Youtube, Instagram, Snapchat, Uber, Facetime, LinkedIn, Lyft, Whatsapp, Netflix, Pandora, or Pokemon Go.

Several major companies didn’t exist a decade ago. Airbnb, Tinder, Fitbit, Spotify, Dropbox, Quora, Tumblr, Kickstarter, Hulu, Pinterest, Buzzfeed, Indigogo, Udacity, or Jet.com just to name a few.

Ten years ago very few people were talking about crowdfunding, the sharing economy, social media marketing, search engine optimization, app developers, cloud storage, data mining, mobile gaming, gesture controls, chatbots, data analytics, virtual reality, 3D printers, or drone delivery.

At the same time we are seeing the decline of many of the things that were in common use 10-20 years ago. Fax machines, wired phones, taxi drivers, newspapers, desktop computers, video cameras, camera film, VCRs, DVD players, record players, typewriters, yellow pages, video rental shops, and printed maps have all seen their industry peak and are facing dwindling markets.

If we leapfrog ahead ten years and take notice of the radically different lives we will be living, we will notice how a few key technologies paved the way for massive new industries.

Here is a glimpse of a stunningly different future that will come into view over the next decade.

All of these items were replaced with smartphones!
All of these items were replaced with smartphones!

3D Printing

Also known as additive manufacturing, 3D printing has already begun to enter our lives in major ways. In the future 3D printers will be even more common than paper printers are today.

1.    3D printed makeup for women. Just insert a person’s face and the machine will be programmed to apply the exact makeup pattern requested by the user.

2.    3D printed replacement teeth, printed inside the mouth.

3.    Swarmbot printing systems will be used to produce large buildings and physical structures, working 24/7 until they’re completed.

4.    Scan and print custom designed clothing at retail clothing stores.

5.    Scan and print custom designed shoes at specialty shoe stores.

6.    Expectant mothers will request 3D printed models of their unborn baby.

7.    Police departments will produce 3D printed “mug shots” and “shapies” generated from a person’s DNA.

8.    Trash that is sorted and cleaned and turned into material that can be 3D printed.

How long before you own the next generation VR headset?
How long before you own the next generation VR headset?

Virtual/Augmented Reality

The VR/AR world is set to explode around us as headsets and glasses drop in price so they’re affordable for most consumers. At the same time, game designers and “experience” producers are racing to create the first “killer apps” in this emerging industry.

9.    Theme park rides that mix physical rides with VR experiences.

10. Live broadcasts of major league sports games (football, soccer, hockey, and more) in Virtual Reality.

11. Full-length VR movies.

12. Physical and psychological therapy done through VR.

13. Physical drone racing done through VR headsets.

14. VR speed dating sites.

15. For education and training, we will see a growing number of modules done in both virtual and augmented reality.

16. VR and AR tours will be commonly used in the sale of future real estate.

Flying/Driving Drones

Drones are quickly transitioning from hobbyist toys to sophisticated business tools very quickly. They will touch our lives in thousands of different ways.

17. Fireworks dropped from drones. Our ability to “ignite and drop” fireworks from the sky will dramatically change both how they’re made and the artistry used to display them.

18. Concert swarms that produce a spatial cacophony of sound coming from 1,000 speaker drones simultaneously.

19. Banner-pulling drones. Old school advertising brought closer to earth.

20. Bird frightening drones for crops like sunflowers where birds can destroy an entire field in a matter of hours.

21. Livestock monitoring drones for tracking cows, sheep, geese, and more.

22. Three-dimensional treasure hunts done with drones.

23. Prankster Drones – Send random stuff to random people and video their reactions.

24. Entertainment drones (with projectors) that fly in and perform unusual forms of live comedy and entertainment.

Our driverless future is coming!
Our driverless future is coming!

Driverless Cars/Transportation

Driverless technology will change transportation more significantly than the invention of the automobile itself.

25. Queuing stations for driverless cars as a replacement for a dwindling number of parking lots.

26. Crash-proof cars. Volvo already says their cars will be crash-proof before 2020.

27. Driverless car hailing apps. Much like signaling Uber and Lyft, only without the drivers.

28. Large fleet ownership of driverless cars (some companies will own millions of driverless cars).

29. Electric cars will routinely win major races like the Daytona 500, Monaco Grand Prix, and the Indy 500.

30. In-car work and entertainment systems to keep people busy and entertained as a driverless car takes them to their destination.

31. In-car advertising. This will be a delicate balance between offsetting the cost of operation and being too annoying for the passengers.

32. Electric car charging in less than 5 minutes.

Internet of Things

The Internet of things is the network of physical devices, vehicles, and buildings embedded with electronics, software, sensors, and actuators designed to communicate with users as well as other devices. We are currently experiencing exponential growth in IoT devices as billions of new ones come online every year.

33. Smart chairs, smart beds, and smart pillows that will self-adjust to minimize pressure points and optimize comfort.

34. Sensor-laced clothing.

35. “Print and Pin” payment systems that uses a biometric mark (fingerprint) plus a pin number.

36. Smart plates, bowls and cups to keep track of what we eat and drink.

37. Smart trashcan that will signal for a trash truck when they’re full.

38. Ownership networks. As we learn to track the location of everything we own, we will also track the changing value of each item to create a complete ownership network.

39. Self-retrieving shoes where you call them by name, through your smartphone, and your shoes will come to you.

40. Smart mailboxes that let you know when mail has arrived and how important it is.

Full-body physical health scanner!
Full-body physical health scanner!

Health Tech

Even though healthcare is a bloated and bureaucratic industry, innovative entrepreneurs are on the verge of disrupting this entire industry.

41. Hyper-personalized precision-based pharmaceuticals produced by 3D pill printers.

42. Ingestible data collectors, filled with sensors, to give a daily internal health scan and report.

43. Prosthetic limbs controlled by AI.

44. Real-time blood scanners.

45. Peer-to-peer health insurance.

46. Facetime-like checkups without needing a doctor’s appointment.

47. Full-body physical health scanners offering instant AI medical diagnosis, located in most pharmacies

48. Intraoral cameras for smartphones for DYI dental checkups.

The future of computers is the mind!
The future of computers is the mind!

Artificial Intelligence (AI)

Much like hot and cold running water, we will soon be able to “pipe-in” artificial intelligence to any existing digital system.

49. Best selling biographies written by artificial intelligence.

50. Legal documents written by artificial intelligence.

51. AI-menu selection, based on diet, for both restaurants and at home.

52. Full body pet scanners with instant AI medical diagnosis.

53. AI selection of movies and television shows based on moods, ratings, and personal preferences.

54. Much like the last item, AI music selection will be based on moods, ratings, and musical tastes.

55. AI sleep-optimizers will control all of the environmental factors – heat, light, sound, oxygen levels, smells, positioning, vibration levels, and more.

56. AI hackers. Sooner or later someone will figure out how to use even our best AI technology for all the wrong purposes.

Unmanned aviation is coming!
Unmanned aviation is coming!

Transportation

Future transportation will come in many forms ranging from locomotion on an individual level to ultra high-speed tube transportation on a far grander scale.

