"Alcohol didn't cause the high crime rates of the '20s and '30s, Prohibition did. And drugs do not cause today's alarming crime rates, but drug prohibition does." – US District Judge James C. Paine, addressing the Federal Bar Association in Miami, November, 1991
Regular Commentator "Coal Guy" helped to clarify the impacts of declining population growth on the Government Ponzi Schemes I brought up in a recent post... now listen to...
“I will go so far as to say that not only growth but capitalism itself may be in part dependent on a growing population, production depends upon people, not only in the actual process, but because of the final demand that justifies its existence.”
During my career on Wall Street I have often said that economic growth would likely end with the end of population growth, and with it the end of ALL of the Ponzi Schemes (we didn't have Madoff back then). This concept was often met with derision. Here now is Establishment Power Bill Gross saying essentially the same thing with but one qualifier in the above statement - "in part dependent" - and of course it is fully dependent, no "in part" about it.
Problem is... stone cold Capitalists like me will be kind of lost without capitalism...
14 comments:
There is a "graph of the day" (debt saturation) that says for the last 40 years, the change in GDP divided by the change in debt -- a ratio has been dropping for 40 years -- continues to drop. This indicates that we are now at the point that every $1 of added debt gives us minus 45 cents from GDP. No matter how much more money we borrow, we can no longer grow our way out of this mess, history says.
http://www.business
insider.
com/diminishing-
marginal-
producitivity-of-
debt-2010-3
Long time no post dudes. Actually I agree with Bill that the P scheme is partially dependent on population. The other part is available energy per capita. You could have China with 1.4 billion people that consumes less then America with 300 million people because energy available to Americans per capita is an order of magnitude greater that to Chinese. And we use it mostly for production and they use it to make things for others and not for themselves.
BTW, it seems that they are using more energy in aggregate than US right now. Well good for them. Wonder how long that will last. I have no hope for China to be able to take over from US in a seamless manner. Not without a MAJOR economic restructuring and a war in the middle. Just like the Great Depression and WWII while we transitioned from UK to US lead world.
Anyway, population growth alone is not sufficient for Capitalism to continue is all I wanted to say.
Cheers,
Chuck H.
"I roll with Damocles"
Chuck; most American energy is used for consumption, not production. Making fireworks and setting them off may count towards GDP, but it isn't 'productive'. A 'fireworks' economy includes driving around in circles (summer driving season), overheating/over-cooling houses, producing junkfood, and making wars. It's just makework for fossil fuels.
China and India's fossil fuel use is building infrastructure and productive capacity; not just factories, roads and docks, but civil systems like law, education and healthcare. Investments in the future.
Bur; that's the reason why your graph shows negative returns on debt for Western economies.
Trouble is, people don't differentiate.
Bur:
That is a great data point. I really need to noodle that one...
Finally, a complement. :)
I thought you would have seen that graph somewhere. It's one of those "deep numbers" graphs that dictate a historical trend that isn't likely to change.
The more information and opinions on your blog, the better it is. :)
I even recommended your blog to one of the Agora site writers who was researching the best peak oil blogs. Some new kid.
I've seen a similar chart. It is another measure of inflation, and the coming debt collapse. Even in the face of increasing debt (money supply) the real productive output ( things people buy and use) is decreasing. It is an indicator of the massive debt bubble on one side and de-industrialization on the other. In a state of zero inflation, there should be a 1 to 1 correspondence.
Regards,
Coal Guy
I was making the demographics point a few weeks ago on China and Russia. I read a article when I was in high school (98 or 99) that basically said don’t count on the government to provide benefits (ss, Medicare, foods stamps) and expect housing to collapse because of the retirement of the baby boomers. The funny thing about housing then was that it was not a bubble yet. You cannot outsmart demographics.
Looking at federal Income tax receipts is kind of scary
2008=1.25 trillion
2009=1.21
2010=1.061
can we really be growing? I don't think so.
