Consume Or We Die...

[SMAC67]

Good post Tallboy, although I have to agree with Frugalboy that at the heart of the issue is the number of human beings on the planet. Although losing 365 million Americans would be of more benefit to mankind than 365 million Chinese. Although I'm sure the latter would like to emulate the former. It ain't going to happen as nature will once again sort out the current imbalance.

It's hardly worth commenting on Toto's delusions but it is indicative of the mental modeling most people seem to currently hold. I don't think the phrase "cognitive dissonance" does it justice. I think the lack of intergenerational memory is the prime factor in all of this as people are simply unable to learn from history. We are tool making animals living in the here and now, tomorrow never comes.

We certainly all consume, and most certainly die, the quicker you do the former, the shorter the time span to the latter, see Elvis for details....................

[tallguy]

Firstly, FRB has it's origins from the Venetians in the 1300's. Secondly FRB of the form that we use today was used by the British and Dutch Empires from the 1700's. This is long before oil, and long before the industrial revolution. In fact, 80% of the population in the US was essentially rural (agricultural) up to the 1900's.

Of course FRB has old roots. If you read the post more carefully, you would have seen that I was referring to the global application of FRB.

Of course FRB, in more limited form, was used before oil. I didn't say it wasn't. Your point is?

Thirdly, the USA has been on a path of exponential growth since it's foundation, and the rate of exponential growth (real terms) has been constant. This was before oil, before industrialization, during oil, during industrialization.

Fourthly, the US economy has essentially tripled in real GDP terms since 1980. Yet today the US consumes less oil per annum than during 1980. Therefore, it is not a zero sum game, as you describe.

Of course the USA has grown significantly since it beginnings. It had a lot of room to grow physically and also in resource terms. However, that growth massively accelerated following the industrial harnessing of oil. It is not true to say that oil consumption in the USA has decreased since 1980 (putting aside the massive demand destruction of the last two years). However, it is certainly true to say that consumption of oil has not increased on a level one might assume to be commensurate with their growth since that time.

But, this is because you don't understand the subtleties of how growth is indirectly paid for, energetically. This is where the debt-based economics of FRB come into their own. Inflation of the money supply via FRB over the last few decades has allowed USA consumers to consume their oil by proxy via the purchasing of cheap products from Chindia. In other words, consumption by the USA, indirectly, has risen via the massive rise of oil consumption in their supplier countries

Fifthly, FRB is not stealing from the future. Stealing from the future occurs when debts are run up beyond claims to the present physical world. These are two different things. Lending can lead to stealth from the future, but FRB in itself is not the cause of this lending. Bad lending practice is, and this can occur under any financial/monetary system, as history bears witness.

Of course history bears witness. Just not on a global scale. Also, I did not say FRB was stealing from the future per-se. I said it was borrowing from the future. Which if couse, it is. When you borrow money from the bank to buy your house, you are, in effect, borrowing from your own productive future. With the application of interest on the loan, there is also an implicit assumtion that there will be more money tommorow than there is today. Otherwise the debts would not be repayable. That, in turn assumes that there will be a bigger economy tommorow than today. Stealing from the future occurs when bad debt is monetized and or taxpayers are expected to foot the bill for those bad debts.

Your grasp of economics is basically sound, but very context limited. you need to stand back and look at the larger picture.

Sixthly, we are not up against a shortage of resources. We have not even begun to tap the resource potential of this planet and potentially others. There is an essentially endless supply of energy of all forms, oil being just one of the first to be exploited.

This is statement of faith. Evidence?

Edited November 11, 2010 by tallguy

[billybong]

Brazil's Lula Says World Headed For 'Bankruptcy' Unless Rich Nations Act

SEOUL (AFP)--Brazilian President Luiz Inacio Lula da Silva said Thursday the world economy was headed for "bankruptcy" unless rich nations raise consumer demand rather than relying on exports to power recovery.

"If they don't consume, and they just bet on exports, the world will go into bankruptcy," he told reporters as leaders at the Group of 20 industrial and developing nations headed into a two-day summit in the South Korean capital.

Sounds like he's responding to Cameron's appeal to China to consume more. Sounds like he wants more Chinese investment in Brazil.

You do get your laughs as you go along

[tallguy]

Good post Tallboy, although I have to agree with Frugalboy that at the heart of the issue is the number of human beings on the planet. Although losing 365 million Americans would be of more benefit to mankind than 365 million Chinese. Although I'm sure the latter would like to emulate the former. It ain't going to happen as nature will once again sort out the current imbalance.

