Not The Grub Street Journal

Exegesis Hermeneutics Flux Capacitor of Truthiness

drtimmorgan on  said:

Just to restate my position on this, the economy is an energy system, in which nothing with any economic utility at all can be produced without energy.

Money has no intrinsic worth, but commands value only as ‘claim’ on the products of the real economy. Its only function is as a medium of exchange.

Fulfilling this function requires that two preconditions are met:

1. There is something for which money can be exchanged

2. The kind of money in question is accepted by all parties as a medium of exchange

Money (in any form) given to someone adrift in a lifeboat has no value, because it fails the first test.

Somebody arriving from Mars with pockets full of Martian Zogs would find his money useless, because it fails the second test.

Therefore, there is no monetary solution to the deterioration in prosperity caused by a fall in the supply of surplus energy.

The authorities do not understand (or, at any rate, admit) this. They are using monetary manipulation to prop up inflated asset prices. The only reason why they haven’t been called on this is that we cannot monetise asset ownership, i.e. sell all stocks, bonds and properties and turn them into cash.

In the future, the use of money manipulation might be extended into, for example:

A. Financing government spending as the revenue base erodes

B. Subsidising fossil fuel production

C. Subsidising investment in renewables

D. Helping the victims of falling prosperity

ANY of these uses would be inflationary, quite possibly to the point at which the credibility of fiat currencies is destroyed.

This means that the only way to achieve objectives A-D without destroying the currency has to involve redistribution.

rogerglewison  said:

Your comment is awaiting moderation.

Redistribution of What to who and by which means?
Energy is Ubiquitous, yet Value is an abstract concept and there are experiential values which exceed their Energy input where an abstract value, such as a monetary unit is allowed to reflect the Market determined price.
The fact is that there are different levels of needs and wants and over an above fundamental survival requirements, Say 2500 Calories a day including embodied energy for Shelter and dietary requirements.
What are the absolute bands of energy requirements, how much energy is Wasted and how much-embodied energy can be re-cycled that is currently wasted all have to factor into any ongoing Energy Based Distribution system and energy-based system for determining and energy-based into of account?

What is the problem with having a different type of Currency, why does Destruction of the existing unfit for purpose system have to be taken as read?

There have been successive efforts since the Nixon shock to replace the current international FInance model, that we are moving to a Multi-Polar world seems an inescapable conclusion, with all the potential problems this represents for the Dollar centric hegemony.

If it ain’t broke don’t fix it is always a good maxim but if a new design is called for to replace an obsolete system then everything is on the table.

I personally reject your four-point example and the inevitability of your conclusion Tim.

The world has tremendous potential as does the industrial capacity and also cultural and technological potentials of current technology. Of course, there are fundamental changes which need to be made The single biggest problem is the mispricing inherent in the financialised late-stage capitalism which has morphed already into Fascism, otherwise known as Neo-Liberalism.

Pierre Joseph Proudhon proposed a reform to banking which was quite simply to abolish the private monopoly on the creation of Currency as debt at interest. Peter Kropotkin describes Prouhdond Simple idea and its effect as follows,

https://archive.org/details/PeterKropotkinEntryOnanarchismFromTheEncyclopdiaBritannica/page/n1/mode/2up
Now Proudhon advocated a society without government, and
used the word Anarchy to describe it. Proudhon repudiated,
as is known, all schemes of Communism, according to which
mankind would be driven into communistic monasteries or
barracks, as also all the schemes of state or state-aided socialism
which were advocated by Louis Blanc and the Collectivists. When
he proclaimed in his first memoir on property that ” Property
is theft,” he meant only property in its present, Roman-law,
sense of ” right of use and abuse ” ; in property-rights, on the other
hand, understood in the limited sense of possession, he saw the
best protection against the encroachments of the state. At the
same time he did not want violently to dispossess the present
owners of land, dwelling-houses, mines, factories and so on. He
preferred to attain the same end by rendering capital incapable
of earning interest; and this he proposed to obtain by means of
a national bank, based on the mutual confidence of all those who
are engaged in production, who would agree to exchange among
themselves their produces at cost-value, by means of labour
cheques representing the hours of labour required to produce
every given commodity. Under such a system, which Proudhon
described as ” Mutuellisme,” all the exchanges of services would be
strictly equivalent. Besides, such a bank would be enabled to
lend money without interest, levying only something like 1 %,
or even less, for covering the cost of administration. Every one
being thus enabled to borrow the money that would be required
to buy a house, nobody would agree to pay any more a yearly
rent for the use of it. A general ” social liquidation ” would
thus be rendered easy, without violent expropriation. The same
applied to mines, railways, factories and so on.