Bur,
These programs account for 450 billion alone currently so there is big money to be saved. Cut all by 40-60 percent and I really doubt that there will be any difference in service. Cutting the fat tends to make workers more efficient.
o $78.7 billion (−1.7%) – Department of Health and Human Services
o $72.5 billion (+2.8%) – Department of Transportation
o $52.5 billion (+10.3%) – Department of Veterans Affairs
o $51.7 billion (+40.9%) – Department of State and Other International Programs
o $47.5 billion (+18.5%) – Department of Housing and Urban Development
o $46.7 billion (+12.8%) – Department of Education
o $42.7 billion (+1.2%) – Department of Homeland Security
o $26.3 billion (−0.4%) – Department of Energy
o $26.0 billion (+8.8%) – Department of Agriculture
Now we have got to attack the big dogs in the fight. Defense-related expenditures outside of the Department of Defense constitute between $216 billion and $361 billion in additional spending, bringing the total for defense spending to between $880 billion and $1.03 trillion. First, pull out of Afghanistan and Iraq and cut military spending by 25% across the board. Britain is in the process of doing this exact thing as part of austerity measures. The base budget for defense is about 580 billion so we would return to this without the two wars, then you could take all of 25 % off this amount saving another 145 billion. That is a total of 450 billion dollars from the low end of range of 880 billion. Rescind all tarp funds 700 billion. Stop all stimuli spending something like 300 billion. See bur this gets real essay without touching the other programs.
Above proems 450 save 180
Defense savings 445
Return of tarp moneys 700
Return of unspent stimulus 300
Total 1.625 trillion dollars
Projected deficit 1.71 trillion I am getting close.
Social security is only 700 billion and mostly pays for itself right now. So make a mandatory correlater between revenue and spending and adjust monthly checks accordingly. Raise age for future retirees and increase tax by 2% and save this money against 2020+ payments so as not to affect floating checks previously mentioned.
Dex:
Re: Social Sec & MEdicare... That would be the worst thing we could do... well, maybe not... the worst thing we could do is just keep on doing what we are doing with the inevitable day of reckoning off in the future...
and I guess this is just an intellectual exercise in any event... because I think it too late considering the balances on the ledger to fix it/them/us...
BUT
fixing Social Security COULD ONLY HAPPEN IN A DEFLATIONARY ENVIRONMENT.
Ergo, this is the moment (in my humble opinion), to scrap collecting SS & Med taxes, end the future of the programs by paying out a pare per su haircut of benefits to those that paid in. It would require printing money - which could only be done during severe deflation.... and then telling the American people the facts as they are - that each one of us is responsible for ourselves.
Jeffers,
I was writing to show that it is not impossible to cut deficit spending. Bur had brought up earlier that we have no Ideas on were to cut. Well I do and lots of them. Most likely they will have to get into the mandatory programs, but burs point is always that these programs (medicare,ss,defense....) account for so much of the budget that the rest don't matter, they do. I think there is plenty of room to play in other areas before even digging into the major programs. But I gave a resonable Idea on Defense and attacked the republican sacred cow first. The SS idea is a quick fix. I won't get it. My last report said I will get it when I am 70yrs old. MY Mom's dad lived till 72 and my dad's dad lived till 56. I will never see it, but the whole purpose of our government system was to impose comprise and I laid out a simple plan that would win support. It is not what I would personally want, but when all the baby boomers retire we will have 82 million old cranky voters to deal with.
Dex:
I am in agreement on the other points - no issue there. But SS & Medicare are doomsday programs - if we don't end them soon all is truly lost... and I mean that in the most profound and deadly serious sense. If ("If"? I should say "When" the U.S. were to enter a terminal financial breakdown, the entire world will go viral. The political repercussions of which would make Peak Oil look like extremely small potatoes.
I kind of agree that cheap oil freed women from the home and helped set loose a cavalcade of feminism/liberalism, but every time I try to really get into it, reading all that Sharon Astyk has written on the subject, my head basically explodes. I guess I'm too fixated on the technical and economic aspects of the changing times we live in, to get to the more social aspects.
I will say that in my experience, modern hyper-consumerism is all too well represented on both sides of the gender line, however.