It's hardly worth commenting on Toto's delusions but it is indicative of the mental modeling most people seem to currently hold. I don't think the phrase "cognitive dissonance" does it justice. I think the lack of intergenerational memory is the prime factor in all of this as people are simply unable to learn from history. We are tool making animals living in the here and now, tomorrow never comes.

We certainly all consume, and most certainly die, the quicker you do the former, the shorter the time span to the latter, see Elvis for details....................

Yes, I would agree the heart of the problem is population size. However, if we hadn't accessed the oil allowing us to grow our populations unsustainably, we would not be in the position of having an unsustainable population.

However, ths is semantics. We now are where we are.

Too many people, not enough stuff.

It's not going to end well.

[Toto deVeer]

Of course FRB, in more limited form, was used before oil. I didn't say it wasn't. Your point is?

You said:

Fractional reserve banking (FRB) stimulates and amplifies economic growth by borrowing from the future and so avoids, for a time, the inherent flaw in capitalism. The earth has finite amounts of easily accessible industrial resources eventually resulting in a situation where growth has stopped. Capitalism's inherent flaw is exposed.

You have connected a chain: frb -> borrowing (stealing) from the future -> growth. But your chain continues: growth must have industrial resources. And you contend that this is the flaw in capitalism; the connection between industrial resource limitation and frb-induced borrowing from the future.

But frb was around before there was any industrial revolution. Yet there was still growth. Therefore I am illustrating that limited industrial resources are not strictly a limitation of capitalism, in that it existed before the industrial revolution.

Of course the USA has grown significantly since it beginnings. It had a lot of room to grow physically and also in resource terms. However, that growth massively accelerated following the industrial harnessing of oil. It is not true to say that oil consumption in the USA has decreased since 1980 (putting aside the massive demand destruction of the last two years). However, it is certainly true to say that consumption of oil has not increased on a level one might assume to be commensurate with their growth since that time.

I don't understand your chart. Below I have attached a chart from wtrg economics.

I stand corrected. The US uses less oil now than they did in 1978 (not 1980):

1978 : 21 mbd.

2010 : 19 mbd.

Yet the GDP has tripled. This defeats your assertion that growth is limited by resources, including the most important one, oil. You have ignored that growth can occur from many other things, including intangibles such as invention, innovation and intellectual property.

But, this is because you don't understand the subtleties of how growth is indirectly paid for, energetically. This is where the debt-based economics of FRB come into their own. Inflation of the money supply via FRB over the last few decades has allowed USA consumers to consume their oil by proxy via the purchasing of cheap products from Chindia. In other words, consumption by the USA, indirectly, has risen via the massive rise of oil consumption in their supplier countries

The situation we find ourselves in is due to excessive supply of money. The supply of money is separate from the mechanism of frb, or elastic currency. Huge deficits have been run up with non-elastic currencies, such as the US Note, which existed before the FRN (and frb) in the US. All it takes is for someone to accept a promise to pay, and this can occur within a barter system, even.

This is statement of faith. Evidence?

natural gas.

methyl hydrate.

anhydrous ammonia.

hydrogen.

fusion.

fission.

wind.

water.

solar.

geothermal.

The reserves of methyl hydrate alone are estimated to be twice the entire global oil, gas and coal reserves, combined. Anhydrous ammonia has been used in combustion engines since WW2 (Belgian buses) and jet aircraft in the US, Both of these burn cleanly. In the US the most efficient solar system ever tested (no solar cells) is being installed on projects totalling more than 3000 MW.(one project is the world's largest solar plant, 1700 MW).

These are not technical or financial issues, their adoption is restricted by political issues.

I just don't agree with anything you've said.

Edited November 12, 2010 by Toto deVeer

[Stars]

Stars

Services are only tertiary. That is to say, They serve to redistribute existing wealth. They do not, in and of themselves, generate it.

No, services also create wealth

A car is only a medium by which the service of transport can be delivered. The new wealth is in that transport service / ability. Manufacturing is a very good way to deliver services, but it isn't the only way.

The only way to create new wealth is to bring it in from outside of an economic system.