In a society of this type the state would be useless. The chief
relations between citizens would be based on free agreement and
regulated by mere account keeping. The contests might be
settled by arbitration. A penetrating criticism of the state and
all possible forms of government, and a deep insight into all
economic problems, were well-known characteristics of Proudhon’s
work.

ogerglewis on  said:

CT: You discuss the need for states to ensure consent: the need to pacify, hypnotize and align populations for continued globalization; more precisely, the need to divert attention from the structural violence of economic policies and the actual violence of militarism. Can you say something about how the issue of global warming relates to this?

DR: Irrespective of whether the so-called ‘climate crisis’ is real, exaggerated or fabricated, it is clear, from the data in my report, that the ethos of global warming was engineered on a global scale and benefits the exploiters of the carbon-economy and, more indirectly, the state.
https://www.counterpunch.org/2019/06/13/from-dollar-hegemony-to-global-warming-globalization-glyphosate-and-doctrines-of-consent/

austrianpeteron  said:

Counterpunch is a doubtful source for valid information IMHO – I avoid it and worry when someone quotes it.

rogerglewison  said:

Hello Peter,
I do not dismiss Tims Work I am a passionate advocate both for it and of it.
I have a few minor quibbles with Tim regarding presenting of the underlying axioms of Seeds. Economic Prosperity and Surplus energy are Axiomatic my contention is that the Calculus of the Axioms should be calibrated in energy units and not monetary units.
Dennis Rancourt is an academic whose work is widely quoted in the WikiSpooks Blog. I know the WikiSpooks people and their Work and that of Dennis is of a very high quality and from very able people, some in surprisingly influential positions others hailing from such establishment backgrounds, now retired.
The Interview with Dennis is as set out on the page or screen Peter, the Source is irrelevant, the arguments are what one addresses and not the Per packaged prejudices of where they are published. Colin Todd Hunter ( The Interviewer) is a regular contributor to

https://wikispooks.com/wiki/Denis_Rancourt

Heres the Same Article on Global Research, I think you linked to one of their articles yourself a few days back?
https://www.globalresearch.ca/dollar-hegemony-global-warming-globalization-glyphosate-doctrines-consent/5680238

https://wikispooks.com/wiki/Global_Research

austrianpeteron  said:

Ah Yes Roger, thank you, I did link that but didn’t connect it. My position is clear as I am a supporter of much of Austrian economics as a solution to our present out-of-control fiat system. Although Austrians advocate ‘sound money’ systems I am not a supporter of a return to the gold standard as I think we have moved on in our economic models.

My friend, Gerry Brady at: http://boomfinanceandeconomics.com/#/ and I spend a great deal of time debating the virtues of sustainable financial and economic systems to meet contemporary demands. Our deliberations to date have resulted in his recent article:
https://boomfinanceandeconomics.wordpress.com/2020/01/18/boom-as-at-19th-january-2020/

As a knowledgeable commentator I would value your feedback. I am not entirely convinced of Gerry’s solution but I have included it in my book as the best I have to date.

rogerglewison  said:

The “Democrats” are tied to global finance and push for a global carbon economy, and global “development”, in the image of their malicious interest. Their deep-state base is the CIA and they excel in media and entertainment-industry control.

The “Republicans” are more tied to the USA domestic-energy sector (such as the exploded shale-oil economy), to the army, and to the armament industry. They are more nationalist in their power centre, more into the extraction and wage-slave-production industries in Latin America and Africa, via USA corporations, and have less use for the UN in their manipulations.
http://activistteacher.blogspot.com/
Heres a starter for ten, Dennis’s second tectonic shift is in my own opinion off-target, As he raises the question My response is to seek out what he puts forward as evidence to support that view.
Fast-forward to today: Two global tectonic shifts have and are occurring, which fundamentally threaten the USA/Western ruling elite, in that USA hegemony itself is challenged.

The first global tectonic shift is the continuous rise of Eurasia, economically led by China, with strategic, diplomatic and organizational support from Russia. This coincides with Russian emergence in protecting its national interests in Syria and Venezuela, while offering military technology (S-400 air-defence missile system) that neutralizes USA air dominance, to Turkey and others.

The second global tectonic shift is the increased global abundance of easily extractable fossil-fuel reserves. It turns out that shale-oil is everywhere, as is natural gas; and Chinese coal, not counting secure imports,[8] is plentiful enough to power China, using modern centralized generation and transformation stations, for decades. There is oil and gas in Venezuela, Russia, Syria, Iran… Canada, USA… more places than can easily be controlled to starve competitors, to ensure high prices for preferred producers, and to keep the petro-dollar alive.[6]

rogerglewison  said:

Hi Peter, Austrian Economics has several sub-schools, For instance, Schumpeter and Mises have differences not only of degree but of kind, Also Hayek is accepted by some but not all Austrians? What kind of Austrian are you? Wasn’t Adolph Hitler also Austrian? Yes of course he was, so Schact and Fitcsh should also factor into any debate on Austrian Economics which I contest as a School of Economics is widely misunderstood and misrepresented by those who adoipt it as a Political Stance absent the requirement of evidence as much as other Schools of Thought that morph into dogmatism.
MMT has its factions also, I like Hudson but think Bill Mitchell is a Zealot hiding in Academic Clothes of pretended Objectivity.
https://mises.org/library/mises-and-schumpeter-friendly-rivals
This Narrative on The Schumpeter Mises difference of opinion is I contend polish on an actual turd.