57. Unmanned aviation – personal drone transportation.

58. 360-degree video transportation monitoring cameras at most intersections in major cities throughout the world.

59. Everywhere wireless. With highflying solar powered drones, CubeSats, and Google’s Project Loon, wireless Internet connections will soon be everywhere.

60. Black boxes for drones to record information in the event of an accident.

61. Air-breathing hypersonic propulsion for commercial aircraft. Fast is never fast enough.

62. Robotic follow-behind-you luggage, to make airline travel easier.

63. Robotic dog walkers and robotic people walkers.

64. Ultra high-speed tube transportation. As we look closely at the advances over the past couple decades, it’s easy to see that we are on the precipices of a dramatic breakthrough in ultra high-speed transportation. Businesses are demanding it. People are demanding it. And the only thing lacking is a few people capable of mustering the political will to make it happen.

Miscellaneous

As I began assembling this list, a number of items didn’t fit well in other categories.

65. Bitcoin loans for houses, cars, business equipment and more.

66. Self-filling water bottles with built-in atmospheric water harvesters.

67. Reputation networks. With the proliferation of personal information on websites and in databases throughout the Internet, reputation networks will be designed to monitor, alert, and repair individual reputations.

68. Atmospheric energy harvesters. Our atmosphere is filled with both ambient and concentrated forms of energy ranging from sunlight to lightning bolts that can be both collected and stored.

69. Pet education centers, such as boarding schools for dogs and horses, to improve an animal’s IQ.

70. Robotic bricklayers. With several early prototypes already operational, these will become common over the next decade.

71. Privacy bill of rights. Privacy has become an increasingly complicated topic, but one that is foundational to our existence on planet earth.

72. Hot new buzzword, “Megaprojects.”

72 Stunning Future Things 9
The safer we feel, the more risks we take!

Final Thoughts

There’s a phenomenon called the Peltzman Effect, named after Dr. Sam Peltzman, a renowned professor of economics from the University of Chicago Business School, who studied auto accidents.

He found that when you introduce more safety features like seat belts into cars, the number of fatalities and injuries doesn’t drop. The reason is that people compensate for it. When we have a safety net in place, people will take more risks.

That probably is true with other areas as well.

As life becomes easier, we take risks with our time. As our financial worries are met, we begin thinking about becoming an entrepreneur, inventor, or artist. When life becomes too routine, we search for ways to introduce chaos.

Even though we see reports that billions of jobs will disappear over the coming decades, we will never run out of work.

As humans, we were never meant to live cushy lives of luxury. Without risk and chaos as part of our daily struggle our lives seem unfulfilled. While we work hard to eliminate it, we always manage to find new ways to bring it back.

Yes, we’re working towards a better world ahead, but only marginally better. That’s where we do our best work.

Source: http://www.futuristspeaker.com/business-trends/72-stunning-things-in-the-future-that-will-be-common-ten-years-from-now-that-dont-exist-today/

US Presidential Election Prediction

Its clear we are in a cycle of increasing political chaos and uncertainty. This is continuing to escalate. Its happening in liberal democratic countries. National elections are due in these countries (Germandonald-trumpy, France 2017), UK (2018). We can anticipate major upheavals along with the US. We are seeing the death throes of the liberal democratic tradition. Worsening economic inequality, the self interest of political elites, political coverups, politicians unable to deliver on their promises, vote rigging, dodgy economics, disenfranchised voters, unaccountable rogue police are just some of the issues to be seen in newspapers and television. Democracy, a human system, like all systems before, is failing.

Next US President

Given the increasing political chaos we anticipate Donald Trump will be elected as the 45th US President of the United States of America. Between now and November we should see a marked swing towards Trump. Viewing the US situation through the lens of cycles analysis we step beyond the character and reputation of US Presidential nominees to see the fabric of a society and economy being eroded through self interest.This process has been underway for over 5 decades.TruHillary Clinton imagesmp’s election should be seen as the response to a disenfranchised electorate. That’s both within the parties and without. Its an  increasingly angry social mood. Voters are angry and one of their few options is to respond at the ballot. Electoral horror at the status quo has emerged with a dual society – the haves and have nots, cronyism, hidden interests, corporatism, the endless wars, spurious economics, indebtedness………..

Like Brexit and many of the problems we are witnessing nightly in the news (EU refugee crisis, police and citizen shootings, etc), many crises have been manufactured by governments themselves.

We witness the unfolding political, social and economic drama of the USA and by extension the global stage since the US ascended to become the global hegemon after WWII. Most people acknowledge things have gone terribly wrong over the last 20 years but nobody knows what to do. There is little or no confidence in the political class, or their technocrat advisors, government institutions, the economy and society at large. We anticipate the continuing breakdown of the status quo an Trump’s election to the presidency is merely a reflection of the zeitgeist of our time. Yet this is perfectly understandable when you step back from the noise of daily media and observe the cycles of history evolving before our eyes.

History Repeating

An historical example of a time when a large scale breakdown of society occurred on this scale was during the phase 1740-1792 leading to the French Revolution. This time however, with globalization, it spans over many countries. At that time we saw increasing political instability with its attendant corruption, economic decay and the polarization of the people against the political elites (king and government). It’s happened many times before as any student of history will testify, is happening now and will happen again as humans consistently fail to learn from their past.

Understanding Cyclic History

We are witnessing in our lifetime the completion of large scale cycles of human endeavor and activity with the attendant dislocation and reallocation of social, economic and political activity and resources. An understanding of the broad brush strokes economically, socially and politically may serve to enhance your perspective on what emerges next. The scale of forces at work in liberal and democratic societies and economies is so huge that the current drama is taking decades to unfold.

This is the topping and completion process of an economic cycle that has been going on for around 224 years. By the time this top and the ensuing drama is finished, it may well have spanned generations of people. On a historical note, we are witnessing the completion of the growth phase of the industrial revolution cycle that began around 1783-5.

And so what does Trump have to do with economic cycles?

The current political chaos will continue to intensify and this will give way eventually into economic chaos. The impending signs  for that economic chaos are clearly to be seen and once again it centers on the incapacity of central planners and bureaucrats to perceive the unintended consequences of their mischief. Trump has nothing to do with these economic cycles. He merely reflects the zeitgeist of the times. Like someone surfing a wave, they ride the wave for a period of time then disappear into the footnotes of history. Trump has often appeared at major tops of economic cycles in the last 30 years in US history. Its not surprising then he has reappeared surfing the zeitgeist wave as the US completes the topping phase of this huge cycle of human endeavor.

Trump’s ability to ride the social mood of the time we believe will help him to take the presidency. Whether he will have the power to change the status quo, like Obama who promised major change yet found himself caught in the entrenched self interest of Congress, Wall Street, Big Pharma and the military. Trump may well ride the last vestiges of prosperity in this cycle. Given the growing political and economic storm Trump may well find himself the target of assassination attempts in the next four years. He will be remembered as the President that reigned at the time the US and world peaked in economic activity for many decades to come.

