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!


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.


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/

Global Warming and its Economic Risks

Benjamin Hulac looks into the impact of global warming on the economic side.

Climate change is the most severe global economic risk of 2016, the World Economic Forum said yesterday.

The nonprofit economic analysis institution, set to convene next week in Davos, Switzerland, for its yearly meeting, has labeled climate change or related environmental phenomena—extreme weather, major natural catastrophes, mounting greenhouse gas levels, water scarcity, flooding, storms and cyclones—among the top five most likely and significant economic threats the world faced in each of its annual reports since 2011.

The 2016 report, the latest installment of a report the WEF has published since 2007, marks the first time an environmental risk tops the rankings.

“Climate change is exacerbating more risks than ever before in terms of water crises, food shortages, constrained economic growth, weaker societal cohesion and increased security risks,” Cecilia Reyes, the chief risk officer of Zurich Insurance Group Ltd., one of the organizations that worked on the report, said in a statement.

The WEF document does not paint a sanguine picture.

North America’s eastern seaboard, East Asia, Southeast Asia and the South Pacific are particularly exposed to extreme weather patterns and natural catastrophes, according to the report—a survey conducted in the fall of 750 experts, who answered questions about 29 types of global risk, like cyberattacks, government instability and weapons of mass destruction.

Global climate change threatens top producers of wheat, corn, rice and other agricultural commodities, the report notes. Recent years illustrated the “climate vulnerability of G-20 [Group of 20] countries such as India, Russia and the United States—the breadbasket of the world.”

Hot, dry and tense
Climate change is compounding and amplifying other social, economic and humanitarian stresses globally. It is linked to mass and often forced migration; violent conflict between nations and regions; water crises; and, as the world population rises and simultaneously gets hotter, food shortages, the report reads.

“Forced displacement is already at an unprecedented level,” the authors continue, referring to emigration.


In this hotter, water-scarce future, tensions will likely grow between nations.

“Unless current water management practices change significantly, many parts of the world will therefore face growing competition for water between agriculture, energy, industry and cities,” the authors write.


A growing business awareness
Following the worldwide financial meltdown of 2008, the people WEF surveyed listed the collapse of investment prices as the most likely and most grave hazards. Yet that trend shifted.

“Environmental worries have been at the forefront in recent years,” the authors wrote, “reflecting a sense that climate change-related risks have moved from hypothetical to certain because insufficient action has been undertaken to address them.”


Paris ‘a starting point’
Economists, regulators and financial experts have become increasingly vocal about climate risks.

Governor of the Bank of England Mark Carney, in a September speech at Lloyd’s of London headquarters, said the warming climate could “bring potentially profound implications for insurers, financial stability and the economy.”


“It’s a risk that needs to be managed,” Bernhardt said. “The challenge, historically, is that it’s been treated as an uncertainty.”

Source: http://www.scientificamerican.com/article/top-economic-risk-of-2016-is-global-warming/

Global Warming or is NOAA is Messing with Temperature Data Collection?

Climatologist Patrick J, Michaels writes in WSJ:

An East Coast blizzard howling, global temperatures peaking, the desert Southwest flooding, drought-stricken California drying up—surely there’s a common thread tying together this “extreme” weather. There is. But it has little to do with what recent headlines have been saying about the hottest year ever. It is called business as usual.

Surface temperatures are indeed increasing slightly: They’ve been going up, in fits and starts, for more than 150 years, or since a miserably cold and pestilential period known as the Little Ice Age. Before carbon dioxide from economic activity could have warmed us up, temperatures rose three-quarters of a degree Fahrenheit between 1910 and World War II. They then cooled down a bit, only to warm again from the mid-1970s to the late ’90s, about the same amount as earlier in the century.

Whether temperatures have warmed much since then depends on what you look at. Until last June, most scientists acknowledged that warming reached a peak in the late 1990s, and since then had plateaued in a “hiatus.” There are about 60 different explanations for this in the refereed literature.

NOAA’s alteration of its measurement standard and other changes produced a result that could have been predicted: a marginally significant warming trend in the data over the past several years, erasing the temperature plateau that vexed climate alarmists have found difficult to explain. Yet the increase remains far below what had been expected.

It is nonetheless true that 2015 shows the highest average surface temperature in the 160-year global history since reliable records started being available, with or without the “hiatus.” But that is also not very surprising. Early in 2015, a massive El Niño broke out. These quasiperiodic reversals of Pacific trade winds and deep-ocean currents are well-documented but poorly understood. They suppress the normally massive upwelling of cold water off South America that spreads across the ocean (and is the reason that Lima may be the most pleasant equatorial city on the planet). The Pacific reversal releases massive amounts of heat, and therefore surface temperature spikes. El Niño years in a warm plateau usually set a global-temperature record. What happened this year also happened with the last big one, in 1998.

Global average surface temperature in 2015 popped up by a bit more than a quarter of a degree Fahrenheit compared with the previous year. In 1998 the temperature rose by slightly less than a quarter-degree from 1997.

Without El Niño, temperatures in 2015 would have been typical of the post-1998 regime. And, even with El Niño, the effect those temperatures had on the global economy was de minimis.

Read the full article here.

Interview: Jean Botti, Chief Technology Officer, Airbus

Stuart Nathan interviews Jean Botti.

Barely any engineering sector depends as much on the development of new technology as aerospace; and although it’s often defence that’s seen as the part of the sector where most development takes place, recent years have seen civil aerospace also being the cradle of much new development. The tightening of regulations on the environmental profile of flying, along with new materials and processes, have all driven R&D in the sector. For Airbus, the world’s second-largest aircraft manufacturer, it’s taken the technologies of flight in some unexpected directions.

The small size of the E-Fan aircraft has led some to dismiss the project as a sideshow, but Botti insists that it represents a serious long-term goal for Airbus. The ultimate aim of the project is to develop an electric airliner, initially with around 100 seats, which the company is currently calling E-Thrust. “This is a learning curve for us. We have to start with the small aircraft with power in kilovolts, and work up to megavolts. We couldn’t possibly do it in one go.”

Part of the goal of the E-Thrust project – but only part – is environmental. When the aircraft’s engines run on battery power, the aircraft produces no emissions. “If you look at where the world trends are heading by the 2030s, with increased numbers of people in cities and the rise of megacities, there will inevitably be more and more congestion and pollution,” Botti said. “And if you look at where the most polluted part of the city is, in general it’s around the airport; I’m not only talking about CO2 and NOx here, but also about noise pollution. It has to be better to take off and land with very quiet electric engines.” He added that aircraft could arrive and depart later at night and in the early hours without disturbing the neighbours.

As this implies, these electric airliners are likely to be hybrids, with an on-board generator charging the batteries and feeding the motors. This also allows the option of charging the batteries via ‘windmilling’ the propellers when the aircraft is slowing down; precisely analogous to recovering energy during braking in a hybrid car. “This does mean that you emit greenhouse gases when the aircraft is in cruise,” Botti admitted, “but certainly no more than a standard aircraft does; with windmilling, probably less.”

In formal terms, E-Thrust and its family won’t even be Airbus products; the company has created a new subsidiary called Voltair to commercialise the technology; symbolic of the clean break it represents from its more-established turbojet-powered aircraft families. “We didn’t want to mix the message,” Botti said. Voltair operates out of new premises in Toulouse: “When I created the plant that will make E-Fan, I had the objective that young engineers will start up and become the experts that we need in the future to make larger electric aircraft; that’s knowledge that currently doesn’t exist,” he added. Technology development is looking at new batteries and motors using high-temperature superconductors; Botti even mentioned the possibility of nuclear fusion to power such aircraft. “We are not looking at next year or even next decade with this project, and we want to keep such possibilities in mind, even if they seem very far-fetched now,” he said.

Source: Airbus

Ethical Brands a hit with Younger Generation

In order to capture the imagination and attention of younger generation, brands now a days are increasingly looking to portray themselves as ethical. David Tyrrell analyses the latest research that points to this trend particularly among Beauty Brands.

Climate change, a term that certainly generates strong opinions, is looked at closely by younger generations as their partnership with the planet will extend longer than their parents and grandparents. Similarly, younger generations increasingly  seek out and support brands they perceive as ethical.

The term ethical can be defined as adhering to principles of what is “right” to do. Over half of US iGens and Millennials will purchase from ethical companies with 43% of iGens willing to spend more money on an ethical brand. Perhaps impacting the financials even more, 43% of the youngest generations actively promote ethical brands through social media in stark contrast to only 15% of Baby Boomers.

In an effort to appeal to younger, more ethically minded consumers, while showcasing initiatives to reduce their carbon footprint, skincare brands are spotlighting environmentally responsible approaches to create safe, high quality products. A leader in this area since its founding, Aveda tackles sustainability on many fronts that include using renewable energy (wind power), recyclable packaging, as well as using bioplastic alternatives derived from sugarcane when it can, in lieu of synthetics.

As we just passed the 1-degree C temperature increase for the planet, companies like L’Oréal and Unilever have joined in aggressively executing a multi-tier strategy to reduce their carbon footprints. This commitment across a variety of diverse interests continues to gain momentum as evidenced by the number of attendees at the 2015 Sustainable Innovation Forum. The forum brings together cross-sector representation including business, NGO and government to find ways to expand breadth of the “green economy.”

According to Mintel research, nearly two in five Millennials believe ethical and environmentally friendly are linked, compared to three in 10 Baby Boomers. Financial cost was often omitted from the environmental impact conversation in the past. Yet, that cannot be overlooked as nearly three in five US consumers purchase green to save money, suggesting that consumers view green as good, but exceedingly better when it is financially beneficial.

As pricing for green innovations becomes more palatable, the rate of adoption, and more notably an allegiance to green will evolve. Brands can take advantage by drawing attention to their usage of more popular, available, financially reasonable, clean energy alternatives that can sway consumer trial.

Source: Advocating the use of clean energy by Beauty Brands



Hydrogen Fuel Cell Now a Distinct Possibility

Futurism’s article on Hydrogen Fuel Cell provides insight into the future practicality of the cell.

A fuel cell is a device that generates electricity via a chemical reaction. This chemical reaction involves positively charged hydrogen ions (protons) and oxygen (or another oxidizing agent).

One great appeal of fuel cells is that they generate electricity with very little pollution, as much of the hydrogen and oxygen used in generating electricity ultimately combine to form a harmless byproduct—water. The technology, however, has been elusive.

Now, researchers from the University of Dundee Oxford are working with the Harwell Innovation Centre to solve the problem with fuel cells. In their work, they discovered how bacteria splits hydrogen apart to produce energy.  They believe that this new finding will be a significant step towards a more efficient hydrogen economy.

The bacteria are able to split the hydorgen using a nickel-iron (NiFe) hydrogenase. The enzyme splits hydrogen gas into protons and electrons and recombines them to form hydrogen. A similar process is used in fuel cells, but with platinum; however, nature has come up with a way to do it with nickel and iron, which are both less costly.