rogerglewis on  said:

https://notalotofpeopleknowthat.wordpress.com/2020/02/14/bps-net-zero-accounting-trick/

rogerglewison  said:

http://ocla.ca/wp-content/uploads/2019/04/OCLA_Report_2019-1.pdf
THURSDAY, NOVEMBER 21, 2019
Tectonic Shifts Unnerve Both Factions of the USA Ruling Elite
My latest social analysis article, published at Dissident Voice:
https://dissidentvoice.org/2019/11/dear-young-progressives-the-white-supremacist-anti-immigration-anti-political-correctness-free-speech-fascists-are-your-friends/

austrianpeteron  said:

Thanks for the link, Roger, and I concur about the ruling elite becoming desperate as their globalist plans are being frustrated. But they are extremely patient having waited a century for their plans of centralised global control to come to fruition.

I am part of those aware of the danger and spend my time promulgating the risks to as many who will listen – which is not many:
https://www.theburningplatform.com/2020/02/15/the-financial-jigsaw-issue-no-91/

rogerglewison  said:

I equate Sound Money with Austerity and I equate Honest Money with Free markets. WIthout Honest Money, I contend there can not be Free Markets.
I do not equate Liberty with sound money but I do equate it with Honest Money, Honest Money as described by John Tomlinson I think gives a good grounding to the principles of money as a Token. Regarding Energy Economics and the inevitability of Boom or Bust when there are positive Interest rates, ( this is the Proudhon Point) I contend that Interest if it is not created when the credit is issued at Interest, will result in the Exponential Armageddon inherent in the exponential function.
Proudhon makes his case in this argument with Frederich Bastiat, It repays the reading even though it is quite long.
http://praxeology.net/FB-PJP-DOI.htm

rogerglewis on  said:

https://honest-money.com/ This is John Tomlinson’s web site around his book Honest Money

rogerglewis on  said:

Now this is what it’s all about!

rogerglewis on  said:

Your comment is awaiting moderation.

Meanwhile the Boundaries of Knowledge Advance.

And in many cases are suppressed.

rogerglewison  said:

Your comment is awaiting moderation.

https://youtu.be/P3jvkNRCY2s I made this video available with English Subtitles the original version in English is not available anywhere on the internet?

rogerglewis on  said:

Your comment is awaiting moderation.

rogerglewis on  said:

https://www.bloomberg.com/graphics/gas-prices/#20194:United-States:USD:g

This is a very interesting comparison widget for Gasoline prices across the world.

I was just watching this video on Comparison of fuel costs for EV’s and ICE Vehicles

And the Stark contrast between US Gas Prices over European ones struck me.

us. 2.91 per gallon
Sweden 6.42 per gallon
Germany 5.85 per gallon
Russia 2.80 per gallon
China 3.96 per gallon

The Affordability ratios are very interesting
1.63 % US and 14.81 % China
% of income spent is also interesting
1.93% US and 0.49% China

Who gets What from a Gallon of Oil.

https://www.opec.org/opec_web/en/data_graphs/333.htm
OECD’S average
31% Crude Price 20% Industry Margin 49% Tax.

this excellent paper at the House of Commons online library the other day.

https://publications.parliament.uk/pa/cm201011/cmselect/cmtreasy/memo/taxpolicy/m32.htm

15. Taxation comprises three fundamental economic parts:

l Creation of the medium of taxation and issue into the economy

l Distribution of the medium of taxation through the economy

l Collection of the medium of taxation

17. Modern taxation systems are still based around the creation, distribution and collection of tokens, but the tokens now take electronic rather than physical form. These tokens are bookkeeping entries in the banking system. The structure of the taxation system and the economy it controls is determined by the rules under which these electronic bookkeeping tokens are created, distributed and collected. Coins and notes are still issued in small quantity but are subsidiary to the banking system’s bookkeeping entries.

19. “Contemporary governments grant the exclusive power to issue the medium of taxation to a state-sanctioned banking cartel. The banking cartel comprises a central bank and private member banks. The central bank is responsible for price-fixing, information sharing, promoting member interests and preventing member defaults. Serving the public interest is not a primary goal of a central bank. The cartel holds the exclusive power to set the price of and issue the medium of taxation. Governments generally prohibit the issue of alternative media for exchange and mandate payments of taxes only in the cartel-issued medium.”