Creating new wealth is just changing the state of something to a state we value more

The reason for the above is the need for profit. In its most essential form, profit may be defined as a situation whereby you exit an economic transaction with more resources than when you went in. In order for anyone to extract a profit, a loss must be incurred by someone, or some thing, somewhere else. Either the supplier of the raw materials makes a loss, or the manufacturer makes a loss, or the retailer makes a loss, or the customer makes a loss, or the workers all the way up the production chain makes a loss. Someone or something has to make a loss. The above leads to the paradox of a situation where the ideal for any capitalist would be to do away with all workers and automate all production since this would prove to be the most profitable arrangement. However, those workers are also their customers. Thus, in doing away with them, they have destroyed their customer base's capacity to spend money on buying their products.

This is a fallacy

Because wealth is created by our actions and trade (see above) all sides in trade can make a simultaneous profit

Thanks for the effort writing that post, i don't have nearly enough time to do a full reply - i think there are a few things we disagree about

[Bloo Loo]

No, services also create wealth

A car is only a medium by which the service of transport can be delivered. The new wealth is in that transport service / ability. Manufacturing is a very good way to deliver services, but it isn't the only way.

Creating new wealth is just changing the state of something to a state we value more

This is a fallacy

Because wealth is created by our actions and trade (see above) all sides in trade can make a simultaneous profit

Thanks for the effort writing that post, i don't have nearly enough time to do a full reply - i think there are a few things we disagree about

services can only be paid for from wealth already existing that has been monetised.

You cant monetise a service.

for example, a farmer wants a loan to buy a farm.

the bank looks at the land value, THEN looks at the income it could generate.

that income depends on the cost of services the farm needs to buy....too much, then profit falls and the loan may not pay for the purchase.

the food generated is wealth, the people providing the services consume the wealth.

[tallguy]

services can only be paid for from wealth already existing that has been monetised.

You cant monetise a service.

for example, a farmer wants a loan to buy a farm.

the bank looks at the land value, THEN looks at the income it could generate.

that income depends on the cost of services the farm needs to buy....too much, then profit falls and the loan may not pay for the purchase.

the food generated is wealth, the people providing the services consume the wealth.

Exactly so

[Stars]

services can only be paid for from wealth already existing that has been monetised.

No services can be paid for with services

Have you never heard the expresion if I scratch your back, you can scratch mine?

Edited November 12, 2010 by Stars

[tallguy]

No services can be paid for with services

Have you never heard the expresion if I scratch your back, you can scratch mine?

Of course services can be paid for with services.

Bloo Loo was merely providing a simplified schematic.

However, you need to go all the way down the rabbit-hole Stars.

It's not services that's at the bottom of it.

Edited November 12, 2010 by tallguy

[Stars]

the food generated is wealth, the people providing the services consume the wealth.

People may consume wealth; but people who provide a services are also creating wealth

An obvious example which shows you are contradicting yourself is someone who provides the service of manufacture

[tallguy]

People may consume wealth; but people who provide a services are also creating wealth

An obvious example which shows you are contradicting yourself is someone who provides the service of manufacture

You being semantic here stars.

So, you do accept that the only way to generate wealth is to be either a primary producer, or at a stretch, a sdecondary producer. A tertiary sevice provider simply moves the wealth around.

Edited November 12, 2010 by tallguy

[Stars]

Of course services can be paid for with services.

However, you need to go all the way down the rabbit-hole Stars.

It's not services that's at the bottom of it.

I am going down the rabbit hole - you to me seem to be stukh at surface appearances. It seems reasonably obvious to me that manufacturing an object which can be used to transport goods and transporting them by carrying them to their destination are just different ways to supply the service of transport; and that the act of manufacturing itself is merely a service. It's a distinction without much substance

[Bloo Loo]

People may consume wealth; but people who provide a services are also creating wealth

An obvious example which shows you are contradicting yourself is someone who provides the service of manufacture

I see, you are defining differently to me.

I see a service as a product of an entity...a haircut, a meal in a restaurant...something to which added value is sold.

you see the man pulling the lever to make the widget as a service.

You can of course go all the way down the chain to all this, and I would agree, that the end result, the value of everything, is a token of human labour.

but, you cant monetise that...you can pay someone to do soemthing you dont, but that is a cost to you, not an addition to your wealth.

[Bloo Loo]

No services can be paid for with services

Have you never heard the expresion if I scratch your back, you can scratch mine?

you are describing economic activity, not wealth.

you could be describing cash....you give me cash and ill give you some back....this produces no wealth, but it sure is a great way to double the money supply as measured by the fairies at the Bank.