The researchers tested the natural process by subtly changing the amino acids in the part of the enzyme where the hydrogen reaction occurs. They removed a nitrogen atom at its heart, one that was essential to make the hydrogen reaction work. Through x-ray crystallography using the Diamond Light Source, the researchers compared the altered enzyme against the original.

Then they confirmed that reduction in activity had to be due to chemical, not physical, changes.

It was found that a Frustrated Lewis Pair applies to the enzyme.  A normal Lewis pair is composed of different chemicals that are keen to interact with each other and would so given the opportunity. In the NiFe hydrogenase, these are the atoms of nickel and iron together, and a particular nitrogen atom built into the enzyme. The “frustration” part is due to these entities being positioned close, but not close enough to interact fully. This produces an area of tension between them. A hydrogen molecule placed into this area of tension is split apart.

The next step for the researchers is to observe the actual reaction.

Source:Hydrogen Fuel Cell

An apocalyptic vision of Singapore

Roland Cheo writing for The Strait Times

Too hot for habitation, Singapore in 2065 houses its people in cooled caverns underground, who connect via virtual media, not face to face.

Imagine the year 2065, when you mention “Singapore,” you no longer refer to an island but a Corporation. Singapore Incorporated runs several suburbs in northern India and China, populated by a diaspora that had abandoned the island founded by Raffles.

With the rising sea level and temperatures bearing down at almost 40 deg C due to climate change, the island is now 202 sq km, whose reclaimed land has long been swallowed by the sea and is often buffeted by tsunami-like waves.

What was once a bustling city with towering skyscrapers now stands empty, as a testimony of a bygone era, while the majority of the mobile labour force have since abandoned the city and moved to satellite towns operated by Singapore Inc in the more temperate countries. Those who could not leave the island to better climes had retreated underground.

Only 30 per cent of the population of Singaporeans still live on the island, albeit underground. These are the ones without the resources to relocate to better suburbs of Singapore Inc in the more temperate countries.

Subsidised air-conditioned Housing Board flats dominate the landscape of quarried pits under central Singapore island, illuminated by industrial strength LED lights, leaving residents to view a perpetual night silhouette of the city.

Manufacturing and service industries in Singapore are kept to a bare minimum since the now-defunct Copenhagen Agreement, and then the new Melbourne Initiative, has cut global emissions by almost five times the levels that they were in 2010.

Not many residents of the island actually live topside, exposed to the natural elements. In fact, hardly anyone actually ventures above ground. The heat is unbearable and only a small pocket of residents, collectively known as Faith Spacers, are willing to live in areas around Seletar Reservoir, occupying what was once the Teachers’ Quarters in Seletar Airbase.

Besides the poor, of those who have chosen to remain on the island are the intelligentsia who reside in the research institutions, primarily at the National University of Singapore and Nanyang Technological University.

The other private institutions have moved away to other more landlocked locales. These institutions are no longer comprehensive universities but are instead part of a larger network of schools that have pooled resources across the world in order to conduct online courses. Since no one attends lectures any more, everything is experienced virtually in one’s own home.

Seventy per cent of the population live in satellite towns in India and China, where the climate is relatively comfortable. The Singapore Government wisely leased several large pockets of lands in relatively colder areas, away from the main cities in India and China in the 2030s.

These areas were relatively undeveloped at the time and the Chinese and Indian governments were more than happy to lease the areas to be developed by Singapore Inc.

By the time temperatures started to soar in the 2020s, many of these satellite towns had already developed the infrastructure that allowed Singaporeans and, later, foreign talent to live in a temperate and efficiently run suburb of Singapore Inc. Jurong Town Corporation developed the land while the Immigration Authority managed the inflows and outflows of migrants in order to maintain the growth rates of the cities.

The global repercussions of climate change have also been felt all over the world. The driver of the world economy is no longer the US, whose unbearable temperatures have seen many migrate over to Canada, leaving the balance of power to reside more and more in the hands of northern territories.

The northern part of China and Russia, as well as Nordic countries, now supply most of the world’s needed agricultural products while countries in the tropics, such as in South-east Asia as well as India and Africa, are the world’s suppliers of solar energy. These countries are tapped into a worldwide grid which sells its energy supply to a central depository, which in turn resells it to the rest of the world. Imagine that the United Nations is now headquartered in Iceland.

The knowledge economy has fizzled away like discarded old oyster sauce, fermented by its own infertile imagination clinging to the past: a focus on mobile devices or the push towards more computing power. In its wake came the virtual economy. In the early 2000s, Singapore had opened its doors to animation companies, especially companies working on 3D technologies with the goal of supplying the movie industry. However in the 2020s, with the rising temperatures also came the emergence of new strains of viruses in the vein of Ebola and Sars, which created widespread pandemics. Policymakers around the world closed their borders to travellers, concerned with the spread of these deadly diseases.

In fact, even within local populations, new laws were enacted to enable one to minimise contact with fellow human beings. Social laws were passed which made gatherings of more than 10 people in one room illegal. Soon the closed-door policy resulted in the movie industry collapsing. In today’s world one has to go through a complicated set of protocols in order to organise a gathering.

The authorities have the right to forcibly incarcerate anyone suspected of harbouring a deadly disease. Those suspected of being bioterrorists are cryogenically incarcerated before they are shipped to holding tanks on prison ships which are fully automatised and run remotely by human operators in Singapore Inc’s headquarters in Gansu, China. Singapore Inc runs some of the world’s largest ship prisons.

Technology companies then scrambled to meet a new demand: the demand for social interactions without needing face-to-face interaction. Temasek Holdings rushed into the forefront, relocating promising tech companies to the island of Singapore where they provided these companies state-of-the-art facilities in underground caverns, which were modelled after the New York skyline. Artificial lighting and green spaces using lichens and mosses were expertly interwoven into the very fabric of underground living. With full artistic licence given to these companies, Singapore then became the leading nation to export liveable realities.

This mass commercialisation of exported experiences resulted in Singapore coming to the forefront of the global demand for entertainment. Singapore levied a high corporate tax rate in particular on this industry, in exchange for maintaining the underground city and providing 24/7 services to the tech companies.

In spite of these social improvements, Faith Spacers choose to disregard the safety protocols. They have chosen to remain on the main island where they meet in groups beyond the stipulated 10.

They refuse all contact with wearable technology but instead actively seek outdoor activities in teams. They restore antiquated bicycles and use them to traverse the island, establishing new outposts called Faith Spaces, where they encourage face-to-face contact. They describe it as a religious experience: the personal connection with people, without the use of technology.

This counterculture is currently an annoyance to the safety of the majority of the populace; however, since they have chosen to bypass the general public, the authorities turned a blind eye, as they continue to remain a small minority.

• The writer is an associate professor at the Centre for Economic Research in Shandong University, China.

Source: http://www.straitstimes.com/opinion/an-apocalyptic-vision-of-singapore

More Solar Innovation

V3Solar’s spinning solar cells generate 20 times more electricity than flat photovoltaics

If there’s one constant among the vast majority of solar panel designs, it’s flatness; while solar panels can be equipped to tilt to follow the sun’s path through the course of the day, there are still significant efficiency limitations to this basic design. V3Solar’s rather elegant photovoltaic Spin Cell cones aim to address that, and their current prototype was recently third-party verified as capable of generating “over 20 times more electricity than a static flat panel with the same area of photovoltaic cells.”

The V3 Spin Cell was developed through collaboration with industrial design team Nectar Design. The company believes that the Spin Cell could be a game-changer in its market. On their website V3 explains that if one places a 20x solar concentration on a flat, static solar panel then “the temperature quickly reaches 260 degrees F, the solder melts within ten seconds, and the PV fails. With the same concentration on the Spin Cell, the temperature never exceeds 95 degrees F.”

The one meter-diameter cones feature a layer of hundreds of triangular photovoltaic cells positioned at an angle of 56 degrees, encased in a “static hermetically-sealed outer lens concentrator.” The photovoltaic cone spins with the assistance of a “small amount” of its own solar-generated power which feeds a Maglev system, intended to reduce the noise generated by the cones as well as any required maintenance.

While an “array” of V3′s Spin Cell’s can occupy a very small space, relative to conventional flat panels, V3 has also conceived of a “Power Pole,” to support even greater even solar power generation in a small space, the designers explain “This is a pole that holds 10 Spin Cells, or 10KWp, in a footprint of 10 SF. The spin cells are placed with mathematical precision to make sure no Spin Cell shades another. This not only creates significantly great power density, but also removes the concern of floods and mitigates the environmental impact.”

Additionally, V3 hopes that with the dramatically reduced physical footprint of the solar cones, they might be able to “dramatically reduce the [total cost of ownership of solar farms] making more projects economically viable.” See one of the Spin Cones in action here.

Images © V3Solar

Source: http://inhabitat.com/v3solars-photovoltaic-spin-cell-cones-capture-sunlight-all-day-long/

U.S. Continuous Average Temperature Index – Discontinued

US Weather Cooling

The National U.S. Historical Climatology Network (USHCN) monthly temperature updates have been discontinued. The official CONUS temperature record is now based upon nClimDiv. USHCN data for January 1895 to August 2014 will remain available for historical comparison. However, one must wonder if the data, which was demonstrating a cooling period rather than global warming, was conflicting with political agendas to raise taxes based upon false information.

Editor’s Note: Never let facts stand in the way of a government in trouble when it comes to raising tax revenue. Will be interesting to see if the new data series taking over reflects the pro-climate change global warming argument. If it goes true to form the new nClimDiv data set will be revised at some stage in the next year or two.

Source: http://armstrongeconomics.com/archives/33511

Small is beautiful. The Nano future is coming

Advances in nanotechnology will be a key enabler of technological advance in the next decade. The integration of information technology, biotechnology, materials sciences, and nanotechnology will generate a dramatic increase in innovation. Read this Alert to see how your personal and business life might be affected pretty soon.
What is changing?


  • Older technologies will continue lateral ‘sidewise development’ into new markets and applications .
  • Current high-visibility investments and technology breakthroughs will be needed to realize the full potential of nanotechnology.
  • Technologies like nanotechnology will be used to establish a maintenance free environment (i.e. self -cleansing glass, self-repairing concrete).
  • Nanotechnology will produce new goods with new properties at a smaller scale that may use far less resources.


  • Future uses of genetic data, software, and nanotechnology will help detect and treat disease at the genetic or molecular level.
  • Modern healthcare technologies and prevention strategies will have the potential to extend the life expectancy of people.
  • Molecular ‘robots’ could be designed to enter the body and eat plaque.
  • Nanotechnology will enable lives to be saved by digestible cameras and machines made from particles 50,000 times as small as a human hair.
  • Smart nano-materials will facilitate the development of textiles that detect biotoxins.