Conclusion

52. Development of the tax system has been constrained by political reality and driven by the demands of vested interests in finance and real estate. The fundamental principles of tax policy should explicitly incorporate the money system and the welfare system. The tax system is not fit for purpose and is beyond repair. It should be replaced by an efficient, neutral and distortion-free system based around clearly defined recurrent payments from owners of land, immovable property and natural resources based on contract law. Means-tested welfare should be replaced by a Citizens’ Dividend distributing the financial surpluses of government arising from such reforms.

53. The transition to a new, principled tax system should be on an “opt-in” basis where people can choose to permanently leave the old system when they can benefit from so doing. The effect of such a transition would be an rapid and dramatic revival in economic performance without battling political headwinds.

54. The principles outlined here fully meet all the objectives of the OECD tax report and the Mirrlees Review. They meet Smith’s canons of taxation and adhere to orthodox and common heterodox academic analysis. They are comprehensible and achievable.

January 2011

Carbon Taxation.

https://theecologist.org/2008/aug/02/radical-carbon-tax-reform

It seems to me that The importance of Taxing Carbon is being treated as an elephant in the room.
Fossil Fuels are hugely important and will remain so for at least the next 50 years or so.

The debate is hampered by the political cowardice of our Elite owned political Class who are incapåable of calling a spade a spade, so much easier to talk in the Semi Religious riddles of Global warming.

Regardless of Global Warming and Environmental issues, it is it seems to be important to be honest about what resources there are and how they are applied

That is why I think that the Embedded energy concepts in this paper which I have posted before are so important.
https://www.sciencedirect.com/science/article/abs/pii/S0301421517305839

austrianpeteron  said:

Excellent information thank you, Roger, I should be grateful for your permission to reproduce it in my weekly articles:
https://www.theburningplatform.com/2020/02/08/the-financial-jigsaw-issue-no-90/

rogerglewison  said:

Hi Tim,
Conflation is a problem in any complex system, catching the dynamics is very tricky especially the Unknown unknowns.
Steve Keen has written a fair bit on Jubilees and helicopter money, worth checking it out.
Regarding the IBS, World Bank and IMF etc again a huge subject and much depends on one’s analytic viewpoint, Leitaers Integral Money Paper is well worth looking at in the respect of whose problems exactly we are trying to Solve.
Bail Outs, Bail Ins, and SOvereign v Corporate v Private debt. The Growth comes from the Uncreated Interest Bit, Magrit Kennedy and others including Leitaer and Kreutz have all demonstrated this as has Grigon.
Embodied energy is a key part of any stock-taking exercise as is the Circular economy, these are resource realities which Seeds needs to factor into its analysis of any future paradigms going forwards as things presently stand Tim, I think seeds, whilst being one of the better approaches in the wild is far to invested in the current FInancial Systems mindset, it will come as no surprise to you that that is my opinion, unusually for me, it is an opinion that has hardened rather than softened in the couple of years I have been reading your work here.

drtimmorganon  said:

SEEDS has to present its conclusions in financial terms (rather than in energy units) to be relevant to the debate. I believe that it presents a view that is totally different from, and far more meaningful than, the plethora of models based on the ‘flat earth’, false paradigm of ‘the economy is money’.

SEEDS tells us that Western prosperity has long been in decline, and that the same is now about to happen to those EMs (such as China and India) where it hasn’t happened yet. It further indicates that the financial system as we know it now is unlikely to survive efforts at denial over this.

Let’s see which version is right! I’d back SEEDS, which has already predicted Trump, the “Brexit” vote and the ending of growth in China…

Bob Jon  said:

Hi Tim

Steve Keen has advocated a debt jubilee but the jubilee would consist of giving everyone, indebted or not, a given amount. Those in debt would have the money applied against the debt and those in surplus would spend it.

As I see it the problem with this is that, quite apart from the issue of moral hazard, it is likely to be too small to make any difference to a significant proportion of the indebted and too expensive to give to everyone.

drtimmorganon  said:

Correct me if I’m wrong (and I suppose I could ask Steve), but it sounds to me as though it would be either too small to achieve anything or so big that it would destroy the currency.

Will!on  said:

“Steve Keen has advocated a debt jubilee but the jubilee would consist of giving everyone, indebted or not, a given amount.”

Is that another version of the Universal Basic Income, and all the attendant arguments for and against?

rogerglewison  said:

https://moneyweek.com/445670/steve-keen-debt-jubilee-to-fix-the-economy

rogerglewison  said:

“SEEDS has to present its conclusions in financial terms (rather than in energy units) ”
You choose to present Seeds in those terms Tim and you have explained your reasons why. It is a choice all the same and not a compulsion.
Seeds by defining its terms and boundaries in Energy Terms, would I contend benefit in terms of demonstrating its own insights, from defining its own Lexicon outside of the Established Lexicon of Financialised Capitalism.

Of course, you could ask Steve yourself and indeed I would pay money to see you both discuss the question in Public whether in a Theatre or online.