Whether we have a few more months or years of twilight before the downside comes home to roost, suffice to say, from now on we can expect increasingly tough times punctuated by phases of optimism. The current political chaos will continue to intensify and this will give way into economic chaos. The impending signs  for that economic chaos are already clearly seen and once again it the focus centers on the incapacity of central planners and bureaucrats to perceive the unintended consequences of their mischief. Will people in future times learn from our mistakes and mistakes of the past? We think not.

The Great Sovereign Debt Crisis Coming Soon

Starting in Europe and reaching public consciousness when Japan implodes before engulfing the USA and remaining Liberal-Democratic nations.

The Great Sovereign Debt Crisis of the 21st Century is steadily gaining momentum. The forces of deflation have been steadily building since 2000 and the stage is set over the next 6-12 months where the reality of public plundering of the means of production comes home to roost. The weight of public and private debt, government regulation and leverage, fraudulent economics and fallacious political thinking that assumes that if you keep taking and spending other people’s money you will never ever run out!

Yet this is exactly what is happening. The politicians have borrowed to deliver on promises they were never going to be around to see delivered. They’ve debased the their currency and now we have reached the problem that there is so much debt in the world that the world does not have enough income to service that debt.

Historically its happened many times before of course and yet we never seem to learn. Empires grow and prosper, politicians make promises, governments and people borrow and everyone takes for granted the wealth that has been achieved until finally, it all collapses. History records the rise and fall of civilizations on exactly this premise. It’s always government and the self-seeking of leaders that cause civilizations to self-destruct.

While we observe the rise and fall of empires due to reasons of currency debasement or war, we can also observe that these are merely the mechanisms that cause the problems. Behind them lies the cyclic nature of humanity. Deep in the limbic system of the human brain reside deep impulses that play out at individual and aggregate levels.

We might look back at the Tulip Mania Bubble of the Dutch Golden Age (1634-1637) and wonder how people might have been so crazy as to invest in tulips. The Tulip Mania occurred on the back of a Europe-wide debasement of coins (1619-1622) used to finance war. Yet they did and future historians will look back at early 21st century share, commodity, real estate prices and wonder “how could they have been so blind?”TulipPricesDebasement of the currency has occurred this time by closing the link between gold and paper money and the massive printing of money that subsequently occurred. Each era brings the usual excuse “this time its different”. But the same debasing of money, the same political hubris, the same grasp for political power create the same drivers that cause the boom and the bust.

We watch at the moment the European debt drama playing out in Greece. Other nations sit on the edge of potential debt crises including Spain, Portugal, Italy, Puerto Rica and various cities of the US. This is just the beginning. Soon we shall see the debt crisis spreading to northern Europe, Japan, China and the US. Its about sovereign debt of course, the debt accumulated by generations of politicians spending other people’s money.SouthSeaIn Japan they experienced this in the early 1930’s when massive money printing operations inflated their economy. It resulted in the assassination of the Finance Minister and Prime Minister, the establishment of the military as the power brokers of Japanese politics and the beginnings of the build up for for WWII. That didn’t end well for the Japanese people.

Between 1740 and 1783, the French experienced it with the massive indebtedness of the monarchy, high taxes, high levels of regulation and cronyism led to the French Revolution, Napoleon and a final defeat in 1815.

Pax Romana followed a similar path where eventually the debasement of the currency and accumulated debt caused the empire to implode. To look at Pax Americana is to see an identical script unfolding. Massively unsustainable debt levels, vast militarization, endless monetary debasement, constitutional decay and subjugation of citizens by taxation, regulation and blatant spying signal, as it has in many previous civilizations, the demise of this short lived empire.

Using financial markets as a barometer we observe markets in major topping patterns, working out of main trends. The next 3-6 months will prove critical in determining if the Great Sovereign Debt Crisis has truly arrived or if there is still enough gas in the tank for one last sprint before the weight of debt, regulation and political hubris bring down the liberal – democratic nations of the world. dow-jones-100-year-historical-chart-2015-08-07Once again the cyclic nature of human egress and regress is playing out at individual and aggregate levels and from where we stand, major and minor cycles of human endeavor are changing direction. Crisis bring danger and opportunity for those so prepared.

Yanis Reveals EU Denial of Any Right of the People to Vote

Varoufakis Yanis

Greece’s Finance Minister Yanis Varoufakis has come out to reveal the quite shocking and anti-democratic events that took place during the last Eurogroup meeting. First, they do hate Yanis’ guts, for he understands far more about the economy than anyone in Brussels. At their demand, any further discussions will be without him. What led to the EU breaking off was exactly what we reported previously — they do not want any member state to EVER allow the people to vote on the euro. Brussels has become a DICTATORSHIP and is so arrogant without any just cause, believing that they know better than the people.

We are watching the total collapse of Democracy and the birth of a new era — Economic Totalitarianism from arrogant people who are totally clueless beyond their own greed for power and money.

Source: http://www.armstrongeconomics.com/archives/34115

Editor Note: Greece is the end of the beginning for the EZ and the beginning of a long period of political, social and economic instability that co-incides with the topping phase of the upward phase of the Industrial Revolution cycle that began in 1783-85.

The Rise of Modern Eugenics

By Peter Twigg
One of the most thrilling and terrifying prospects in the 21st century is the ascendency of medical technology combined with the political ideology of progressivism multiplied by consumer demand.

Yes to the ability to control and defeat many kinds of illnesses, to extend quality of life and life itself. New emerging medical technologies including genomic technologies will allow scientists to read organism genomes faster than ever before and also write more complex changes into those genomes, creating organisms with new capabilities. And no to the merger of state driven progressive policy mating with the new sciences. Consumers will demand gene engineering so that their children may be smarter, more athletic and more beautiful as well along with the vast healing potential genomic therapies offer the sick and the aging.

It’s been tried before of course. It was called ‘Eugenics’ and was practiced in America, Germany and Sweden in the 1930’s and 40’s. The practice of eugenics was first recorded at the time of Ancient Sparta when unfit and undesirable children were killed at birth. Selective breeding, military training and excellence allowed Sparta to become the dominant military power. A simple Wikipedia definition defines Eugenics from the Greek εὐγενής eugenes, meaning “well-born” from εὖ eu, “good, well” and γένος genos, “race”). It is the belief and practice of improving the genetic quality of the human population.

Sanctioned at government levels, it was the progressive attitude and justification used to promote mass sterilization, institutionalization, social segregation and infanticide. The term eugenics fell out of favour in light of the Nazi abuses. The fact is that it still plays a role in both science and government policy as it ever did. Only the names have changed.

Instead of “eugenics” and “racial hygiene,” the scientific community now promotes “social biology” and “sociobiology.” “Deficient” genes now replace the term “inferior” genes. “Family planning” now replaces “abortion” and “sterilization.” Eugenics was misapplied disastrously in the 1930s and 1940s. Eugenics programs were often race-based, as opposed to being simply based on “inferior genetics” across the board.

Juan Enriquez, a writer, investor, and managing director of Excel Venture Management speaking at Technology Review’s EmTech conference this year, says our newfound ability to write the code of life will profoundly change the world as we know it. Because we can engineer our environment and ourselves, humanity is moving beyond the constraints of Darwinian evolution. The result, he says, may be an entirely new species.