[Toto deVeer]

All this debate about services seems to ignore the effect that knowledge and innovation has on the creation and distribution of wealth. This knowledge can be within the sphere of manufacture or services which means that both can be involved in the aspect of production and creation of real wealth and real goods.

[Bloo Loo]

All this debate about services seems to ignore the effect that knowledge and innovation has on the creation and distribution of wealth. This knowledge can be within the sphere of manufacture or services which means that both can be involved in the aspect of production and creation of real wealth and real goods.

yep, you need an MBA to drive a van for City Link these days.

[Toto deVeer]

yep, you need an MBA to drive a van for City Link these days.

This is not to say that all services generate wealth.

However, consider the production of electricity. Is this manufacturing or is it a service? How many services are engaged in it's delivery? How many services are involved in development of new ways to create electricity? I would argue that the production of power, which is not something that one can hold or see or touch, is one of the greatest wealth creators on the planet. It is, in essence, a knowledge industry.

Edited November 12, 2010 by Toto deVeer

[Stars]

I see, you are defining differently to me.

I see a service as a product of an entity...a haircut, a meal in a restaurant...something to which added value is sold.

you see the man pulling the lever to make the widget as a service.

Well, pulling a lever or painting a widget is a service and these services together end up becoming manufacturing. Here is a thought - what about the guy who transports food to the guy who pulls the lever, is he part of a manufacturing process or merely a 'service provider'? Is he creating wealth? Of course he is.

Edited November 12, 2010 by Stars

[Toto deVeer]

what was your second point ?

Your sixth point is the key. There is an abundance of resources there is no physical limit only a limiting belief as I said before Romans used coal as a jewelry and uranium to colour glass who would have thought back then that these decorative resources held an abundance of energy.. The main problem with the finite crew is that they misinterpret human limits as resource limits the only hindrance is thought itself not physical resources.

Second point is in the first paragraph, admittedly written in haste and not well.

IMV the main problem is the resistance to change by corporate/political structure that spans the globe (something that Fuller wrote about in the Grunch of Giants, in the early 1980's. He predicted where we have evolved to today). We actually have the technology to break the gates of control of these entities, and they are fighting against the needed innovation. In a sense we are our own worst enemies.

But ultimately these gates will be broken.

[Toto deVeer]

In the purest physical sense there is no matter in the universe, there is only energy. We only have to find the ways to unlock and harness it.

[Injin]

But how can you explain why every previous similar Malthusian type prediction throughout history has got ot badly wrong in every aspect and humans have overcome every hurdle to tap in to the never ending abundance of resources.

Why would it be any different now ?

That's not true though is it?

Many civilisations have crashed and burned, never to return. Many places on earth have crashed and burned over and over again. if you were saying "rome is doomed" just before rome was doomed, you'd have been right.

While I think you are right about the barriers breakability, there are no guarantees and taking progress for granted is a prety good sign that it's stopped being a process with known factors and has moved onto being a mere belief.

[Riedquat]

But how can you explain why every previous similar Malthusian type prediction throughout history has got ot badly wrong in every aspect and humans have overcome every hurdle to tap in to the never ending abundance of resources.

Why would it be any different now ?

We've got lucky several times before. Why should we roll another six next time? How long do you rely on a strategy of continually getting lucky? I prefer a strategy of being able to carry on within the resources that we know about whilst searching for new ones, and only even considering using the new ones once they've turned up, rather than hoping that there will always be something around the corner. Also remember that a lot of past progress was simply exploiting existing, known, easily accessible resources on larger scales. The innovation required to do that meant development, I don't recall a time in the past where anyone was looking for it simply to be able to stay still.

[Toto deVeer]

We've got lucky several times before. Why should we roll another six next time? How long do you rely on a strategy of continually getting lucky? I prefer a strategy of being able to carry on within the resources that we know about whilst searching for new ones, and only even considering using the new ones once they've turned up, rather than hoping that there will always be something around the corner. Also remember that a lot of past progress was simply exploiting existing, known, easily accessible resources on larger scales. The innovation required to do that meant development, I don't recall a time in the past where anyone was looking for it simply to be able to stay still.

It's not really a matter of luck, it is a matter of survival. Facing certain death is a pretty good motivator, and unfortunately history has shown that it takes that circumstance before humans start to take action.

[Injin]

The point I was making is that every historical prediction made by population scaremongers was wrong, absolutely wrong.

Yes but if they were right you never heard about it, by definition.