Michael Hudson is also mentioned above), he is of all the MMT names my favourite. Most of the others I have little time for although Randal Wray is a good writer, Bill Mitchell annoys me intensely as does Mosler.

https://en.wikipedia.org/wiki/Michael_Hudson_(economist)
and Forgive Them Their Debts: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year (2018)
https://www.rt.com/shows/on-contact/446574-michael-hudson-global-debt/

Bob Jon  said:

Hi Tim

Re Steve Keen your views are exactly the same as mine.

Other commenters have mentioned Michael Hudson who is also an advocate of a debt jubilee faute de mieux because as he says debts that can’t be repaid won’t be repaid.

He puts debt jubilees in their historical context and in that context they make a great deal of sense both economically, politically and socially. I think they make much less sense today when the circumstances are completely different, although as he says – and to repeat – debts that can’t be repaid won’t be repaid.

John Doyleon  said:

Doesn’t China owe these debts to itself? In a command economy the government has all the cards. Also It’s got a lot of assets overseas, like $1.4 trillion in the US fed. It can eliminate the local debts very simply, by jubileeing them. Who is going to complain?

ewaf88on  said:

Tim – I had mentioned in an earlier post about a massive new coal mine China is developing in Mongolia.

If this site has a very good EROEI ratio then it might provide the cheap energy they need to meet the production capacity demanded by their debt and growth problems.

However I’m not sure how we’d obtain the figures.

Donald

rogerglewison  said:

 

I think John has a point, External debt is what is the real enemy of a Nation with a Sovereign Currency. Of Course Access to Energy through the PetroDollar is a key matter of Geo-Political control and of course, China has been Through the Brics Bank and also direct deals with Russia and Previously India been trading in kind for resources. That said China does have rather a lot of Dollars from its Trade surpluses from Manufacturing.
Embedded energy and therefore net resource Consumption or Conversion and re-export further complicate the picture.
One final point on Energy as expressed through FInancial metrics is the huge slice of Taxation both at the production and consumption levels across all Energy Production, Upstream and downstream from Wellhead to Petrol pump, pr Gas stove or hob.
The dynamic is really one of Net debt, we know that all debits and credits do not sum to zero as the Interest portion is not created when Loans are made. Debt is money and when an Economy expands so does debt by definition.
I do think that you are over claiming Seeds crystal ball abilities in this instance Tim, The problem is not just about resource extraction costs but about Distribution and above all the politics of access to resources, not just energy but also raw materials.

 

  • I think a number of different issues are being conflated here.

    First, external debt. This is a problem because of exchange rates, which are outside national control. If you borrow in, say, USD, and your national currency slumps 75% against the USD, you debt has quadrupled, and so have your debt service costs. Default remains an option, and you may indeed have no choice about it.

    Debts denominated in sovereign currency can, of course, be monetized. But that runs the risk of causing not just the external value of the currency to slump, but its internal purchasing power as well.

    A jubilee isn’t all that feasible either. First, if your neighbour owes you $10,000, but if that is written off, you’re going to be both out of pocket and – rightly – angry. Not only have you lost the capital but, more importantly, you’ve lost any income stream associated with it.

    Second, you are mortgage-free, but your neighbour has a $100,000 mortgage, which then gets written off. I don’t think you’d be happy about that either.

    Third, if there has been one jubilee, it’s fair to assume that in due course there would be another – so, in the meantime, what’s to stop you bingeing on debt?

    Next, pensnion funds (for example) have a lot invested in government and corporate bonds, and other debt instruments – what happens to these funds if a jubilee wipes out these debt assets?

    Ultimately, what really matters about debt isn’t the capital amount, but the debt service (cost to the borrower, income to the lender).

    Finally, most fiat is “loaned into existence”. Undermining the validity of debt strikes a huge blow at the viability of money.

    Ultimately, the de-growth which is looming is likelier than not to destroy fiat currencies anyway (a subject I’m working on now). But I see no logic in hastening that process by bailing out the improvident.

  • Thank you, Tim, for shining light on the complexities and interconnections of credit/asset markets and vehicles. There is an old saying: “No good deed goes unpunished.”

    Steve

    TM:
    “Finally, most fiat is “loaned into existence”. Undermining the validity of debt strikes a huge blow at the viability of money.

    Ultimately, the de-growth which is looming is likelier than not to destroy fiat currencies anyway (a subject I’m working on now). But I see no logic in hastening that process by bailing out the improvident.”

  • I see you don’t get it, Tim. The Chinese debt jubilee is for debts owed to it. Not for loans between private parties. Are there that many of them? I don’t know, but the Steve Keen option can apply to them. He wants it to be fair The commercial banks lose debt that was worth zero anyway. It gets written off as if it was paid out. They still keep the interest which is the only money that is the banks anyway. The mortgagee gets an injection of cash to repay the debt, if that option is the chosen one.,and their debt is extinguished too. All bank loans are liabilities.