Enriquez proposes a new human species is one that begins to engineer the evolution of viruses, plants, animals, and itself. As we do that, Darwin’s rules get significantly bent, and sometimes even broken. By taking direct and deliberate control over our evolution, we are living in a world where we are modifying stuff according to our desires.

Considering the fact that Enriquez is in favour of the creation of a “new ethics,” this statement alone, if his philosophy gains any traction, is quite a concern. Although improved in terms of implementation and public perception, we have seen this system before and, unfortunately, what Juan Enriquez labels a “new ethics” is not very new at all.

In light of the increase in propaganda masquerading as science and being peddled by scientists, there is no doubt the world’s population is being prepped for a eugenics-based future. This time the system will be assisted by a much more sophisticated technological machine, and thus, a much more efficient system of eugenics. After years of non-stop television, media repetition, and “experts” who tout the benefits of merging man and machine, as well as the cost of inheriting “inferior” genes, there is little doubt that the world’s population will march into this future willingly.

What is clear is the new technology, as it emerges, will change virtually everything in society as we know it – economically, socially, morally and politically. In fact a new human species, able to engineer viruses, plants, animals and itself. A new world order indeed.

Just as it lacked an ethical and moral framework in the 30’s and 40’s, ethicists and scientists are a long way from being able to put such a framework into effect. And of course the scientists innovating this new technology will want to appoint themselves as the ‘Gene Kings’, the arbiter of the technology, prices and who should be able to receive this technology. Yet, the demands of consumers for new solutions to age old problems, the push of new technologies offering unrivaled solutions makes this a much coveted prize for humanity.

For governments it also means answers to many of the pressing social and economic issues created by burgeoning populations. Governments continue to sponsor and promote eugenics as a means of solving many of the world’s problems. Demographics, food production, healthcare provision can all be controlled from a eugenics standpoint.

Politics in the 20th and 21st centuries is a progressive affair. The illusion of left and right, capitalism, liberalism etc, has been eviscerated systematically over the last 100 years.

Progressivism is the ideology where democratic government intervention is presumed to produce a better result than a voluntary society. It is an ideology with no basis in fact or logic. Despite its growing impact on social and economic policy, progressivism is all about those in power enjoying the rewards of position and power.

Progressivism is a form of utopianism where government laws and social conditions are perfect and beyond realisation. One consequence of utopianism is ruthlessness. This explains the racial hygiene of Nazism and why many progressive politicians exhibit ruthlessness as they push to achieve a utopian state of affairs. What ‘higher ideal’ than to do away with disease and to create a ‘heaven on earth’. The utopian element of progressivism however lends itself towards totalitarianism – the total state backed by the ultimate moral sanction of solving all human problems through the power (read force) of the state.

Every generation will bring upgrades as genomic technology improves and the “problems” resolved, much like computers today receive software upgrades every month or so. The process of getting it right will necessarily bring about many failures but as explained in the fervor of consumer demand and the progressive government push towards a utopian ideal these will be mere unintended consequences and a price worth paying.

There will be political abuses in achieving the aims of the state. Racial profiling will determine who will be eligible for gene therapies and who will not. People will be licensed according to their genes whether they are eligible to breed or not. People with congenital defects will simply not be allowed to reproduce with all the social, economic, medical and legal pressure applied by government to enforce compliance.

Government may even hold up a utopian ideal of a ‘one human race’ where all differences are bred out, thus offering the prospect of eliminating racial bigotry and the cause of so much human suffering through history. At the same time a one human race species destroys human bio-diversity and the ability of the human species to adapt and survive in the face of new challenges. Ooops! Even if humanity survived such challenges, Darwinism would also be finished and control would now reside with the hubristic politicians and scientists who mastermind the great human genome re-engineering.

You can be sure that, gene therapies will create a new genre of super corporations with their attendant level of political and economic influence arising from the control of such technology. These elite corporations along with political leaders will be able to affect greater government intervention and control to execute their progressive utopian ideal.

In an extreme social scenario of totalitarianism taken to extremes the potential to develop human sub classes – drones (slaves), elites, and soldier classes become some ‘Hunger Games’ style existence.

So we can conclude by saying the technology will happen and its impact on humanity and societies will be vast and in-calculable. As part of the process, despite the best attempts to get a moral and ethical framework that is sturdy enough to curb the level of abuse, the fact remains, there will be abuse by governments and consumers. Fortunes will be made. The rewards will prove to be equally amazing as many diseases will be eliminated, life extended and human potential enhanced.

The unintended consequences of the technology will also be vast in its consequences and reach into every facet of human endeavor. But consumers will demand modern eugenics, governments will mandate and exercise force in achieving it and humanity will plunge forward headlong into incredible change and growth. The way we view the world, people and our destiny is getting ready to change.

Sources:
Web article: Google: 20141025: nazi eugenics: The Horrifying American Roots of Nazi Eugenics http://historynewsnetwork.org/article/1796
Web article: Google: 20141025: eugenics: http://www.technologyreview.com/news/425804/emtech-get-ready-for-a-new-human-species/

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Hope for Humankind

Peak Babies, Not Oil

Patrick Cox writing for Tech Digest:

Much of my career has been spent refuting this or that doomsday scenario. From peak oil to overpopulation, I’ve been on the other side of the hysteria and often vilified for it. In the last few days, however, a Wall Street Journal headline told us that “Oil Prices Tumble Amid Global Supply Glut.” Also, a LiveScience story told us that “US Birth Rate Hits All-Time Low.”

Neither one of these headlines should surprise anybody. The math behind both of these stories has been clear for a very long time. Neither peak oil nor overpopulation fears were based on actual science. This, of course, raises questions about our species’ susceptibility to periodic Chicken Little hysteria. I have no explanation for this innate tendency, but it’s been evident for thousands of years.

In the modern cautionary tale, first published in the Anglosphere in the mid-1800s, it’s a chicken that cries that the sky is falling. Ancient Buddhists from India and Tibet told the same basic story, but the central character was an alarmist rabbit. That version was spread into Africa and then via the slave trade into America where the oral version was recorded by Joel Chandler Harris in his Uncle Remus books. What sets it apart from the older versions is that Brother Rabbit starts the panic but never actually falls for it himself. I’m reminded of some current global warming activists who fly in private jets and live in estates with carbon footprints bigger than small towns.

This isn’t to say, however, that we have nothing to worry about. In the immortal words of Henry Saint Clair Fredericks (stage name Taj Mahal), “If you ain’t scared, you ain’t right.”

So I’m not exactly scared, but there are things that concern me. The oil glut isn’t one of them, but historically low birthrates do have enormous implications for investors. The last available data, compiled in 2013 by the CDC, show 62.5 births per 1,000 women aged 15 to 44 in the US. That’s down 10 percent from 2007, which was already below replacement rate. In 2008, the US birthrate was 2.08 births per woman, below the 2.1 level needed to replace the population. Today, we are seeing the lowest recorded American birthrate since government started keeping track in 1909. New Zealand, Australia, and Canada are even significantly lower.