  • The global market for nanotechnologies will reach $1 trillion or more within 20 years.
  • Progress in nanotechnology will depend heavily on R&D investments.
  • Robotics, synthetic biology, nanotechnology, and molecular manufacturing really will lead to an explosion of wealth and resource availability.
  • Printed electronics and electrics will be a $335 billion business in twenty years i.e. 2029
  • Bioscience, information technology, and nanotechnology will be applied to meet agricultural and food challenges.
  • There will be 400,000 jobs in the nanotech sector across the European Union this year.
  • Nanotechnology, 3D printing, smart materials and a new generation of composites will be a $1.3trn (£805.8bn) global manufacturing battleground this year.
  • In the coming future nanotechnology will certainly have a colossal effect on the ceramics, metals, polymers, and biomaterials industries.


  • As personalized medicine becomes more affordable expect to see the coming of age for genomics, nanotechnology, robotics, and other innovations.
  • The use of nanotechnology could herald an ‘exciting’ breakthrough for patients with heart disease.
  • Nanotechnology could completely transform conventional economic activity from healthcare and renewable energy technology to food production.
  • Applications that are likely to be widely diffused in 2025 will combine different technologies such as biotechnology, nanotechnology, materials technology and information technology.
  • New applications and reinventions will trigger market take-off and shape further development of collaborative technologies for governance and policy modelling.
  • Nanotechnology is expected to have a major impact on sustainability in the near future.


  • Nano- technology will enable different types of electronics.
  • Nanotechnology will allow chip manufacturers to continue upholding Moore’s Law.
  • Nanoscale piezoelectric materials could provide the lowest possible power consumption for on/off switches in MEMS and other types of electronic computing systems.
  • Relying on nano-sized robotics will eventually become commonplace.


  • Advances in nanotechnology will require long time horizons and continued investments in materials, platforms, and applications across manufacturingindustries.
  • Expect the greater use of new materials with an emphasis on not just boosting performance but also improving efficiency.
  • Materials and nanotechnology will enable the development of new devices with unforeseen capabilities.
  • Nanotechnology will replace most current wearable technology.
  • Discoveries in nanotechnology will lead to unprecedented understanding and control over the fundamental building blocks of all physical things.
  • Nanotechnology could be used to help reduce battery weight and lighten other products.
  • The U.S. Air Force believes that nanotechnology will have a direct application for both flight and space travel.
  • Nanotechnologies will pave the way for developing hybrid energy solutions.
  • Nanotechnology could provide solutions for sensing.
  • Nanotechnology will also spawn new technologies for manipulating DNA.


  • Biotechnology and nanotechnology will provide greater potential for destruction.

Learn more
To find the sources and more resources on Shaping Tomorrow about ‘The Future of Your Workplace’ some of which were used in this Trend Alert, Small is beautiful – Nano futures surround you, or ask us for a customised, in-depth GIST report on this or any other topic of interest to you.  Also, click here to find out how Shaping Tomorrow can help your organization rapidly assess and respond to these and other key issues affecting your business.

Source: http://www.shapingtomorrow.com/summary/insights/423760

Energy and the Economy – Twelve Basic Principles

By Gail Tverberg

There is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. My view of how energy and the economy fit together is very different. It is based on the principle of reaching limits in a finite world. Let me explain the issues as I see them.

Twelve Basic Principles of Energy and the Economy

1. Economic models are no longer valid, as we start getting close to limits.

We live in a finite world. Because of this, the extraction of energy resources and of resources in general operates in a way that is not at all intuitive as we approach limits. Economists have put together models of how the economy can be expected to act based on how the economy acts when it is distant from limits. Unfortunately, these economic models are worse than useless as limits approach because modeled relationships no longer hold. For example:

(a) The assumption that oil prices will rise as the cost of extraction rises is not necessarily true. Instead, a finite world creates feedback loops that tend to keep oil prices too low because of its tight inter-connections with wages. We see this happening right now. The Telegraph reported recently, “Oil and gas company debt soars to danger levels to cover shortfall in cash.”

(b) The assumption that greater investment will lead to greater output becomes less and less true, as the easy to extract resources (including oil) become more depleted.

(c) The assumption that higher prices will lead to higher wages no longer holds, as the easy to extract resources (including oil) become more depleted.

(d) The assumption that substitution will be possible when there are shortages becomes less and less appropriate because of interconnections with the rest of the system. Particular problems include the huge investment required for such substitution, impacts on the financial system, and shortages developing simultaneously in many areas (oil, metals such as copper, rare earth metals, and fresh water, for example).

More information is available from my post, Why Standard Economic Models Don’t Work–Our Economy is a Network.

2. Energy and other physical resources are integral to the economy.

In order to make any type of goods suitable for human use, it takes resources of various sorts (often soil, water, wood, stones, metals, and/or petrochemicals), plus one or more forms of energy (human energy, animal energy, wind power, energy from flowing water, solar energy, burned wood or fossil fuels, and/or electricity).

Figure 1. Energy of various types is used to transform raw materials (that is resources) into finished products.
Figure 1. Energy of various types is used to transform raw materials (that is resources) into finished products.

3. As we approach limits, diminishing returns leads to growing inefficiency in production, rather than growing efficiency.

As we use resources of any sort, we use the easiest (and cheapest) to extract first. This leads to a situation of diminishing returns. In other words, as more resources are extracted, extraction becomes increasingly expensive in terms of resources required, including human and other energy requirements. These diminishing returns do not diminish in a continuous slow way. Instead, there tends to be a steep rise in costs after a long period of slowly increasing costs, as limits are approached.

Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.
Figure 2. The way we would expect the cost of the extraction of energy supplies to rise, as finite supplies deplete.

One example of such steeply rising costs is the sharply rising cost of oil extraction since 2000 (about 12% per year for “upstream costs”). Another is the steep rise in costs that occurs when a community finds it must use desalination to obtain fresh water because deeper wells no longer work. Another example involves metals extraction. As the quality of the metal ore drops, the amount of waste material rises slowly at first, and then rapidly escalates as metal concentrations approaches 0%, as in Figure 2.

The sharp shift in the cost of extraction wreaks havoc with economic models based on a long period of very slowly rising costs. In a period of slowly rising costs, technological advances can easily offset the underlying rise in extraction costs, leading to falling total costs. Once limits are approached, technological advances can no longer completely offset underlying cost increases. The inflation-adjusted cost of extraction starts rising. The economy, in effect, starts becoming less and less efficient. This is in sharp contrast to lower costs and thus apparently greater efficiency experienced in earlier periods.

4. Energy consumption is integral to “holding our own” against other species.

All species reproduce in greater numbers than need to replace their parents. Natural selection determines which ones survive. Humans are part of this competition as well.

In the past 100,000 years, humans have been able to “win” this competition by harnessing external energy of various types–first burned biomass to cook food and keep warm, later trained dogs to help in hunting. The amount of energy harnessed by humans has grown over the years. The types of energy harnessed include human slaves, energy from animals of various sorts, solar energy, wind energy, water energy, burned wood and fossil fuels, and electricity from various sources.

Human population has soared, especially since the time fossil fuels began to be used, about 1800.

Figure 3. World population based on data from "Atlas of World History," McEvedy and Jones, Penguin Reference Books, 1978  and Wikipedia-World Population.
Figure 3. World population based on data from “Atlas of World History,” McEvedy and Jones, Penguin Reference Books, 1978 and Wikipedia-World Population.

Even now, human population continues to grow (Figure 4), although the percentage rate of growth has slowed.

Figure 4. World population split between US, EU-27, and Japan, and the Rest of the World.

Because the world is finite, the greater use of resources by humans leads to lesser availability of resources by other species. There is evidence that the Sixth Mass Extinction of species started back in the days of hunter-gatherers, as their ability to use of fire to burn biomass and ability to train dogs to assist them in the hunt for food gave them an advantage over other species.

Also, because of the tight coupling of human population with growing energy consumption historically, even back to hunter-gatherer days, it is doubtful that decoupling of energy consumption and population growth can fully take place. Energy consumption is needed for such diverse tasks as growing food, producing fresh water, controlling microbes, and transporting goods.

5. We depend on a fragile self-organized economy that cannot be easily replaced.

Individual humans acting on their own have very limited ability to extract and control resources, including energy resources. The only way such control can happen is through a self-organized economy that allows people, businesses, and governments to work together on common endeavors. Development of a self-organized economy started very early, as bands of hunter-gatherers learned to work together, perhaps over shared meals of cooked food. More complex economies grew up as additional functions were added. These economies have gradually merged together to form the huge international economy we have today, including international trade and international finance.

This networked economy has a tendency to grow, in part because human population tends to grow (Item 4 above), and in part because greater complexity is required to solve problems, as an economy grows. This networked economy gradually adds more businesses and consumers, each one making choices based on prices and regulations in place at the particular time.

Figure 5. Dome constructed using Leonardo Sticks
Figure 5. Dome constructed using Leonardo Sticks

This networked economy is fragile. It can grow, but it cannot easily shrink, because the economy is constantly optimized for the circumstances at the time. As new products are developed (such as cars), support for prior approaches (such as horses, buggies and buggy whips) disappears. Systems designed for the current level of usage, such as oil pipelines or Internet infrastructure, cannot easily be changed to accommodate a much lower level of usage. This is the reason why the economy is illustrated as interconnected but hollow inside.

Another reason that the economy cannot shrink is because of the large amount of debt in place. If the economy shrinks, the number of debt defaults will soar, and many banks and insurance companies will find themselves in financial difficulty. Lack of banking and insurance services will adversely affect both local and international trade.

6. Limits of a finite world exert many pressures simultaneously on an economy.

There a number of ways an economy can reach a situation of inadequate resources for its population. While all of these may not happen at once, the combination makes the result worse than it otherwise would be.

a. Diminishing returns (that is, rising production costs as depletion sets in) for resources such as fresh water, metals, and fossil fuels.

b. Declining soil quality due to erosion, loss of mineral content, or increased soil salinity due to poor irrigation practices.

c. Rising population relative to the amount of arable land, fresh water, forest resources, mineral resources, and other resources available.

d. A need to use an increasing share of resources to combat pollution, related to resource extraction and use.

e. A need to use an increasing share of resources to maintain built infrastructure, such as roads, pipelines, electric grids, and schools.

f. A need to use an increasing share of resources to support government activities to support an increasingly complex society.

g. Declining availability of food that is traditionally hunted (such as fish, monkeys, and elephants), because an increase in human population leads to over-hunting and loss of habitat for other species.

7. Our current problems are worryingly similar to the problems experienced by earlier civilizations before they collapsed.

In the past, there have been civilizations that were confined to a limited area that grew for a while, and then collapsed once resource availability declined or population outgrew resources. Such issues led to a situation of diminishing returns, similar to the problems we are experiencing today. We know from studies of these prior civilizations how diminishing returns manifested themselves. These include:

(a) Reduced job availability and lower wages, especially for new workers joining the workforce.

(b) Spiking food costs.

(c) Growing demands on governments for services, because of (a) and (b).