    Federal currency is totally without liability as it was extinguished at the moment the currency is created. China will have all its own debts in Yuan., Australia in $A, the USA in $US. They can never be sent broke in paying them out. You could write a whole book on this. My remarks just touch on the issues, but It’s all for when the SHTF comes. As Michael Hudson says. “Debts that cannot be repaid will not be repaid”.

    PS did you get my blog with Bill Mitchell’s lectures in the UK this w/e.?

  • Saying that Tim doesn’t get it is a real hoot.

    Who (China is what you say) is the “it” in “owed to it”? The Chinese Gov’t? To be “owed” means to the entity which loaned money via bonds, notes, etc. Investors loan money. To say that the commercial bank holdings of bonds are worth zero is BS. Those can be sold at any time into the actively traded debt market for cash.

    There are trade and account deficits between countries as well. Jubilee there is default by the party in deficit.

 

rogerglewis on  said:

@Johndoyle.
“Debt is claim,no? You can call it lots of other things, like IOU’s, tokens etc, but it all comes back to there first being a debt.”
https://archive.org/stream/AlexanderDelMar/AlexanderDelMar-TheScienceOfMoney1896#page/n7/mode/2up
Actually no it does not all come back at first there is a debt. What there is and the condition precedent for trade is a double coincidence of wants, more precisely The requirement to exchange.
Money is a rain check which allows delayed consideration if the Money token is created so that it comes from Skin in the Game it does not give rise to the asymmetric risk problems inherent in the Creation of Money with the Debt mentality.

This is not even a semantic point it is a logical point.

The existing system is such that the Debt = Money axiom holds but that is by no means the only way to do Money.

This from Alexander DelMar , who correctly showed that Money as an expression of value was an abstract “Convenient posit” ( See Quine two dogmas). And what its true substantive function is and was back then and has been recognised by people down the ages from Aristotle onwards is a Mere numerical ratio. To express a numerical ratio there is absolutely no reason to insist that any component of debt necessarily exists.

 

        • This is a complex topic, to put it mildly. But what we are facing is an energy viability crisis, and it links directly to ECoE.

          OIl production has for some years been carried by US shale, itself, being non-viable, carried by investors and lenders. I made the (admittedly radical) case here last year that the US has a national interest case for subsidizing shale, from which production could otherwise slump rapidly, because the “drilling treadmill” and ultra-rapid decline rates from individual wells. Similar arguments could be made for oil production more broadly.

          On the other hand, RE needs subsidy as well. In the past, wind, solar and other REs have been subsidized. This has ceased to be affordable as take-up has increased. This is why, in 2018, capacity additions were unchanged from 2017, whilst capex was lower in real terms than it had been back in 2011.

          These are threats to energy supply, and I would remind you that the IEA and EIA central case numbers show the world needing about 11% more oil and about 32% more gas in 2040 than in 2018, with coal use roughly the same.

          So it seems that, unless we subsidize energy supply, there are going to be large and worsening shortfalls. Ultimately, subsidy comes from ‘us’.

          An existing example is the UK, where every electricity customer has to pay about £185 annually in a ‘climate change levy’ used to subsidise RE (I believe it pays for just over half of all RE investment in Britain). Because this number is expected to increase, there are debates about transferring it from electricity bills to general taxation.

          In this example, the customer is left with £185 less to spend on everything else. This would remain the case if it was funded from taxation instead. This, in microcosm, is ECoE at work. With ECoE at 2%, we have 98% of output to spend on other things, but with ECoE at 8%, that falls to 92%.

          Now let me take you back to some SEEDS analysis. Western countries’ prosperity starts falling once ECoE hits 3.5% to 5%. The threshold for less complex EM economies is 8-10%. As ECoE rises, we have to do without other things in order to maintain energy supply – and ‘have to do without other things’ equates to having less prosperity.

      1. Hi Tim,
        This is from The Hall Paper ( EROI of different fuels and the implications for society
        Author links open overlay panelCharles A.S.HallJessica G.LambertStephen B.Balogh) https://www.sciencedirect.com/science/article/pii/S0301421513003856 ( no Paywall, downloadable PDF) As this report was partly funded by HMG there is a rather fetching PDF available to download as well.
        https://assets.publishing.service.gov.uk/media/57a08a0340f0b652dd000508/60999-EROI_of_Global_Energy_Resources.pdf

        .1. Economic cost of energyThe ratio of the monetary cost of energy compared to the GDPgenerated for the same year gives a quantitative index of how muchmoney is invested in energy on average to generate a unit of wealth.This can be calculated by dividing the money required to buy energyby the total gross domestic product. When this ratio is low, typicallyaroundfive percent, economies grow strongly (Hall and Klitgaard,2012). When this ratio is high, about ten percent (and, historically, upto fourteen percent), recessions tend to occur. A sudden climb(followed by a subsequent decline) in the proportion of the GDPspent for energy occurred during the two 1970s and the mid-2008“oil price shocks”(Hall and Cleveland, 1981; Hamilton, 2009; Hall andKlitgaard, 2012). Rapid increases in the economic cost of energy (e.g.fromfive to ten percent) result in the diversion of funds from what istypically devoted to discretionary spending to energy acquisition(Hall and Klitgaard, 2012). Consequently, large changes in energyprices influence economies strongly.