In and of itself, a sub-replacement birthrate isn’t necessarily a problem. The problem is that our ruling elite seem totally unaware that it’s happening. Routinely, in fact, we hear from certain politicians that overpopulation remains a pressing problem even as populations throughout the West are shrinking. The same trends, by the way, are already obvious in Asia and Africa where populations continue to increase primarily because people are living longer. Real demographers know that the world population is on track to contracting, and perhaps quite dramatically.

Once again, I recognize that there are upsides to reduced populations. The problem, however, is that so many government policies are still based on the assumption that every generation will be larger than the last. Growing populations are great in many ways. First of all, more young people entering the work force creates demand for all kinds of goods and services. It grows GDP and therefore tax revenues. The simplest way to achieve economic growth is, in fact, to grow the population.

While this is glaringly obvious, it’s remarkable how many economists miss this elephant in the room when talking about countries such as Japan, where economic problems have mirrored the country’s falling population. Last year, the Japanese population shrank by about a quarter million people.

Japan has the highest life expectancy and oldest population in the world, and the older Japanese people expect that the promises made in the past to help support the aged will be honored. It’s not at all clear to me that those promises can be kept, at least as things now stand.

As I’ve written many times, there were about 17 workers per retired person in the United States when I was born in the middle of the last century. Today, the ratio is less than three to one, and getting worse. Already, 30 cents out of every tax dollar collected in America flows to the aged, but much of that money is being borrowed. In effect, the bill for caring for the aged is being sent to future taxpayers, despite the fact that there will be fewer young workers and more aged people to support. This arrangement is not only unsustainable, it’s unethical. In my opinion, the older, wealthier population should help the younger, less wealthy part of the population, the reverse of the current situation.

Every time I’ve written this over the last 30 years or so, I’ve been attacked by people who claim that I’m a fearmonger and that we have plenty of money to support the aged. Today, however, we’re $17 trillion in debt and still borrowing. The current administration doesn’t even acknowledge that the problem exists, so it’s getting harder and harder to make that case.

We need to face the fact that things are going to get worse before they get better. I have little doubt, however, that we will eventually adjust to the new reality. We’ll see policymakers wake up to the new demographics, as they are in Japan, sooner than most of us think. Other countries are also facing facts and are devising solutions. I particularly like the spirit that some Danes are showing in their efforts to counter the country’s low fertility rate. Japan, however, is leading the way in terms of enabling technological solutions through regulatory reform.

The Japanese government understands that the old model is doomed and is actively looking for ways to increase the national work force. There are two obvious ways to do that. One is to bring more women, who have not traditionally worked to the same extent as Japanese men, into the work force. More working women means economic growth and more funds to support an aging population. The other, more long-term solution is to increase birthrates to grow the national work force.

The problem is that the two strategies counteract one another. Japanese women who work have lower birthrates than those who do not. Therefore, the only remaining solution is to extend health spans and working careers, increasing incomes and tax revenues while reducing medical expenses.

There are several ways that the Japanese are working to do this. The most important is the recently accomplished elimination of phase 2 and phase 3 clinical trials for stem cell therapies. The second is in the field of dietary supplements and nutraceuticals.

Japanese regulators exercise less direct control over the market but provide more solid, peer-reviewed information for consumers and healthcare providers. Recently, for example, the Japanese government issued a patent to Terra Biological for oxaloacetate (trade name benaGene) for use in “life extension.” Oxaloacetate is one of the NAD+ precursors that I take based on recent research. I also take the NAD+ precursor, nicotinamide riboside (trade name Niagen).

In general, Japan is leading the way in efforts to encourage new anti-aging therapies. In the next few years, I anticipate that Japan will continue to lower regulatory barriers for new biotechnologies. This is very unlike America’s FDA, which doesn’t yet recognize anti-aging or life extension as a legitimate therapeutic target.

The current regulatory environment in the US will change, however, because it has to. The only question is how soon it happens.

Fortunately, there is a growing chorus of rational voices in the US. I would recommend that everybody download and read Why Population Aging Matters: A Global Perspective. This relatively brief presentation was written by the National Institute on Aging (NIA), part of the National Institutes of Health. On its website, the NIA states bluntly:

The world is on the brink of a demographic milestone. Since the beginning of recorded history, young children have outnumbered their elders. In about five years’ time, however, the number of people aged 65 or older will outnumber children under age 5. Driven by falling fertility rates and remarkable increases in life expectancy, population aging will continue, even accelerate. The number of people aged 65 or older is projected to grow from an estimated 524 million in 2010 to nearly 1.5 billion in 2050, with most of the increase in developing countries.

The interesting thing about that quote is that it was written in 2007, which means that this historic change has already come to pass. Back then, the authors warned:

Some governments have begun to plan for the long term, but most have not. The window of opportunity for reform is closing fast as the pace of population aging accelerates. While Europe currently has four people of working age for every older person, it will have only two workers per older person by 2050. In some countries the share of gross domestic product devoted to social insurance for older people is expected to more than double in upcoming years. Countries therefore have only a few years to intensify efforts before demographic effects come to bear.

More than a few years have passed since this report was written and nothing has really changed politically in the US, though the rate of demographic change and the pace of scientific progress, which is pushing out lifespans, have accelerated. Things will, therefore, get worse. The dynamics behind crippling governmental debt internationally are growing.

There are upsides to this totally predictable situation though. One is that we can anticipate many of the outcomes and devise ways of profiting from them. This is why I focus on disruptive biotechnologies that can significantly lower healthcare costs while extending health spans and careers. These biotechnologies provide the only real solution for the demographic transformation, except for the Danish solution mentioned above. I find it fascinating, by the way, that the revolution in biotechnology is happening exactly at the point in history when it’s needed.

Another significant benefit that will accrue from this convergence of forces is that many of us will be able to take advantage of these breakthrough discoveries. I’m incredibly excited about the emergence of growth hormone-releasing hormone (GHRH) vaccine which has been used widely in animals, where it seemingly rejuvenates and extends lives. Endothelial precursor therapy has similarly been shown in animals to rejuvenate cardiovascular systems. Hopefully soon, we’ll see brown adipose tissue transplantation curing obesity, diabetes and cholesterol problems. There are, however, significant benefits from recently discovered over-the-counter products.

Whenever I talk to el jefe, señor Mauldin, these days, it seems most of our conversations center on our workouts. Both of us work out and lift weights, as we have for much of our lives. Both of us, however, are making gains that we’ve never seen before. One of the Mauldin Economics executives told me recently that he’d never seen John look so good before, that his arms and shoulders are bigger than they’ve ever been.

I probably shouldn’t claim that I look good, but I can say that I’ve also put on a surprising amount of muscle in the last year. That’s not how it’s supposed to work. Both John and I are in our 60s. I work out less than I did than in my 30s, but I’m suddenly lifting much more weight and have more muscle mass than ever. John’s experience is the same.

My only explanation is biotechnology. The NAD⁺ precursors that I mentioned above have been shown in animals to rejuvenate muscle tissue so I’m not surprised to see the effects in humans. I also credit anatabine citrate, though it is at least temporarily unavailable. I’m expecting word on that front soon.

Also, I’m a devoted user of the AVAcore thermogenic device. Recently, a major research organization presented evidence that it may be able to prevent the damage caused by overheating in athletes, but one of the investigating scientists mentioned, as an aside, that it also accelerates training results dramatically. Neither I nor Mauldin Economics have any interest in this privately held company, but I’m evangelical about the benefits, especially to older people. The stronger you are, the lower your risk of disease and mortality.