(d) Declining ability of governments to collect sufficient taxes from workers who are producing less and less (because of diminishing returns) and because of this, receiving lower wages.

(e) Increased reliance on debt.

(f) Increased likelihood of resource wars, as a group with inadequate resources tries to take resources from other groups.

(g) Eventual population decline. This occurred for two reasons: As wages dropped and needed taxes rose, workers found it increasingly difficult to obtain an adequate diet. As a result, they become more susceptible to epidemics and diseases. Greater involvement in resource wars also led to higher death rates.

When collapse came, it did not come all at once. Rather a long period of growth was succeeded by a period of stagnation, before a crisis period of several years took place.

Figure 6. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.
Figure 6. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles.

We began an economic growth cycle back when we began using fossil fuels to a significant extent, starting about 1800. We began a stagflation period, at least in the industrialized economies, when oil prices began to spike in the 1970s. Less industrialized countries have been able to continue growth their growth pattern longer. Our situation is likely to differ from that of early civilizations, because early civilizations were not dependent on fossil fuels. Pre-collapse skills tended to be useful post-collapse, because there was no real change in energy sources. Loss of fossil fuels would considerably change the dynamic of the outcome, because most jobs would become obsolete.

Most models put together by economists assume that the conditions of the growth period, or the growth plus stagflation period, will continue forever. Such models miss turning points.

8. Modeling underlying the book Limits to Growth shows why depletion can be expected to lead to declining economic growth. It also shows why extracting all of the resources that seem to be available is likely to be impossible.

We also know from the analysis underlying the book The Limits to Growth (by Donella Meadows and others, published in 1972) that growing demand for resources because of Items listed as 6a to 6g above will take an increasingly large share of resources produced. This dynamic makes it very difficult to produce enough additional resources so that economic growth can continue. The authors report that the behavior mode of the modeled system is overshoot and collapse.

The 1972 analysis does not model the financial system, including debt and the repayment of debt with interest. The closest it comes to economic modeling is modeling industrial capital, which it describes as factories, machines, and other physical “stuff” needed to extract resources and produce goods. It finds that inability to produce enough industrial capital is likely to be a bottleneck far before resources in the ground are exhausted.

As an example in today’s world, there seems to be a huge amount of very heavy oil that can be steamed out of the ground in many places including Canada and Venezuela. (The existence of such heavy oil is one reason the ratio of oil reserves to oil production is high.) To actually get this oil out of the ground quickly would require a huge physical investment in a very short time frame. As a practical matter, we cannot ramp up all of the physical infrastructure needed (pipelines, steaming equipment, refining equipment) without badly cutting into the resources needed to “grow” the rest of the economy. A similar problem is likely to exist if we try to ramp up world oil and gas supply using fracking.

9. Our real concern should be collapse caused by reaching limits in many ways, not the slow decline reflected in a Hubbert Curve.

One reason for being concerned about collapse is the similarity of the problems our current economy is experiencing to those of prior economies that collapsed, as discussed in Item 7. Another reason for this concern is based on the observation from physics that an economy is a dissipative structure, just as a hurricanes is, and just as a human being is. Such dissipative structures have a finite lifetime.

Concern about future collapse is very different from concern that one or another resource will decline in a symmetric Hubbert curve. The view that resources such as oil will gradually decrease in availability once 50% of the resources have been extracted reflects a best-case scenario, where a perfect replacement (both cheap and abundant) replaces the item that is depleting, so that the economy is not affected. Hubbert illustrated the kind of situation he was envisioning with the following graphic:

Figure 7. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.
Figure 7. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

10. There is a tight link between both oil consumption and total energy consumption and world economic growth.

This tight link is evident from historical data:

Figure 8. A comparison of three year average growth in world real GDP (based on USDA values in $2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014.
Figure 8. A comparison of three year average growth in world real GDP (based on USDA values in $2005$), oil supply and energy supply. Oil and energy supply are from BP Statistical Review of World Energy, 2014.

The link between energy and the economy comes both from the supply side and the demand side.

With respect to supply, it takes energy of many types to make goods and services of all types. This is discussed in Item 2 above.

With respect to demand,

(a) People who earn good wages (indirectly through the making of goods and services with energy products) can afford to buy products using energy.

(b) Because consumers pay taxes and buy goods and services, growth in demand from adequate wages flows through to governments and businesses as well.

(c) Higher wages enable higher debt, and higher debt also acts to increase demand.

(d) Increased demand increases the price of the resources needed to make the product with higher demand, making more of such resources economic to extract.

11. We need a growing supply of cheap energy to maintain economic growth.

This can be seen several ways.

(a) Today, all countries compete in a world economy. If a country’s economy uses an expensive source of energy (say high-priced oil or renewables) it must compete with other countries that use cheaper fuel sources (such as coal). The high price of energy puts the country with high-cost energy at a severe competitive disadvantage, pushing the economy toward economic contraction.

(b) Part of the world’s energy consumption comes from “free” energy from the sun. This solar energy is not evenly distributed: the warm areas of the world get considerably more than the cold areas of the world. The cold areas of the world are forced to compensate for this lack of free solar energy by building more substantial buildings and heating them more. They are also more inclined to use “closed in” transportation vehicles that are more costly than say, walking or using a bicycle.

Back in pre-fossil fuel days, the warm areas of the world predominated in economic development. The cold areas of the world “surged ahead” when their own forests ran short of the wood needed to provide the heat-energy they needed, and they learned to use coal instead. The knowledge they gained about using coal for home-heating quickly transferred to the ability to use coal to provide heat for industrial purposes. Since the warm areas of the world were not yet industrialized, the coal-using countries of the North were able to surge ahead economically. The advantage of the cold industrialized countries grew as they learned to use oil and natural gas. But once oil and natural gas became expensive, and industrialization spread around the world, the warm countries regained their advantage.

(c) Wages, (non-human) energy costs, and financing costs are all major contributors to the cost of producing goods and services. When energy costs rise, the rise in energy costs puts pressure both on wages and on interest rates (since interest rates determine financing costs), because businesses need to keep the total cost of goods and services close to “flat,” if consumers are to afford them. This occurs because wages do not rise as energy prices rise. In fact, pressure to keep the total cost of goods low creates pressure to reduce wages when oil prices are high (perhaps by sending manufacturing to a lower-cost country), just as it adds pressure to keep interest rates low.

(d) If we look at historical US data, wages have tended to rise strongly (in inflation-adjusted terms) when oil prices were less than $40 to $50 barrel, but have tended to stagnate above that oil price range.

Figure 9. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.
Figure 9. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

12. Oil prices that are too low for producers should be a serious concern. Such low prices occur because oil becomes unaffordable. In the language of economists, oil demand drops too low.

A common belief is that our concern should be oil prices that are too high, and thus strangle the economy. A much bigger concern should be that oil prices will fall too low, discouraging investment. Such low oil prices also encourage civil unrest in oil exporting nations, because the governments of these nations depend on tax revenue that is available when oil prices are high to balance their budgets.

It can easily be seen that high oil prices strangle the economies of oil importers. The salaries of consumers go “less far” in buying basics such as food (which is raised and transported using oil) and transportation to work. Higher costs for basics causes consumers cut back on discretionary expenditures, such as buying new more expensive homes, buying new cars, and going out to restaurants. These cutbacks by consumers lead to job layoffs in discretionary sectors and to falling home prices. Debt defaults are likely to rise as well, because laid-off workers have difficulty paying their loans. Our experience in the 2007-2009 period shows that these impacts quickly lead to severe recession and a drop in oil prices.

The issue we are now seeing is the reverse–too low oil prices for oil producers, including oil exporters. These low oil prices are contributing to the unrest we see in the Middle East. Low oil prices also contribute to Russia’s belligerence, since it needs high oil revenues to maintain its budget.


We seem now to be at risk in many ways of entering into the collapse scenario experienced by many civilizations before us.

One of areas of risk is that interest rates will rise, as the Quantitative Easing and Zero Interest Rate Policies held in place since 2008 erode. These ultra-low interest rates are needed to keep products affordable, since the high cost of oil (relative to consumer salaries) has not really gone away.

Another area of risk is an increase in debt defaults. One example occurs when student loan borrowers find it impossible to repay these loans on their meager wages. Another example is China with the financing of its big recent expansion by debt. A third example is the possibility that businesses extracting resources will find it impossible to repay loans with today’s (relatively) low commodity prices.

Another area of risk is natural disasters. It takes surpluses to deal with these disasters. As we reach limits, it becomes harder to mitigate the effects of a major hurricane or earthquake.

Clearly loss of oil production because of conflict in the Middle East or in other oil producing countries is a concern.

This list is by no means exhaustive. Many economies are “near the edge” now. Recent news is that Germany has slipped into recession as well as Japan. One economy failing is likely to pull others with it.
Related Notes
The unnecessary burden imposed by the UK’s “green” energy policy | Adam Smith InstituteThe unnecessary burden imposed by the UK’s “green” energy policy Written by George Layton| Wednesday 7 August 2013 Green was traditionally the colour of money, but with UK and EU energy policy, it is …
Ten reasons to be cheerful, part 2: Water | Adam Smith InstituteHomeBlogTen reasons to be cheerful, part 2: Water Ten reasons to be cheerful, part 2: Water Written by Dr Madsen Pirie| Tuesday 23 October 2012 Some people tell us that water scarcity might well be th…

Source: http://ourfiniteworld.com/2014/08/14/energy-and-the-economy-twelve-basic-principles/

Debt: Eight Reasons This Time is Different

Gail Tverberg blogs on Our Finite World.

In today’s world, we have a huge amount of debt outstanding. Academic researchers Carmen Reinhart and Kenneth Rogoff have become famous for their book This Time is Different: Eight Centuries of Financial Folly and their earlier paper This Time is Different: A Panoramic View of Eight Centuries of Financial Crises. Their point, of course, is that the same thing happens over and over again. We can learn from past crises to solve our current problems.

Part of their story is of course correct. Governments have gotten themselves into problems with debt, time after time. This is happening again now. In fact, the same two authors recently prepared a working paper for the International Monetary Fund called Financial and Sovereign Debt Crises: Some Lessons Learned and Some Lessons Forgotten, talking about ideas such as governments inflating their way out of debt problems and pushing problems off to insurance companies and pension funds, through regulations requiring investment in certain securities.

Many seem to believe that if we worked our way out of debt problems in the past, we can do the same thing again. The same assets may have new owners, but everything will work together in the long run. Businesses will continue operating, and people will continue to have jobs. We may have to adjust monetary policy, or perhaps regulation of financial institutions, but that is about all.

I think this is where the story goes wrong. The situation we have now is very different, and far worse, than what happened in the past. We live in a much more tightly networked economy. This time, our problems are tied to the need for cheap, high quality energy products. The comfort we get from everything eventually working out in the past is false comfort.