That said, I've been thinking about something completely different regarding oil decline - something that I haven't really seen discussed much in Peak Oil related talking circles...The End of Cheap Pavement:
http://online.wsj.com/article/SB10001424052748704913304575370950363737746.html
The optimists have pinned their hopes on keeping our motoring civilization going post-Peak Oil on electric cars, algae biodiesel, etc., but nobody has really talked about the fact that virtually all of our road network is paved with oil byproduct. Call it what you will, bituminous concrete, or the new name, "hot mix asphalt", it's all dependent on cheap oil. Of course, we all have been discussing how a bankrupt government, already choking on entitlement programs, won't have any $$ for infrastructure maintenance, but what about the fact that the very material we use, asphalt, is about to become very pricey and scarce?
Conventional concrete simply doesn't work very well in the Snowbelt. The cement it's made out of uses copious amounts of natural gas to fire the limestone kilns, and then uses lots of diesel to mix, haul, and spread it.
Previous to HMA and the various similar products, our civilization used twin steel rails, canals, and (wooden) plank roads to do the heavy hauling in places where regular dirt roads turned to seasonal mud and just tolerated the mud on back roads. The thing is, even more than the cars and trucks we use, our fast road network is the very backbone of our modern economy. Slow-going dirt roads won't cut it.
Even IF society could build 300 million Chevy Volts, etc., along with the power plants to charge them, what are we going to run those cars on, cow paths? Maybe down south the existing roads will hold up okay for a few decades, but anywhere that sees precipitation and freezing temperatures, will lose nice, smooth road surfaces pretty fast. The Internet is full of pictures of loaded trucks and semi trailer units struggling or hopelessly mired in mud all over the Third World. 100 miles of wet, muddy roads are totally impassable to a 18 wheeler trying to get to the next major city. It's a prime reason that part of the world never really modernized. Dirt roads suck during the rainy season.
I kind of agree that cheap oil freed women from the home and helped set loose a cavalcade of feminism/liberalism, but every time I try to really get into it, reading all that Sharon Astyk has written on the subject, my head basically explodes. I guess I'm too fixated on the technical and economic aspects of the changing times we live in, to get to the more social aspects.
I will say that in my experience, modern hyper-consumerism is all too well represented on both sides of the gender line, however.
That said, I've been thinking about something completely different regarding oil decline - something that I haven't really seen discussed much in Peak Oil related talking circles...
(from the Wall St. Journal, but Blogspot says the original URL is too long) http://tinyurl.com/2a6dqpg
The optimists have pinned their hopes on keeping our motoring civilization going post-Peak Oil on electric cars, algae bio diesel, etc., but nobody has really talked about the fact that virtually all of our road network is paved with oil byproduct. Call it what you will, bituminous concrete, or the new name, "hot mix asphalt", it's all dependent on cheap oil. Of course, we all have been discussing how a bankrupt government, already choking on entitlement programs, won't have any $$ for infrastructure maintenance, but what about the fact that the very material we use, asphalt, is about to become very pricey and scarce?
Conventional concrete simply doesn't work very well in the Snowbelt. The cement it's made out of uses copious amounts of natural gas to fire the limestone kilns, and then uses lots of diesel to mix, haul, and spread it.
Previous to HMA and the various similar products, our civilization used twin steel rails, canals, and (wooden) plank roads to do the heavy hauling in places where regular dirt roads turned to seasonal mud and just tolerated the mud on back roads.
Even IF society could build 300 million Chevy Volts, etc., along with the power plants to charge them, what are we going to run those cars on, cow paths?
The Internet is full of pictures from Third World locations of heavily loaded trucks or tractor trailers hopelessly mired, axle deep in mud on a 100 mile long dirt road, trying to get to the next major city. Indeed, this is a prime reason many poorer parts of the world couldn't be modernized during the Oil Age....they couldn't, or wouldn't build paved, intercity roads.
We're headed back there too, and more to the point, we're headed back to those completely awful roads much faster than many think....I think anyway.
At the very least, multi-lane divided highways are going to become single lane highways. Redundant routes will be abandoned. Side roads will become lesser or unmaintained dirt or gravel.
That railroads become more important for freight again is a no brainer. But will we rebuild the branch lines to the smaller towns we abandoned in the early 20th century, or do we make do with gravel roads, or splurge and use the little bit of asphalt (possibly derived from tar sands...something the latter resource might actually make some economic sense for) to access those sideline towns?
Here is one last thing to think about: draft animals deal with muddy roads much better than even a four wheel drive truck does, especially if replacement parts for the truck aren't available anymore.
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