I realize that the current price of the device is high for many people, but I understand that the company is going to do some sort of crowd-sourcing project in the near future, probably Indiegogo, to fund a much more affordable product. I’ll let you know about the project when I have more information.

One of the reasons that I love the AVAcore device so much is that it perfectly demonstrates the unexpected and dramatic nature of emerging biotechnologies. The notion that exercise capacity and recovery could be dramatically improved by normalizing core body temperature is so unexpected, I’m still in awe over the science and the impact on my health.

It is, however, only the tip of the iceberg. As Japan is demonstrating, an aging population not only wants but demands access to the scientific breakthroughs that can significantly extend health spans. Just as Japan’s regulatory system is bending to the will of its aging population, America’s regulators will be forced to come around.

John and I talk a lot about assisting in that process, and I’ll have more information about that in the future. If you’d like to help in this effort, I suspect there are ways to do so. As it stands, our portfolio contains technologies that I believe will have dramatic impacts on some of the greatest threats to health and longer lives, including Alzheimer’s, cancers, fibrosis, diabetes, and other major diseases. A reformed regulatory system would accelerate therapies to market, which will improve and save lives. It will also allow more of us to live and invest longer.

From the TransTech Digest Research Team:

As Patrick explains above, new biotechnologies will not only extend and improve lives, they will also save the global economy from the implications of a shrinking population. Workers able to stay healthy and remain active in their careers will, quite simply, reduce overall medical spending and lead to an expansion of tax revenues over time.

Today’s transformational technologies—more than perhaps any set of advances the world has ever seen—hold the potential to increase the wealth and the health of all persons in all countries, regardless of their age. Where only a few decades ago many observers saw science fiction, breakthrough research today is working to create previously unfathomable new realities.

You can participate in this process of science fiction becoming science fact in the pages of Patrick’s Transformational Technology Alert. Each month, Patrick profiles a new publicly traded company and shows you the part it plays in the technology revolution ahead. Click here to start a risk-free trial subscription to Transformational Technology Alert today.Sincerely,
Patrick Cox
Patrick Cox
Editor, Transformational Technology Alert

Mauldin Economics

Source: http://www.mauldineconomics.com/tech/tech-digest/peak-babies-not-oil

India About to Hit the Sweet Spot

A combination of factors is bringing India to the “Sweet Spot’.url

A population of workers with an average age of around 35 combined with the arrival of a new government may be pulling Incredible India to where, at last, its population and vigor may carry it aloft. Like China in the early 80’s and 90’s, India has the potential to achieve rapid growth. But due to lack of political will, religious divisions, corruption, poverty, a massive overhang of the post-colonial era when Marxist-socialist solutions were the fashion and lack of capital, India’s progress has been slow.

The analogy is of an aircraft taking off. The back wheels are still on the ground but the nose has lifted up. This has been the case for some time with the deadweight of the various factors holding her back. This is about to change. Continue reading

The Emergence of Smaller Self Regulated Communities

Simon Black from SovereignMan writes about the formation of nations and how the rise of independence/secessionist movements and nationalism in places like the UK and EU are a reflection of the changing zeitgeist of the times:

Did you ever hear the urban legend about how Winston Churchill carved up a map of Africa in a drunken stupor?

There’s actually no evidence to support this assertion.

But what is true is that European imperialists conjured entire nations in Africa out of thin air from their palaces in Brussels, Paris, and London.

And all of this was done without any regard for ethnic, linguistic, religious, and historical divisions among the various tribes that inhabited Africa.

But what few people realize is that Europe is no different.

Think about it—the United Kingdom consists of England, Wales, Scotland, and Northern Ireland lumped together in a political union.

Each is entirely different from the others. And secessionist movements are alive and well.

Scotland will hold a referendum about its independence in September. And the troubles in Northern Ireland have plagued the region for decades.

Belgium is a completely artificial country, and the Flemish are actively pursuing independence from the Walloons.

In the late 19th century, Germany and Italy were both unified into modern countries from diverse fiefdoms and city-states with strong regional identities.

Those regional identities are still present today. Just a few weeks ago, a vote was held in Venice over independence for the wider region.

The Basque separatist movements in Spain are stronger than ever. The Balkans were an absurd experiment. I could go on and on.

Europe is the best example that borders and countries are completely arbitrary.

They are created to serve one purpose—consolidating authority over a piece of land and the people living upon it.

Today just happens to be “Europe Day”, a holiday in which Europeans are supposed to commemorate the Schuman Declaration that jump started today’s European Union.

This is a continent that has a long history of constantly going to war with itself.

They slapped lines on a map, formed some new countries, and expected that everything would be OK.

Then they made those lines even broader when they consolidated everything into the European Union. And EU politicians are trying to make things even bigger.

History shows that when economic times are good, people are happy about unity.

But when times are tough as they are now, divisions start creeping up. People look around and say “this system isn’t working”.

They demand change. Sometimes violently. And we would be foolish to presume that this time is any different.

The immediate avenue for this conflict to play out is still through peaceful means—referendums and the rise of nationalist and Eurosceptic political parties.

But it’s clear that the trend is to get smaller, not bigger. And for the system to change entirely.

Like feudalism before it, the nation state is a failed experiment that will ultimately be replaced. It’s already happening.

Many places around the world from Panama to Puerto Rico to Chile are actively competing for productive residents.

They welcome foreigners and provide incentives to live and invest there, instead of treating people like milk cows.

Modern technology and transportation make geography almost irrelevant.

You don’t need to be tied to a single piece of land anymore, and certainly not in a country conjured by politicians.

There’s a world of opportunity out there. And every part of your life can ‘live’ in the best place for it.

For example, you and your family can live in a beautiful place like Bali, which may have the best lifestyle for you.

But your savings can ‘live’ in Hong Kong which has strong, stable banks. And your investments can ‘live’ in South America to capitalize on farmland deals.

All of this is already possible today. And soon, as more people realize the opportunities out there, it’s going to be the norm for everyone.

Source: http://us7.campaign-archive2.com/?u=6043f7810362a545dc3f006f0&id=edec253be7&e=e2ef27b1aa

Editors Note: It is becoming increasingly apparent that large scale 20-21st century democracy is failing. One potential solution which is already floating about is the birth of smaller democratic states or communities similar to nation cities like medieval Venice and Antwerp, modern Singapore, Hong Kong and others.

Emerging Events predicts we will see the emergence of smaller self regulated communities seeking independence and freedom from large state authoritarianism in the years ahead. This will probably occur on the back of economic breakdown and the political chaos resulting. Whether these experiments in human self realization can succeed will be fascinating but reflects the innate desire by humans to live free and self determined lives.

The End Long Game? 2009-2018

We have updated the main theme of the Emerging Events website. Click on the title to read how larger trends and cycles are moving to complete within the next few years and the implications this brings to to people and nations ……… Find it here: http://www.emergingevents.com/?p=2761 Continue reading

Limits to Growth–At our doorstep, but not recognized

By Gail Tverberg of OurFiniteWorld

How long can economic growth continue in a finite world? This is the question the 1972 book The Limits to Growth by Donella Meadows and others sought to answer. The computer models that the team of researchers produced strongly suggested that the world economy would collapse sometime in the first half of the 21st century.