If we look closely at the past, we see that in some cases the outcomes are not benign. There are situations where much of the population in an area died off. This die-off did not occur directly because of debt defaults. Instead, the same issues that gave rise to debt defaults, primarily diminishing returns with respect to food and other types of production, also led to die off. We are not necessarily exempt from these same kinds of problems in the future.

Why the Current Interest in Debt Levels and Interest Rates

The reason I bring up these issues is because the problem of too much world debt is now coming to the forefront. The Bank for International Settlements, which is the central bank for central banks, issued a report a week ago in which they said world debt levels are too high, and that continuing the current low interest rate policy has too many bad effects. Something needs to be done to normalize monetary policy.

Janet Yellen, Federal Reserve Chair, and Christine Lagarde, managing director or the International Monetary Fund, have also been making statements about the issue of how to fix our current economic problems (News Report; Video). There is the additional rather bizarre point that back in January, Lagarde used numerology to suggest that a major change in policy might be announced in 2014 (on July 20?), with the hope that the past “seven miserable years” can be followed by “seven strong years.” The IMF has talked in the past about using its special drawing rights (SDRs) as a sort of international currency. In this role, the SDRs could act as the world’s reserve currency, be used for issuing bonds, and be used for setting the prices of commodities such as gold and oil. Perhaps a variation on SDRs is what Lagarde has in mind.

So with this background, let’s get back to the main point of the post. How is this debt crisis, and the likely outcome, different from previous crises?

1. We live in a globalized economy. Any slip-up of a major economy would very much affect all of the other major economies.

Banks hold bonds of governments other than their own. If a major government fails to make good on its promises, it can affect other governments as well. Smaller countries, like Greece or Cyprus, can be bailed out or their problems worked around. But if the United States, or even Japan, should run into major difficulties, it would affect the world as a whole. See my post, Twelve Reasons Why Globalization is a Huge Problem.

2. Our problem now is not simply governmental debt; it is debt of many different types, affecting individuals and businesses of all kinds, as well as governments.

In the studies of historical debt by Reinhart and Rogoff, the focus is on governmental debt. Now there is much more debt, some through banks, some through bonds, and some through less traditional sources. There are also derivatives that are in some ways like debt. In particular, if there are sharp moves in interest rates, it is possible that some issuers of derivatives will find themselves in financial difficulty.

There are also promises that are in many ways like debt, but that technically aren’t guaranteed, because legislatures can change the promised benefits whenever they choose. Examples of these are our current Social Security program and Medicare benefits. Citizens depend on these programs, even if there is no promise that they will continue to exist in their current form. With all of these kinds of debt and quasi-debt, we have a much more complex situation than in the past.

3. Our economy is a self-organized system that has properties of its own, quite apart from the properties of the individual consumers, businesses, governments, and resources that make up the system. Circumstances now are such that the world economy could fail, even though this could not happen in the past.  

I recently wrote about the nature of a networked economy, in my post Why Standard Economic Models Don’t Work–Our Economy is a Network. In that post, I represented our networked economy as being somewhat like this dome that can be built with wooden sticks.

Figure 1. Dome constructed using Leonardo Sticks

Figure 1. Dome constructed using Leonardo Sticks

Years ago, when a civilization collapsed, the network of connections was not as dense as it is today. Most food was not dependent on long supply chains, and quite a bit of manufacturing was done locally. If one economy collapsed, even a fairly large one like the Weimar Republic of Germany, the rest of the world was not terribly dependent on it. Figuratively, the “hole” in the dome could mend, and over time, the economy could strengthen and go on as before. We cannot count on this situation today, however.

4. Fossil fuels (coal, oil and natural gas) available today are what enable tighter connections than in the past, and also add vulnerabilities.

Early economies relied mainly on the sun’s energy to grow food, gravity to help with irrigation, human energy and animal energy for transport and food growing, wind energy to power ships and wooden windmills, and water energy to operate water wheels. Wood was used for many purposes, including heating homes, cooking, and making charcoal to provide the heat needed to smelt metals and make glass.

In the past two hundred years we have added fossil fuels to our list of fuels. This has allowed us to make metals in quantity, as well as concrete and glass in quantity, enabling the development of much technology. The use of coal enabled the building of hydroelectric dams as well as electrical transmission lines, thus enabling widespread use of electricity. Fossil fuels enabled other modern fuels as well, including nuclear energy, and the manufacture of what we today call “renewable energy,” including today’s wind turbines and solar PV.

Of the fossil fuels, oil has been especially important. Oil is particularly good as a transport fuel, because it is easily transported and very energy dense. With the use of oil, transport by smaller vehicles such as cars, trucks and airplanes became possible, and transport by ship and by rail was improved. Such changes allowed international businesses to grow and international trade to flourish. Economies were able to grow much more rapidly than in the pre-fossil fuel era. Governments became richer and began offering education to all, paved roads, and benefits such as unemployment insurance, health care programs, and pensions for the elderly.

Thus, fossil fuels enable a very different lifestyle, and very different governments and government programs than existed prior to fossil fuels. If something were to happen to all fossil fuels, or even just oil, most businesses would have to cease operation. Governments could not collect enough taxes to continue functioning. Very few farmers would be able to produce food and transport it to market, because oil is used to transport seeds to farmers, to operate machinery, to operate irrigation equipment, to transport soil amendments, and to create herbicides and pesticides.

This situation now is very different from the past, when most food was produced using human and animal labor, and transport was often by a cart pulled by an animal. Before fossil fuels, even if governments collapsed and most people died off, the remaining people could continue growing food, gathering water, and going about their own lives. If we were to lose oil, or oil plus electricity (because oil is required to maintain electric transmission and because businesses tend to close when they are missing either oil or electricity), we would have a much harder time. Most of our jobs would disappear. Banks wouldn’t be able to operate. Our water and sewer systems would stop working. We would find it necessary to “start over,” in a very different way.

5. Because of the big role of debt today, economic growth is essential to keeping the current economic system operating. 

It is much easier to pay back debt with interest when an economy is growing than when it is shrinking, because when an economy is shrinking, people are losing their jobs. Even if only, say, 10% lose their jobs, this loss of jobs creates many loan defaults. Banks are likely to find themselves in a precarious position and are likely to cut back on lending to others, making the situation worse.

If the economy starts shrinking, businesses will also have difficulty. They have fixed costs, including rent, management salaries, and their own debt repayments. These costs tend to stay the same, even if total revenue shrinks because of an economic slowdown. Because of these problems, businesses are also likely to find it increasingly difficult to pay back their own debt in a recession. They are likely to find it necessary to lay off workers, making the recession worse.

If economic growth is very low, this lack of growth can to some extent be covered up with very low interest rates. But such very low interest rates tend to be a problem as well, because they encourage asset bubbles of many sorts, such as the current run-up in stock market prices. It is not always clear which bubbles are being run up by low interest rates, either. For example, it is quite possible that the recent run-up in US oil extraction (see Figure 4, below) is being enabled by ultra-low interest rates debt (since this is a cash-flow negative business) and by investors who a desperate for an investment that might yield a slightly higher yield than current low bond yields.

Actually, the current need for growth to prevent defaults is not all that different from the situation in the past 800 years. In Reinhardt and Rogoff’s academic paper mentioned above, the authors remark, “It is notable that the non-defaulters, by and large, are all hugely successful growth stories.” Reinhardt and Rogoff didn’t seem to understand why this occurred, however.

6. The underlying reason regarding why we are headed toward debt problems is different from in the past. We now are dependent both on oil products and electricity, two very concentrated carriers of energy, instead of the more diffuse energy types used in the past. Our problem is that these energy carriers are becoming high-cost to produce. It is these high costs (a reflection of diminishing returns) that lead to economic contraction. 

This time, in order to continue economic growth, we need a growing supply of very high-quality energy products, namely oil products and non-intermittent electricity, to support the economy that we have built. These products need to be low-priced, if customers are to afford them. Thus, it should not be surprising that economic growth in the past seems to have been driven by a combination of (1) falling prices of electricity as we learned to more efficiently produce it, and (2) continued low prices for oil.

Figure 2.  Electricity prices and electrical demand, USA 1900 - 1998 from Ayres Warr paper.

Figure 2. Electricity prices and electrical demand, USA 1900 – 1998 from Accounting for Growth, the Role of Physical Work by Robert Ayres and Benjamin Warr, Structural Change and Economic Dynamics, February, 2004).

According to Ayres and Warr (Figure 2), power stations in 1900 converted only 4% of the potential energy in coal to electricity, but by 2000, the conversion efficiency was raised to 35%. This improvement in efficiency allowed the continuing decrease in electricity prices. With lower prices, more individuals and businesses were able to afford electricity, and more technology using electricity became feasible. Cheap electricity allowed goods to be produced at prices that workers could afford, and the system tended to grow.

For oil, the price of oil remained relatively flat in inflation-adjusted terms for a very long time, even as engineers developed ever-more-efficient devices to use that oil.

Figure 3. Historical oil prices in 2012 dollars, based on BP Statistical Review of World Energy 2013 data. (2013 included as well, from EIA data.)

Figure 3. Historical oil prices in 2012 dollars, based on BP Statistical Review of World Energy 2013 data. (2013 included as well, from EIA data.)

We ran into our initial problems extracting oil cheaply in the early 1970s, after US oil production started to decline (Figure 4).

Figure 4. US crude oil production split between tight oil (from shale formations), Alaska, and all other, based on EIA data. Shale is from  AEO 2014 Early Release Overview.

Figure 4. US crude oil production split between tight oil (from shale formations), Alaska, and all other, based on EIA data. Shale is from AEO 2014 Early Release Overview.

Back in the 1970s, we were able to work around the price spike by bringing oil production online in several additional places, including the Alaska, the North Sea, and Mexico. Unfortunately, those areas are now declining as well. Thus, we are increasingly forced to extract oil from areas that are high priced either (a) because of  high extraction costs (such as the tight oil now being extracted in the United States) or (b) because of high indirect costs (such as the need for desalination plants and food subsidies in the Middle East). These can only be funded if oil prices are high, allowing governments to collect high levels of taxes.

There is considerable evidence that high oil prices are associated with recession. The Great Recession of 2007-2009 was associated with a huge spike in oil prices. I have written about the way high oil prices contribute to recession in a peer-reviewed article published in the journal Energy called Oil Supply Limits and the Continuing Financial Crisis. James Hamilton has shown that has shown that 10 out of 11 US recessions since World War II were associated with oil price spikes. Hamilton also showed that the effects of the oil price spike were sufficient to cause the recession of that began in late 2007.

Now the cost of oil production is high, and electricity prices have stopped falling. We read U. S. electricity prices may be going up for good, from the L. A. Times. It should be no surprise that economic growth is now a problem.

7. In historical periods, defaults were mostly associated with the transfer of ownership of various productive assets (such as land and factories) from one owner to another. Now, we are vulnerable to changes that could ultimately cut off oil and electricity, and thus bring the system down–not just transfer ownership. 