        Professor Hall worte this In the Hill last November. ” Does Trump have a bunch of ‘losers’ to thank for a growing economy”?
        BY CHARLES HALL, OPINION CONTRIBUTOR — 11/16/19
        https://thehill.com/opinion/energy-environment/470782-does-trump-have-a-bunch-of-losers-to-thank-for-a-growing-economy

        “This relation among oil supplies, prices and the political winds is not new and works both ways. Presidents Gerald Ford and Jimmy Carter were in office during the economically disastrous increase in the price of oil from less than $4 a barrel in 1972 to more than $35 in 1979. Both lost in their reelection bids.

        In 1980 and 1984, Ronald Reagan ran on a platform of “Let’s make America Great again” and “It’s morning again in America,” which coincided with the decline in oil prices during the 1980s. In the U.K., Margaret Thatcher was floundering in popularity in 1980, but then received most of the credit for the remarkable recovery of the U.K. economy. Was it her conservative management style, or the development of the North Sea oil, which occurred on her watch? Now that the North Sea oil boom is over, the U.K. economy is struggling again.

        So again the U.S. economy is booming, continuing to grow since the large economic contraction of 2008, which in turn followed the brief but dramatic oil price spike to $140 a barrel that had occurred earlier in that year. There is a significant correlation between energy prices and presidential popularity. While oil price is not the only predictor, it is too often ignored in our personality- and social media-driven world (which, of course, is underwritten by fossil fuels).

        Ironically, President Trump’s prospects there are tied in part to American investors being willing to continue to lose money seeking shale oil.”

        From the first Hall and Lambert Paper again.

        (4)Societal EROI(EROISOC): Societal EROI is the overall EROI that might be derived for all of a nation’s or society’s fuels by summing all gains from fuels and all costs of obtaining them. To our knowledge this calculation has yet to be undertaken because it is difficult, if not impossible, to include all the variables necessary to generate an all-encompassing societal EROI value (Hall et al., 2009). We develop a preliminary method for deriving EROISOCat the national level in another paper in this series (Lambert et al., 2013). https://www.sciencedirect.com/science/article/pii/S0301421513006447#bib29

        Energy, EROI and quality of life
        Author links open overlay panelJessica G.LambertCharles A.S.HallStephenBaloghAjayGuptaMichelleArnold
        Abstract
        The near- and long-term societal effects of declining EROI are uncertain, but probably adverse. A major obstacle to examining social implications of declining EROI is that we do not have adequate empirical understanding of how EROI is linked, directly or indirectly, to an average citizen′s ability to achieve well-being. To evaluate the possible linkages between societal well-being and net energy availability, we compare these preliminary estimates of energy availability: (1) EROI at a societal level, (2) energy use per capita, (3) multiple regression analyses and (4) a new composite energy index (Lambert Energy Index), to select indicators of quality of life (HDI, percent children under weight, health expenditures, Gender Inequality Index, literacy rate and access to improved water). Our results suggest that energy indices are highly correlated with a higher standard of living. We also find a saturation point at which increases in per capita energy availability (greater than 150 GJ) or EROI (above 20:1) are not associated with further improvement to society.

        “Our results suggest that energy indices are highly correlated with a higher standard of living. We also find a saturation point at which increases in per capita energy availability (greater than 150 GJ) or EROI (above 20:1) are not associated with further improvement to society.”

        We begin our analysis with Kaufmann (in Hall et al., 1986), who derived an explicit method to assess quantitatively the EROI of imported oil (see Eq. (1)). The concept is that the EROI for imported oil depends upon what proportion of the energy content of an imported dollar′s worth of oil is needed to generate a dollar from the export of commodities generated domestically. King (2010) developed a metric similar to Kaufmann′s EROIIO called the energy intensity ratio (EIR) and calculated it for various industrial fuels in the US over time. The results of his 2010 study support his contention that the EIR is able to act as a proxy for the EROI for individual fuels.