I have been researching what the real situation is with respect to resource limits since 2005. The conclusion I am reaching is that the team of 1972 researchers were indeed correct. In fact, the promised collapse is practically right around the corner, beginning in the next year or two. In fact, many aspects of the collapse appear already to be taking place, such as the 2008-2009 Great Recession and the collapse of the economies of smaller countries such as Greece and Spain. How could collapse be so close, with virtually no warning to the population?

To explain the situation, I will first explain why we are reaching Limits to Growth in the near term.  I will then provide a list of nine reasons why the near-term crisis has been overlooked.

Why We are Reaching Limits to Growth in the Near Term

In simplest terms, our problem is that we as a people are no longer getting richer. Instead, we are getting poorer, as evidenced by the difficulty young people are now having getting good-paying jobs. As we get poorer, it becomes harder and harder to pay debt back with interest. It is the collision of the lack of economic growth in the real economy with the need for economic growth from the debt system that can be expected to lead to collapse.

The reason we are getting poorer is because hidden parts of our economy are now absorbing more and more resources, leaving fewer resources to produce the goods and services we are used to buying. These hidden parts of our economy are being affected by depletion. For example, it now takes more resources to extract oil. This is why oil prices have more than tripled since 2002. It also takes more resource for many other hidden processes, such as deeper wells or desalination to produce water, and more energy supplies to produce metals from low-grade ores.

The problem as we reach all of these limits is a shortage of physical investment capital, such as oil, copper, and rare earth minerals. While we can extract more of these, some, like oil, are used in many ways, to fix many depletion problems. We end up with too many demands on oil supply–there is not enough oil to both (1) offset the many depletion issues the world economy is hitting, plus (2) add new factories and extraction capability that is needed for the world economy to grow.

With too many demands on oil supply, “economic growth” is what tends to get shorted. Countries that obtain a large percentage of their energy supply from oil tend to be especially affected because high oil prices tend to make the products these countries produce unaffordable. Countries with a long-term decline in oil consumption, such as the US, European Union, and Japan, find themselves in recession or very slow growth.

Figure 1. Oil consumption based on BP's 2013 Statistical Review of World Energy.

Figure 1. Oil consumption based on BP’s 2013 Statistical Review of World Energy.

Unfortunately, the problem this appears eventually to lead to, is collapse. The problem is the connection with debt. Debt can be paid back with interest to a much greater extent in a growing economy than a contracting economy because we are effectively borrowing from the future–something that is a lot easier when tomorrow is assumed to be better than today, compared to when tomorrow is worse than today.

We could not operate our current economy without debt. Debt is what has allowed us to “pump up” economic growth. Consumers can buy cars, homes, and college educations that they have not saved up for. Businesses can set up factories and do mineral extraction, without having past profits to finance these operations. We can now operate with long supply chains, including many businesses that are dependent on debt financing. The ability to use debt allows vastly more investment than if potential investors could only the use of after-the-fact profits.

If we give up our debt-based economic system, we lose our ability to extract even the oil and other resources that appear to be easily available. We can have a simple, local economy, perhaps dependent on wood as it primary fuel source, without debt. But it seems unlikely that we can have a world economy that will provide food and shelter for 7.2 billion people.

The reason the situation is concerning is because the financial situation now seems to be near a crisis. Debt, other than government debt, has not been growing very rapidly since  2008. The government has tried to solve this problem by keeping interest rates very low using Quantitative Easing (QE). Now the government is cutting back in the amount of QE.  If interest rates should rise very much, we will likely see recession again and many layoffs. If this should happen, debt defaults are likely to be a problem and credit availability will dry up as it did in late 2008. Without credit, prices of all commodities will drop, as they did in late 2008. Without the temporary magic of QE, new investment, even in oil, will drop way off. Government will need to shrink back in size and may even collapse.

In fact, we are already having a problem with oil prices that are too low to encourage oil production. (See my post, What’s Ahead? Lower Oil Prices, Despite Higher Extraction Costs .) Other commodities are also trading at flat to lower price levels. The concern is that these lower prices will lead to deflation. With deflation, debt is strongly discouraged because it raises the “inflation adjusted” cost of borrowing. If a deflationary debt cycle is started, there could be a huge drop in debt over a few years. This would be a different way to reach collapse.

Why couldn’t others see the problem that is now at our door step?

1. The story is a complicated, interdisciplinary story. Even trying to summarize it in a few paragraphs is not easy. Most people, if they have a background in oil issues, do not also have a background in financial issues, and vice versa.

2. Economists have missed key points. Economists have missed the key role of debt in extracting fossil fuels and in keeping the economy operating in general. They have also missed the fact that in a finite world, this debt cannot keep rising indefinitely, or it will grow to greatly exceed the physical resources that might be used to pay back the debt.

Economists have missed the fact that resource depletion acts in a way that is equivalent to a huge downward drag on productivity. Minerals need to be separated from more and more waste products, and energy sources need to be extracted in ever-more-difficult locations. High energy prices, whether for oil or for electricity, are a sign of economic inefficiency. If energy prices are high, they act as a drag on the economy.

Economists have missed the key role oil plays–a role that is not easily substituted away. Our transportation, farming and construction industries are all heavily dependent on oil. Many products are made with oil, from medicines to fabrics to asphalt.

Economists have assumed that wages can grow without energy inputs, but recent experience shows the economies with shrinking oil use are ones with shrinking job opportunities. Economists have built models claiming that prices will rise to handle shortages, either through substitution or demand destruction, but they have not stopped to consider how destructive this demand destruction can be for an economy that depends on oil use to manufacture and transport goods.

Economists have missed the point that globalization speeds up depletion of resources and increases CO2 emissions, because it adds a huge number of new consumers to the world market.

Economists have also missed the fact that wages are hugely important for keeping economies operating. If wages are cut, either because of competition with low-wage workers in warm countries (who don’t need as high a wages to maintain a standard of living, because they do not need sturdy homes or fuel to heat the homes) or because of automation, economic growth is likely to slow or fall. Corporate profits are not a substitute for wages.

3. Peak Oil advocates have missed key points. Peak oil advocates are a diverse group, so I cannot really claim all of them have the same views.

One common view is that just because oil, or coal, or natural gas seems to be available with current technology, it will in fact be extracted. This is closely related to the view that “Hubbert’s Peak” gives a reasonable model for future oil extraction. In this model, it is assumed that about 50% of extraction occurs after the peak in oil consumption takes place. Even Hubbert did not claim this–his charts always showed another fuel, such as nuclear, rising in great quantity before fossil fuels dropped in supply.

In the absence of a perfect substitute, the drop-off can be expected to be very steep. This happens because population rises as fossil fuel use grows. As fossil fuel use declines, citizens suddenly become much poorer. Government services must be cut way back, and government may even collapse. There is likely to be huge job loss, making it difficult to afford goods. There may be fighting over what limited supplies are available.What Hubbert’s curve shows is something like an upper limit for production, if the economy continues to function as it currently does, despite the disruption that loss of energy supplies would likely bring.