The kinds of things that could bring the system down are diverse. They include:

  • War in the Middle East that would vastly disrupt oil exports. We do not have alternative suppliers–the world would have to do without part of its supplies. We are vulnerable now, because oil exporters are getting “squeezed” by prices that have not risen substantially since 2011. This makes it harder for Middle Eastern countries to fund their budgets, making wars and civil disorder more likely.
  • A spike in oil prices, perhaps caused by a war in the Middle East, that would vastly disrupt oil exports. Oil importing countries would head back into recession, with many layoffs. Governments are in worse shape for fighting this situation than they were in 2007-2008.
  • An increase in interest rates. While Quantitative Easing and Zero Interest rate policy may not look like they are doing much, an increase in interest rates would not work well at all. With higher interest rates, governments would owe more in interest payments, so would need to raise taxes (leading to recessionary effects). The monthly payments required for buying high-priced goods (from cars, to houses, to factories) would rise, cutting back on demand, also tending to lead to recession.
  • A decrease in lending, or even a failure of debt to keep rising, would also be a problem. Janet Yellen’s recent IMF speech highlighted the possibility of using regulation to prevent excessive debt. Unfortunately, increasing debt is very much needed to keep oil prices high enough to enable extraction at today’s high cost levels. See my post The Connection Between Oil Prices, Debt Levels, and Interest Rates. If debt levels drop, we run the danger of oil prices dropping as dramatically as they did in late 2008, when lending froze up.

Figure 5. Oil price based on EIA data with oval pointing out the drop in oil prices, with a drop in credit outstanding.

Figure 5. Oil price based on EIA data with oval pointing out the drop in oil prices, with a drop in credit outstanding.

8. The world is now filled with a large number of people in powerful positions who mistakenly think they know answers to questions, when they really do not. The problem is that researchers tend operate in subject-matter “silos.” They build models based on their narrow understanding of a problem. These models may temporarily work, but as we reach limits in a finite world, these models produce misleading results. The users of these models do not understand the problem and make decisions based on badly flawed models.

Economists do not understand energy issues. They seem to think that their models, which ignore energy issues, are fine. All they need to do is fine-tune regulation, or tweak interest rates, and everything will be fine. Unfortunately, these economic models no longer work, as I explained in a recent post, Why Standard Economic Models Don’t Work–Our Economy is a Network.

In fact, the issue is more basic than just bad models that economists are using. The whole “peer-reviewed paper” system, with its pressure to write more peer-reviewed papers, each resting on prior peer-reviewed papers, is flawed. Models are built and used endlessly, in part because that is the way things have been done in the past. Once an approach is used frequently, everyone assumes it is correct. Models can and do have short term-predictive power, but that fact does not mean that the approach works for the long term.

The problem we are running into is the fact the world is finite. Growth can’t continue indefinitely. The way that the physical world enforces the end to growth is not obvious, until we start hitting the limits. The limits are cost of production limits for oil and for our supply of stable grid electricity. (I have talked about selling prices, but selling prices are not really the limits, in themselves. It is the fact that with higher costs of production, either selling prices must go up, or profits and the ability to invest in new production must go down–that is the problem. Right now, the rising cost of production of oil is being hidden in prices that are too low for oil producers. So many assume we don’t have a problem. The issue of adequate government funding is also mixed into the price/cost of production issue.)

Models that are no longer correct fill every area of study, from actuarial models, to financial planning models, to economic models, to models forecasting future oil and gas production, to climate change models.

Some models are deceptively simple–the idea that the number of years of future production of oil (or gas or coal) can be estimated by [Amount of Resources / Current Annual Production] is a simple model. Unfortunately, this model doesn’t work, because we can never get enough investment capital to extract all of the fossil fuel that seems to be available–the price can never go high enough, and stay high enough. High prices simply bring on recession. See my post, IEA Investment Report – What is Right; What is Wrong.

In fact, it is pretty hard to find any model that continues to work, as we reach limits in a finite world. This is not intuitively obvious. If a model worked before, why wouldn’t it work now? Researchers and well-meaning leaders follow models that sort of worked in the past, but don’t really model the current situation. Thus, we have well-meaning leaders, doing their best to make things better, inadvertently making things worse. In a finite world, everything is “connected” to everything else, so things that look beneficial from one perspective can have a bad outcome viewed another way. For example, a reduction in carbon dioxide emissions from closing coal plants risks major electrical outages is New England and seems likely to raise electricity prices. Such changes push the economy toward recession, and perhaps ultimately toward collapse.

Governments are one area squeezed by higher oil and electricity costs. As governments cut back, whether these cut backs are in education, unemployment benefits, military spending, or healthcare spending, there are indirect effects on the economy as a whole. The problem is that government spending creates jobs. As government spending is cut, it pushes the economy toward contraction–even if part of today’s spending is clearly wasteful. It creates a conundrum–fixing one problem makes another problem worse.


We live in perilous times. We have leaders who think they know the answers but, in fact, they do not. The debt problems we face now are not just overspending problems; they are signs that we are reaching limits of a finite world. World leaders do not seem to understand this connection. It is not even clear that they understand the connection of debt problems to the need for cheap-to-produce, high-quality energy products.

World leaders are nevertheless convinced that they know the answers, based on complex, but very flawed, models. Unfortunately, actions taken based on these models have a good chance of making the situation worse rather than better. For example, trying to tie a world economy closer together, when it is already heading toward collapse, seems like a recipe for disaster.

I find Christine Lagarde’s use of numerology in her January 14, 2014 speech at the National Press Club Luncheon disturbing. Is she trying to signal some “in crowd” to make different decisions, in advance of a big IMF announcement? Or is numerology being used for prediction? Such an approach to forecasting would seem to be even worse than using models based on silos of limited understanding.

Source: http://ourfiniteworld.com/2014/07/07/debt-eight-reasons-this-time-is-different/#more-39101

The open source revolution is coming and it will conquer the 1% – ex CIA spy

The man who trained more than 66 countries in open source methods calls for re-invention of intelligence to re-engineer Earth
 A businessman tries to break through a line of Occupy Wall Street protesters who had blocked access to the New York Stock Exchange area in November 2011.
A businessman tries to break through a line of Occupy Wall Street protesters who had blocked access to the New York Stock Exchange area in November 2011. Photograph: Don Emmert/AFP/Getty Images

Robert David Steele, former Marine, CIA case officer, and US co-founder of the US Marine Corps intelligence activity, is a man on a mission. But it’s a mission that frightens the US intelligence establishment to its core.
With 18 years experience working across the US intelligence community, followed by 20 more years in commercial intelligence and training, Steele’s exemplary career has spanned almost all areas of both the clandestine world.

Steele started off as a Marine Corps infantry and intelligence officer. After four years on active duty, he joined the CIA for about a decade before co-founding the Marine Corps Intelligence Activity, where he was deputy director. Widely recognised as the leader of the Open Source Intelligence (OSINT) paradigm, Steele went on to write the handbooks on OSINT for NATO, the US Defense Intelligence Agency and the U.S. Special Operations Forces. In passing, he personally trained 7,500 officers from over 66 countries.

In 1992, despite opposition from the CIA, he obtained Marine Corps permission to organise a landmark international conference on open source intelligence – the paradigm of deriving information to support policy decisions not through secret activities, but from open public sources available to all. The conference was such a success it brought in over 620 attendees from the intelligence world.

But the CIA wasn’t happy, and ensured that Steele was prohibited from running a second conference. The clash prompted him to resign from his position as second-ranking civilian in Marine Corps intelligence, and pursue the open source paradigm elsewhere. He went on to found and head up the Open Source Solutions Network Inc. and later the non-profit Earth Intelligence Network which runs the Public Intelligence Blog.

Robert David Steele
Former CIA spy and Open Source Intelligence pioneer, Robert David Steele speaking at the Inter-American Defense Board in 2013

I first came across Steele when I discovered his Amazon review of my third book, The War on Truth: 9/11, Disinformation and the Anatomy of Terrorism. A voracious reader, Steele is the number 1 Amazon reviewer for non-fiction across 98 categories. He also reviewed my latest book, A User’s Guide to the Crisis of Civilization, but told me I’d overlooked an important early work – ‘A More Secure World: Our Shared Responsibility, Report of the UN High-Level Panel on Threats, Challenges, and Change.’

Last month, Steele presented a startling paper at the Libtech conference in New York, sponsored by the Internet Society and Reclaim. Drawing on principles set out in his latest book, The Open-Source Everything Manifesto: Transparency, Truth and Trust, he told the audience that all the major preconditions for revolution – set out in his 1976 graduate thesis – were now present in the United States and Britain.

Steele’s book is a must-read, a powerful yet still pragmatic roadmap to a new civilisational paradigm that simultaneously offers a trenchant, unrelenting critique of the prevailing global order. His interdisciplinary ‘whole systems’ approach dramatically connects up the increasing corruption, inefficiency and unaccountability of the intelligence system and its political and financial masters with escalating inequalities and environmental crises. But he also offers a comprehensive vision of hope that activist networks like Reclaim are implementing today.

“We are at the end of a five-thousand-year-plus historical process during which human society grew in scale while it abandoned the early indigenous wisdom councils and communal decision-making,” he writes in The Open Source Everything Manifesto. “Power was centralised in the hands of increasingly specialised ‘elites’ and ‘experts’ who not only failed to achieve all they promised but used secrecy and the control of information to deceive the public into allowing them to retain power over community resources that they ultimately looted.”

Today’s capitalism, he argues, is inherently predatory and destructive:

“Over the course of the last centuries, the commons was fenced, and everything from agriculture to water was commoditised without regard to the true cost in non-renewable resources. Human beings, who had spent centuries evolving away from slavery, were re-commoditised by the Industrial Era.”

Open source everything, in this context, offers us the chance to build on what we’ve learned through industrialisation, to learn from our mistakes, and catalyse the re-opening of the commons, in the process breaking the grip of defunct power structures and enabling the possibility of prosperity for all.

“Sharing, not secrecy, is the means by which we realise such a lofty destiny as well as create infinite wealth. The wealth of networks, the wealth of knowledge, revolutionary wealth – all can create a nonzero win-win Earth that works for one hundred percent of humanity. This is the ‘utopia’ that Buckminster Fuller foresaw, now within our reach.”

The goal, he concludes, is to reject:

“… concentrated illicitly aggregated and largely phantom wealth in favor of community wealth defined by community knowledge, community sharing of information, and community definition of truth derived in transparency and authenticity, the latter being the ultimate arbiter of shared wealth.”

Despite this unabashedly radical vision, Steele is hugely respected by senior military intelligence experts across the world. As a researcher at the US Army War College’s Strategic Studies Institute, he has authored several monographs advocating the need for open source methods to transform the craft of intelligence. He has lectured to the US State Department and Department of Homeland Security as well as National Security Councils in various countries, and his new book has received accolades from senior intelligence officials across multiple countries including France and Turkey.