        https://iopscience.iop.org/article/10.1088/1748-9326/5/4/044006
        2.1. EIR of oil and petroleum
        The EIRp, oil typically lies between 10 and 30, but from 1949 to 2008 it ranges from 7.5 (1981) to 48 (1998) with a value of 8.8 in 2008 marking the year of the highest oil price in history and the beginning of the latest time period of US economic recession. The minimum EIRp, oil of 7.5 in 1981 also coincided with the peak of an economic recession in the US as well as the time of the highest overall cost of petroleum as a percentage of GDP at 8.5% (EIA 2008). EIRe, petro from 1970 to 2006 ranged from 5.3 in 1981 to 15.9 in 1998, the same years for the lowest and highest EIRp, oil. In 1981 EIRp, oil:EIRe, petro was 1.43:1 (minimum) and in 1998 3.05:1 (maximum). The EIRp, oil from 1949 to 1972 gradually increased from 19 to 29 with little volatility in the value. This lack of volatility can possibly be attributed to the Texas Railroad Commission (TRC) acting as an oil cartel by prorationing oil production in Texas from 1935 to 1973 to create a price floor for balancing supply and demand (Prindle 1981). With Texas as the swing state oil producer until US peak production in 1970, this balancing on the price was possible.

        http://priceofoil.org/content/uploads/2011/01/DrillingIntoDebt.pdf

        Our key findings are
        1. Increasing oil production leads to increasing debt.There
        is a strong and positive relationship between oil production and debt burdens. The more oil a country produces,
        regardless of oil’s share of the country’s total economy,
        the more debt it tends to generate.
        2. Increasing oil exports leads to increasing debt. There is
        a strong and positive relationship between oil export
        dependence and debt burdens. The more dependent on
        oil exports a country is, the deeper in debt it tends to be.
        3. Increasing oil exports improves the ability of developing
        countries to service their debts. There is a strong and
        positive relationship between oil exports and debt service. The global oil economy improves the ability of countries to make debt payments, while at the same time
        increasing their total debt.
        4. Increases in oil production predict increases in debt size.
        Doubling a country’s annual production of crude oil is
        predicted to increase the size of its total external debt as
        a share of GDP by 43.2 per cent. Likewise, the same
        change is predicted to increase a country’s debt service
        burden by 31per cent. For example, the Nigerian government currently plans to increase oil production by
        160% by 2010. Past trends indicate that Nigeria’s debt
        can thus be expected to increase by 69%, or $21 billion
        over the next six years.
        5. World Bank programs designed to increase Northern
        private investment in Southern oil production have
        instead drastically increased debt. Northern multilateral and bilateral “aid” for oil exporting projects in the
        South has exacerbated, rather than alleviated debt.
        Specifically, an examination of those countries where
        the World Bank Group conducted “Petroleum
        Exploration Promotion Programs” (PEPPs) reveals debt
        levels (debt-GDP ratios) in those countries that are 19%
        higher than those countries that did not undergo this
        form of structural adjustment.
        6. The relationship between debt & oil is most likely
        caused by the interplay in between three factors:
        a. Structural incentives for and direct investments in
        the oil industry by multilateral and bilateral institutions, such as the World Bank Group and export
        credit agencies.
        b. Oil fueled fiscal folly – both in the North by creditors
        over eager to lend to nations perceived as oil rich,
        and in the South by unwise fiscal policies.
        c. The volatility of the oil market.

        Which are the dominant variables in the societal outcomes we observe and which Societal outcomes are we most concerned with?

        These are the dynamics which require to be properly understood so that the prosperity potential going forward, with the Energy resources and materials resources which are available and will become available properly audited into out Stocks, the flow of stocks and also where those stocks and flows are directed.

 

6 thoughts on “Money its a Gas, used to be oil, but you still have your hands on my stash. Energy Economics. Banned from seeds. #WTF

  1. rogerglewis says:

    test, So much for free speech. Money its a Gas, used to be oil, but you still have your hands on my stash. Energy Economics. Banned from seeds. #WTF https://notthegrubstreetjournal.com/2020/03/02/money-its-a-gas-used-to-be-oil-but-you-still-have-your-hands-on-my-stash-energy-economics-banned-from-seeds-wtf/ It seems that Bjorn Lomberg was too much for the constitutions of the Catastrophic snowflakes?

    rogerglewis on March 2, 2020 at 6:30 am said:
    Your comment is awaiting moderation.
    Bjorn Lomberg seems to have got me excluded from posting here.

    Reply ↓
    rogerglewis on March 2, 2020 at 6:31 am said:
    Your comment is awaiting moderation.
    Did I miss the total prohibition of links memo?

    Reply ↓
    rogerglewis on March 2, 2020 at 6:32 am said:
    Your comment is awaiting moderation.
    I’ve have to admit finding this pretty funny…………..

    If you’ve not seen it, it’s a positive test on an – er, employee – at a brothel in Valencia. Over 100 people, including 86 customers, have been held in lock-down, with many no doubt scratching their heads in search of a plausible explanation when they do, eventually, go home………

    Reply ↓
    rogerglewis on March 2, 2020 at 6:33 am said:
    Your comment is awaiting moderation.
    Its not just links though is it Tim. I have been moderated here links or no links since I started commenting and any danger of contradiction of your own belief system was identified by you as a risk? Poor Show!

    Reply ↓

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