A closely related issue is the belief that high oil prices will allow some oil to be produced indefinitely. Salvation can therefore be guaranteed by using less oil. First of all, the belief that oil prices can rise high enough is being tested right now. The fact that oil prices aren’t high enough is causing oil companies to cut back on new projects,  instead returning money to shareholders as dividends. If the economy starts shrinking because of lower oil extraction, a collapse in credit is likely to lead to even lower prices, and a major cutback in production.

4. Excessive faith in substitution. A common theme by everyone from economists to peak oilers to politicians is that substitution will save us.

There are several key points that advocates miss. One is that if a financial crash is immediately ahead, our ability to substitute disappears, practically overnight (or at least, within a few years).

Another key point is that today’s real shortage is of investment capitalin the form of oil and other natural resources needed to manufacture the new natural gas powered cars and the fueling stations they need. A similar shortage of investment capital plagues plans to change to electric cars. Wage-earners of modest means cannot afford high-priced plug in vehicles, especially if the change-over is so fast that the value of their current vehicle drops to $0.

Another key point is that the alternatives we looking at are limited in supply as well. We use far more oil than natural gas; trying to substitute natural gas for oil will lead to a shortfall in natural gas supplies quickly. Ramping up electric cars, solar, and wind will lead to a shortage of the rare earth minerals and other minerals needed in their production. While more of these minerals can be accessed by using lower quality ore, doing so leads to precisely the investment capital shortfall that is our problem to begin with.

Another key point is that electricity does not substitute for oil, because of the huge need for investment capital (which is what is in short supply) to facilitate the change. There is also a timing issue.

Another key point is that intermittent electricity does not substitute for electricity whose supply can be easily regulated. What intermittent electricity substitutes for is the fossil fuel used to make electricity whose supply is more easily regulated. This substitution (in theory) extends the life of our fossil fuel supplies. This theory is only true if we believe that  coal and natural gas extraction is only limited by the amount those materials in the ground, and the level of our technology. (This is the assumption underlying IEA and EIA  estimates of future fossil use.)

If the limit on coal and natural gas extraction is really a limit on investment capital (including oil), and this investment capital limit may manifest itself as a debt limit, then the situation is different. In such a case, high investment in intermittent renewables can expected to drive economies that build them toward collapse more quickly, because of their high front-end investment capital requirements and low short-term returns.

5. Excessive faith in Energy Return on Energy Investment (EROI) or Life Cycle Analysis (LCA) analyses. Low EROI returns and poor LCA returns are part of our problem, but they are not the whole problem.  They do not consider timing–something that is critical, if our problem is with inadequate investment capital availably, and the need for high returns quickly.

EROI analyses also make assumptions about substitutability–something that is generally not possible for oil, for reasons described above. While EROI and LCA studies can provide worthwhile insights, it is easy to assume that they have more predictive value than they really do. They are not designed to tell when Limits to Growth will hit, for example.

6. Governments funding leads to excessive research in the wrong directions and lack of research in the right direction. Governments are in denial that Limits to Growth, or even oil supply, might be a problem. Governments rely on economists who seem to be clueless regarding what is happening.

Researchers base their analyses on what prior researchers have done. They tend to “follow the research grant money,” working on whatever fad is likely to provide funding. None of this leads to research in areas where our real problems lie.

7. Individual citizens are easily misled by news stories claiming an abundance of oil. Citizens don’t realize that the reason oil is abundant is because oil prices are high, debt is widely available, and interest rates are low. Furthermore, part of the reason oil appears abundant is because low-wage citizens still cannot afford products made with oil, even at its current price level. Low employment and wages feed back in the form of  low oil demand, which looks like excessive oil supply. What the economy really needs is low-priced oil, something that is not available.

Citizens also don’t realize that recent push to export crude oil doesn’t mean there is a surplus of crude oil. It means that refinery space for the type of oil in question is more available overseas.

The stories consumers read about growing oil supplies are made even more believable by forecasts showing that oil and other energy supply will rise for many years in the future. These forecasts are made possible by assuming the limit on the amount of oil extracted is the amount of oil in the ground. In fact, the limit is likely to be a financial (debt) limit that comes much sooner. See my post, Why EIA, IEA, and Randers’ 2052 Energy Forecasts are Wrong .

8. Unwillingness to believe the original Limits to Growth models. Recent studies, such as those by Hall and Day  and by Turner , indicate that the world economy is, in fact, following a trajectory quite similar to that foretold by the base model of Limits to Growth. In my view, the main deficiencies of the 1972 Limits to Growth models are

(a) The researchers did not include the financial system to any extent. In particular, the models left out the role of debt. This omission tends to move the actual date of collapse sooner, and make it more severe.

(b) The original model did not look at individual resources, such as oil, separately. Thus, the models gave indications for average or total resource limits, even though oil limits, by themselves, could bring down the economy more quickly.

I have noticed comments in the literature indicating that the Limits to Growth study has been superseded by more recent analyses. For example, the article Entropy and Economics by Avery, when talking about the Limits to Growth study says, “ Today, the more accurate Hubbert Peak model is used instead to predict rate of use of a scarce resource as a function of time.” There is no reason to believe that the Hubbert Peak model is more accurate! The original study used actual resource flows to predict when we might expect a problem with investment capital. Hubbert Peak models overlook financial limits, such as lack of debt availability, so overstate likely future oil flows. Because of this, they are not appropriate for forecasts after the world peak is hit.

Another place I have seen similar wrong thinking is in the current World3 model, which has been used in recent Limits to Growth analyses, including possibly Jorgen Randers’ 2052 . This model assumes a Hubbert Peak model for oil, gas, and coal. The World3 model also assumes maximum substitution among fuel types, something that seems impossible if we are facing a debt crisis in the near term.

9. Nearly everyone would like a happy story to tell. Every organization from Association for the Study of Peak Oil groups to sustainability groups to political groups would like to have a solution to go with the problem they are aware of. Business who might possibly have a chance of selling a “green” product would like to say, “Buy our product and your problems will be solved.” News media seem to tell only the stories that their advertisers would like to hear. This combination of folks who are trying to put the best possible “spin” on the story leads to little interest in researching and telling the true story.

Conclusion

Wrong thinking and wishful thinking seems to abound, when it comes to overlooking near term limits to growth. Part of this may be intentional, but part of this lies with the inherent difficulty of understanding such a complex problem.

There is a tendency to believe that newer analyses must be better. That is not necessarily the case. When it comes to determining when Limits to Growth will be reached, analyses need to be focused on the details that seemed to cause collapse in the 1972 study–slow economic growth caused by the many conflicting needs for investment capital. The question is: when do we reach the point that oil supply is growing too slowly to produce the level of economic growth needed to keep our current debt system from crashing?

It seems to me that we are already near such a point of collapse. Most people have not realized how vulnerable our economic system is to crashing in a time of low oil supply growth.

Source: http://ourfiniteworld.com/2014/02/06/limits-to-growth-at-our-doorstep-but-not-recognized/