Yet he remains an outspoken critic of US intelligence practices and what he sees as their integral role in aggravating rather than ameliorating the world’s greatest threats and challenges.

This week, I had the good fortune of being able to touch base with Steele to dig deeper into his recent analysis of the future of US politics in the context of our accelerating environmental challenges. The first thing I asked him was where he sees things going over the next decade, given his holistic take.

“Properly educated people always appreciate holistic approaches to any challenge. This means that they understand both cause and effect, and intertwined complexities,” he said. “A major part of our problem in the public policy arena is the decline in intelligence with integrity among key politicians and staff at the same time that think tanks and universities and non-governmental organisations have also suffered a similar intellectual diminishment.

“My early graduate education was in the 1970’s when Limits to Growth and World Federalism were the rage. Both sought to achieve an over-view of systemic challenges, but both also suffered from the myth of top-down hubris. What was clear in the 1970s, that has been obscured by political and financial treason in the past half-century, is that everything is connected – what we do in the way of paving over wetlands, or in poisoning ground water ‘inadvertently’ because of our reliance on pesticides and fertilisers that are not subject to the integrity of the ‘Precautionary Principle,’ ultimately leads to climate catastrophes that are acts of man, not acts of god.”

He points me to his tremendous collection of reviews of books on climate change, disease, environmental degradation, peak oil, and water scarcity. “I see five major overlapping threats on the immediate horizon,” he continues. “They are all related: the collapse of complex societies, the acceleration of the Earth’s demise with changes that used to take 10,000 years now taking three or less, predatory or shock capitalism and financial crime out of the City of London and Wall Street, and political corruption at scale, to include the west supporting 42 of 44 dictators. We are close to multiple mass catastrophes.”

What about the claim that the US is on the brink of revolution? “Revolution is overthrow – the complete reversal of the status quo ante. We are at the end of centuries of what Lionel Tiger calls ‘The Manufacture of Evil,’ in which merchant banks led by the City of London have conspired with captive governments to concentrate wealth and commoditise everything including humans. What revolution means in practical terms is that balance has been lost and the status quo ante is unsustainable. There are two ‘stops’ on greed to the nth degree: the first is the carrying capacity of Earth, and the second is human sensibility. We are now at a point where both stops are activating.”

Robert Steele - preconditions for revolution
Former CIA officer’s matrix on the preconditions for revolution

It’s not just the US, he adds. “The preconditions of revolution exist in the UK, and most western countries. The number of active pre-conditions is quite stunning, from elite isolation to concentrated wealth to inadequate socialisation and education, to concentrated land holdings to loss of authority to repression of new technologies especially in relation to energy, to the atrophy of the public sector and spread of corruption, to media dishonesty, to mass unemployment of young men and on and on and on.”

So why isn’t it happening yet?
“Preconditions are not the same as precipitants. We are waiting for our Tunisian fruit seller. The public will endure great repression, especially when most media outlets and schools are actively aiding the repressive meme of ‘you are helpless, this is the order of things.’ When we have a scandal so powerful that it cannot be ignored by the average Briton or American, we will have a revolution that overturns the corrupt political systems in both countries, and perhaps puts many banks out of business. Vaclav Havel calls this ‘The Power of the Powerless.’ One spark, one massive fire.”

But we need more than revolution, in the sense of overthrow, to effect change, surely. How does your manifesto for ‘open source everything’ fit into this? “The west has pursued an industrialisation path that allows for the privatisation of wealth from the commons, along with the criminalisation of commons rights of the public, as well as the externalisation of all true costs. Never mind that fracking produces earthquakes and poisons aquifers – corrupt politicians at local, state or province, and national levels are all too happy to take money for looking the other way. Our entire commercial, diplomatic, and informational systems are now cancerous. When trade treaties have secret sections – or are entirely secret – one can be certain the public is being screwed and the secrecy is an attempt to avoid accountability. Secrecy enables corruption. So also does an inattentive public enable corruption.”

Is this a crisis of capitalism, then? Does capitalism need to end for us to resolve these problems? And if so, how? “Predatory capitalism is based on the privatisation of profit and the externalisation of cost. It is an extension of the fencing of the commons, of enclosures, along with the criminalisation of prior common customs and rights. What we need is a system that fully accounts for all costs. Whether we call that capitalism or not is irrelevant to me. But doing so would fundamentally transform the dynamic of present day capitalism, by making capital open source. For example, and as calculated by my colleague JZ Liszkiewicz, a white cotton T-shirt contains roughly 570 gallons of water, 11 to 29 gallons of fuel, and a number of toxins and emissions including pesticides, diesel exhaust, and heavy metals and other volatile compounds – it also generally includes child labor. Accounting for those costs and their real social, human and environmental impacts has totally different implications for how we should organise production and consumption than current predatory capitalism.”

So what exactly do you mean by open source everything? “We have over 5 billion human brains that are the one infinite resource available to us going forward. Crowd-sourcing and cognitive surplus are two terms of art for the changing power dynamic between those at the top that are ignorant and corrupt, and those across the bottom that are attentive and ethical. The open source ecology is made up of a wide range of opens – open farm technology, open source software, open hardware, open networks, open money, open small business technology, open patents – to name just a few. The key point is that they must all develop together, otherwise the existing system will isolate them into ineffectiveness. Open data is largely worthless unless you have open hardware and open software. Open government demands open cloud and open spectrum, or money will dominate feeds and speeds.”

Robert Steele
Robert Steele’s vision for open source systems

On 1st May, Steele sent an open letter to US vice president Joe Biden requesting him to consider establishing an Open Source Agency that would transform the operation of the intelligence community, dramatically reduce costs, increasing oversight and accountability, while increasing access to the best possible information to support holistic policy-making. To date, he has received no response.

I’m not particularly surprised. Open source everything pretty much undermines everything the national security state stands for. Why bother even asking vice president Biden to consider it? “The national security state is rooted in secrecy as a means of avoiding accountability. My first book, On Intelligence: Spies and Secrecy in an Open World – which by the way had a foreword from Senator David Boren, the immediate past chairman of the Senate Select Committee for Intelligence – made it quite clear that the national security state is an expensive, ineffective monstrosity that is simply not fit for purpose. In that sense, the national security state is it’s own worst enemy – it’s bound to fail.”

Given his standing as an intelligence expert, Steele’s criticisms of US intelligence excesses are beyond scathing – they are damning. “Most of what is produced through secret methods is not actually intelligence at all. It is simply secret information that is, most of the time, rather generic and therefore not actually very useful for making critical decisions at a government level. The National Security Agency (NSA) has not prevented any terrorist incidents. CIA cannot even get the population of Syria correct and provides no intelligence – decision-support – to most cabinet secretaries, assistant secretaries, and department heads. Indeed General Tony Zinni, when he was commander in chief of the US Central Command as it was at war, is on record as saying that he received, ‘at best,’ a meagre 4% of what he needed to know from secret sources and methods.”

So does open source mean you are calling for abolition of intelligence agencies as we know them, I ask. “I’m a former spy and I believe we still need spies and secrecy, but we need to redirect the vast majority of the funds now spent on secrecy toward savings and narrowly focused endeavors at home. For instance, utterly ruthless counterintelligence against corruption, or horrendous evils like paedophilia.

“Believe it or not, 95% of what we need for ethical evidence-based decision support cannot be obtained through the secret methods of standard intelligence practices. But it can be obtained quite openly and cheaply from academics, civil society, commerce, governments, law enforcement organisations, the media, all militaries, and non-governmental organisations. An Open Source Agency, as I’ve proposed it, would not just meet 95% of our intelligence requirements, it would do the same at all levels of government and carry over by enriching education, commerce, and research – it would create what I called in 1995 a ‘Smart Nation.’

“The whole point of Open Source Everything is to restore public agency. Open Source is the only form of information and information technology that is affordable to the majority, interoperable across all boundaries, and rapidly scalable from local to global without the curse of overhead that proprietary corporations impose.”

Robert Steele
Robert Steele’s graphic on open source systems thinking

It’s clear to me that when Steele talks about intelligence as ‘decision-support,’ he really does intend that we grasp “all information in all languages all the time” – that we do multidisciplinary research spanning centuries into the past as well as into the future. His most intriguing premise is that the 1% are simply not as powerful as they, and we, assume them to be. “The collective buying power of the five billion poor is four times that of the one billion rich according to the late Harvard business thinker Prof C. K. Prahalad – open source everything is about the five billion poor coming together to reclaim their collective wealth and mobilise it to transform their lives. There is zero chance of the revolution being put down. Public agency is emergent, and the ability of the public to literally put any bank or corporation out of business overnight is looming. To paraphrase Abe Lincoln, you cannot screw all of the people all of the time. We’re there. All we lack is a major precipitant – our Tunisian fruit seller. When it happens the revolution will be deep and lasting.”

The Arab spring analogy has its negatives. So far, there really isn’t much to root for. I want to know what’s to stop this revolution from turning into a violent, destructive mess. Steele is characteristically optimistic. “I have struggled with this question. What I see happening is an end to national dictat and the emergence of bottom-up clarity, diversity, integrity, and sustainability. Individual towns across the USA are now nullifying federal and state regulations – for example gag laws on animal cruelty, blanket permissions for fracking. Those such as my colleague Parag Khanna that speak to a new era of city-states are correct in my view. Top down power has failed in a most spectacular manner, and bottom-up consensus power is emergent. ‘Not in my neighborhood’ is beginning to trump ‘Because I say so.’ The one unlimited resource we have on the planet is the human brain – the current strategy of 1% capitalism is failing because it is killing the Golden Goose at multiple levels. Unfortunately, the gap between those with money and power and those who actually know what they are talking about has grown catastrophic. The rich are surrounded by sycophants and pretenders whose continued employment demands that they not question the premises. As Larry Summers lectured Elizabeth Warren, ‘insiders do not criticise insiders.'”

But how can activists actually start moving toward the open source vision now? “For starters, there are eight ‘tribes’ that among them can bring together all relevant information: academia, civil society including labor unions and religions, commerce especially small business, government especially local, law enforcement, media, military, and non-government/non-profit. At every level from local to global, across every mission area, we need to create stewardship councils integrating personalities and information from all eight tribes. We don’t need to wait around for someone else to get started. All of us who recognise the vitality of this possibility can begin creating these new grassroots structures from the bottom-up, right now.”

So how does open source everything have the potential to ‘re-engineer the Earth’? For me, this is the most important question, and Steele’s answer is inspiring. “Open Source Everything overturns top-down ‘because I say so at the point of a gun’ power. Open Source Everything makes truth rather than violence the currency of power. Open Source Everything demands that true cost economics and the indigenous concept of ‘seventh generation thinking’ – how will this affect society 200 years ahead – become central. Most of our problems today can be traced to the ascendance of unilateral militarism, virtual colonialism, and predatory capitalism, all based on force and lies and encroachment on the commons. The national security state works for the City of London and Wall Street – both are about to be toppled by a combination of Eastern alternative banking and alternative international development capabilities, and individuals who recognise that they have the power to pull their money out of the banks and not buy the consumer goods that subsidise corruption and the concentration of wealth. The opportunity to take back the commons for the benefit of humanity as a whole is open – here and now.”

For Steele, the open source revolution is inevitable, simply because the demise of the system presided over by the 1% cannot be stopped – and because the alternatives to reclaiming the commons are too dismal to contemplate. We have no choice but to step up.

“My motto, a play on the CIA motto that is disgraced every day, is ‘the truth at any cost lowers all other costs'”, he tells me. “Others wiser than I have pointed out that nature bats last. We are at the end of an era in which lies can be used to steal from the public and the commons. We are at the beginning of an era in which truth in public service can restore us all to a state of grace.”

Dr. Nafeez Ahmed is an international security journalist and academic. He is the author of A User’s Guide to the Crisis of Civilization: And How to Save It, and the forthcoming science fiction thriller, ZERO POINT. ZERO POINT is set in a near future following a Fourth Iraq War. Follow Ahmed on Facebook and Twitter.

Source: http://www.theguardian.com/environment/earth-insight/2014/jun/19/open-source-revolution-conquer-one-percent-cia-spy

It’s simple. If we can’t change our economic system, our number’s up

By George Monbiot

It’s the great taboo of our age – and the inability to discuss the pursuit of perpetual growth will prove humanity’s undoing
'The mother narrative to all this is carbon-fuelled expansion. Our ideologies are mere subplots.'
‘The mother narrative to all this is carbon-fuelled expansion. Our ideologies are mere subplots.’unga Photograph: Alamy

Let us imagine that in 3030BC the total possessions of the people of Egypt filled one cubic metre. Let us propose that these possessions grew by 4.5% a year. How big would that stash have been by the Battle of Actium in 30BC? This is the calculation performed by the investment banker Jeremy Grantham.

Go on, take a guess. Ten times the size of the pyramids? All the sand in the Sahara? The Atlantic ocean? The volume of the planet? A little more? It’s 2.5 billion billion solar systems. It does not take you long, pondering this outcome, to reach the paradoxical position that salvation lies in collapse.

To succeed is to destroy ourselves. To fail is to destroy ourselves. That is the bind we have created. Ignore if you must climate change, biodiversity collapse, the depletion of water, soil, minerals, oil; even if all these issues miraculously vanished, the mathematics of compound growth make continuity impossible.

Economic growth is an artefact of the use of fossil fuels. Before large amounts of coal were extracted, every upswing in industrial production would be met with a downswing in agricultural production, as the charcoal or horse power required by industry reduced the land available for growing food. Every prior industrial revolution collapsed, as growth could not be sustained. But coal broke this cycle and enabled – for a few hundred years – the phenomenon we now call sustained growth.

It was neither capitalism nor communism that made possible the progress and pathologies (total war, the unprecedented concentration of global wealth, planetary destruction) of the modern age. It was coal, followed by oil and gas. The meta-trend, the mother narrative, is carbon-fuelled expansion. Our ideologies are mere subplots. Now, with the accessible reserves exhausted, we must ransack the hidden corners of the planet to sustain our impossible proposition.

On Friday, a few days after scientists announced that the collapse of the west Antarctic ice sheet is now inevitable, the Ecuadorean government decided to allow oil drilling in the heart of the Yasuni national park. It had made an offer to other governments: if they gave it half the value of the oil in that part of the park, it would leave the stuff in the ground. You could see this as either blackmail or fair trade. Ecuador is poor, its oil deposits are rich. Why, the government argued, should it leave them untouched without compensation when everyone else is drilling down to the inner circle of hell? It asked for $3.6bn and received $13m. The result is that Petroamazonas, a company with a colourful record of destruction and spills, will now enter one of the most biodiverse places on the planet, in which a hectare of rainforest is said to contain more species than exist in the entire continent of North America.

Almost 45% of the Yasuni national park is overlapped by oil concessions.
Yasuni national park. Murray Cooper/Minden Pictures/Corbis

The UK oil firm Soco is now hoping to penetrate Africa’s oldest national park, Virunga, in the Democratic Republic of Congo; one of the last strongholds of the mountain gorilla and the okapi, of chimpanzees and forest elephants. In Britain, where a possible 4.4 billion barrels of shale oil has just been identified in the south-east, the government fantasises about turning the leafy suburbs into a new Niger delta. To this end it’s changing the trespass laws to enable drilling without consent and offering lavish bribes to local people. These new reserves solve nothing. They do not end our hunger for resources; they exacerbate it.

The trajectory of compound growth shows that the scouring of the planet has only just begun. As the volume of the global economy expands, everywhere that contains something concentrated, unusual, precious, will be sought out and exploited, its resources extracted and dispersed, the world’s diverse and differentiated marvels reduced to the same grey stubble.

Some people try to solve the impossible equation with the myth of dematerialisation: the claim that as processes become more efficient and gadgets are miniaturised, we use, in aggregate, fewer materials. There is no sign that this is happening. Iron ore production has risen 180% in 10 years. The trade body Forest Industries tells us that “global paper consumption is at a record high level and it will continue to grow”. If, in the digital age, we won’t reduce even our consumption of paper, what hope is there for other commodities?

Look at the lives of the super-rich, who set the pace for global consumption. Are their yachts getting smaller? Their houses? Their artworks? Their purchase of rare woods, rare fish, rare stone? Those with the means buy ever bigger houses to store the growing stash of stuff they will not live long enough to use. By unremarked accretions, ever more of the surface of the planet is used to extract, manufacture and store things we don’t need. Perhaps it’s unsurprising that fantasies about colonising space – which tell us we can export our problems instead of solving them – have resurfaced.

As the philosopher Michael Rowan points out, the inevitabilities of compound growth mean that if last year’s predicted global growth rate for 2014 (3.1%) is sustained, even if we miraculously reduced the consumption of raw materials by 90%, we delay the inevitable by just 75 years. Efficiency solves nothing while growth continues.

The inescapable failure of a society built upon growth and its destruction of the Earth’s living systems are the overwhelming facts of our existence. As a result, they are mentioned almost nowhere. They are the 21st century’s great taboo, the subjects guaranteed to alienate your friends and neighbours. We live as if trapped inside a Sunday supplement: obsessed with fame, fashion and the three dreary staples of middle-class conversation: recipes, renovations and resorts. Anything but the topic that demands our attention.

Statements of the bleeding obvious, the outcomes of basic arithmetic, are treated as exotic and unpardonable distractions, while the impossible proposition by which we live is regarded as so sane and normal and unremarkable that it isn’t worthy of mention. That’s how you measure the depth of this problem: by our inability even to discuss it.

Twitter: @georgemonbiot. A fully referenced version of this article can be found at Monbiot.com

Source: http://www.theguardian.com/commentisfree/2014/may/27/if-we-cant-change-economic-system-our-number-is-up


Barclays Has The Best Explanation Yet Of How Solar Will Destroy America’s Electric Utilities

Silver lake coal plant

It’s been a good few decades for America’s electric utilities: As regulated monopolies, they face almost no competition and enjoy access to cheap credit.

In a new note, a Barclays team led by Y.C. Koh says the industry is finally be facing its day of reckoning, from a source many have long dismissed as an unviable pipedream: solar. Specifically, the threat is residential solar, people creating their own electricity.

To prove that the threat is real this time, Barclays is downgrading its Electric sector rating to Underweight from Market Weight “…The regulatory responses to the growing competitive threat from solar + storage may prove inadequate to address potential strains to the credit profiles of issuers in these states,” they write.

There are main two reasons why solar is finally for real, the group says. The first is that for more than a decade, there’s been a huge push from governments around the world, and at every level, to subsidise renewables. Bloomberg New Energy Finance (BNEF) estimates that the annual output of PV modules increased almost 30x in the past decade, from 1,000MW per year in 2005 to more than 30,000MW in 2013, Barclays notes. With that scale has come cheaper prices for panels.

Here’s what the cost curve looks like:

Solar cost curve

The second reason is the advent of cheap storage. For the past few years, homeowners have addressed renewables’ intermittency problem — the wind isn’t always blowing, the sun doesn’t always shine — by making a deal with her utility: she’ll continue to buy their electric power, but she gets to keep her solar panels running when she’s not home, and sell any excess power they generate back onto the grid. This is called net metering.

Net metering has been a boon for incentivizing rooftop solar adoption. But what if you could truly power up your home through a solar-charged battery, and only have to buy utility electricity in an emergency?

As recently as 2009, the all-in costs for such batteries would been as much as $US17,000. But with the expansion of electric vehicles, Barclays says the cost of storage has been falling rapidly, and now stands at about $US3,700. And it just so happens that the power required to operate an electric vehicle can power the average home for up to three days, Barclays notes, “potentially opening a new use in residential distributed generation systems.” Battery costs could come down even further if Elon Musk’s gigafactory launches, they add. Yesterday w

e discussed this idea in detail. Here’s the price decline chart:

Barclays battery costs

Barclays sees the solar + storage wave has the potential to spread beyond its roots in California and Arizona. Here is their timeline for when solar costs could reach parity in all 50 states:

Barclays solar

Cheap solar panels, combined with cheap storage, will spark a grid “defection spiral” that will pry away utilities’ grip on the power monopoly. In this scenario, early adopters begin leaving the grid, incrementally increasingutilities’ power costs rise — which further exacerbate the shift into solar and storage, and so on.We are already seeing evidence of step 1, as utilities have begun complaining that solar customers are causing electricity prices for non-solar users to go up.

This is maybe the most vivid description in the note of what solar will do to utilities:

we envision an electricity market where demand for grid power falls, peak hours shift (perhaps dramatically), and regulatory mechanisms need to be adjusted or overhauled to accommodate some utilities becoming the electricity generators of last resort. We expect the net effect to be higher grid power costs (thereby exacerbating the consumer shift to solar + storage), lower average credit quality for regulated utilities and unregulated power producers, and increased recognition of the long-term threat to grid power.

Whatever roadblocks utilities try to toss up — and there’s already been plenty of tossing in the states most vulnerable to solar, further evidence of the pressures they’re facing — it’s already too late, Barclays says:

We fully expect utilities and regulators to make a good faith effort to preserve the status quo “regulatory compact,” whereby the monopoly utility provides a safe and reliable service and regulators allow it to earn a reasonable low-risk return. However, we also expect them to be playing a constant game of catch-up as solar develops. The costs of solar and storage technologies are falling quickly and may fall even faster as higher demand builds additional scale. But the cost of distribution grids and thermally generated power are more likely to rise than to fall, in our view. As a result, regulators and utilities will be constantly trying to respond to a moving target, which is precisely the environment where slow-moving incumbents can fall behind.

It’s been a good run.

Source: http://www.businessinsider.com.au/barclays-downgrades-utilities-on-solar-threat-2014-5

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.


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/