debt
by
Chris Martenson
Executive Summary
- Why the insolvency hole the U.S. is in may be much deeper than appreciated.
- Current 'best case' assumptions show us doubling the size of our economy TWICE over the next 75 years. Why that's just not achievable.
- Why the above assumptions get even worse when the energy story is taken into account.
- Why action at the individual level is your best bet now.
If you have not yet read Part I: "Endless Growth" Is the Plan & There's No Plan B available free to all readers, please click here to read it first.
A Big Hole
When the Treasury Department estimates that the U.S. has a ~$65 trillion NPV (Net Present Value) shortfall in its main accounts, it's saying that using its assumptions, the U.S. government would need to have $65 trillion – today – in an account, earning a stated rate of interest, in order to be solvent.
Since the U.S. government don't have that have that kind of scratch, it's insolvent.
But the real picture is likely worse. The Fed calculates the NPV shortfall to be closer to $100 trillion. And if you believe Lawrence Kotlikoff's math, the figure is closer to $200 trillion. Either way – $65 trillion, $100 trillion, or $200 trillion – the sum cannot be paid.
So it won't be.
And the real trouble is that all of these numbers make the same implicit assumption: The future will more or less resemble the past. That is, some form of future growth – exponential future growth – of the economy is at the heart of every single calculation.
But we might question that, because somewhere between here and there, economic growth will have to come to an end. Or at least a pronounced deceleration. Why? Quite simply, because the earth is finite.
Now, we might comfort ourselves with the belief that our future date with hard limits is lifetimes away. But when we do, we shortchange ourselves (if we're wrong) and our progeny (if we're right). After all, the time to make an adjustment is when the resources and energy exist to make that change.
And that's now. Or, really, decades ago…
Why Your Own Plan Better Be Different
PREVIEW by Chris MartensonExecutive Summary
- Why the insolvency hole the U.S. is in may be much deeper than appreciated.
- Current 'best case' assumptions show us doubling the size of our economy TWICE over the next 75 years. Why that's just not achievable.
- Why the above assumptions get even worse when the energy story is taken into account.
- Why action at the individual level is your best bet now.
If you have not yet read Part I: "Endless Growth" Is the Plan & There's No Plan B available free to all readers, please click here to read it first.
A Big Hole
When the Treasury Department estimates that the U.S. has a ~$65 trillion NPV (Net Present Value) shortfall in its main accounts, it's saying that using its assumptions, the U.S. government would need to have $65 trillion – today – in an account, earning a stated rate of interest, in order to be solvent.
Since the U.S. government don't have that have that kind of scratch, it's insolvent.
But the real picture is likely worse. The Fed calculates the NPV shortfall to be closer to $100 trillion. And if you believe Lawrence Kotlikoff's math, the figure is closer to $200 trillion. Either way – $65 trillion, $100 trillion, or $200 trillion – the sum cannot be paid.
So it won't be.
And the real trouble is that all of these numbers make the same implicit assumption: The future will more or less resemble the past. That is, some form of future growth – exponential future growth – of the economy is at the heart of every single calculation.
But we might question that, because somewhere between here and there, economic growth will have to come to an end. Or at least a pronounced deceleration. Why? Quite simply, because the earth is finite.
Now, we might comfort ourselves with the belief that our future date with hard limits is lifetimes away. But when we do, we shortchange ourselves (if we're wrong) and our progeny (if we're right). After all, the time to make an adjustment is when the resources and energy exist to make that change.
And that's now. Or, really, decades ago…
by
David Collum
by
David Collum
Every year, friend-of-the-site David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. Moreover, he has graciously selected PeakProsperity.com as the site where it will be published in full. It's quite longer than our usual posts, but worth the time to read in full.
2013 Year in Review
by David CollumEvery year, friend-of-the-site David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. Moreover, he has graciously selected PeakProsperity.com as the site where it will be published in full. It's quite longer than our usual posts, but worth the time to read in full.
by
Gregor Macdonald
Improbably, the global economy has returned to growth over the past four years despite the ravages of a deflationary debt collapse, a punishing oil shock, ongoing constraint from debt and deleveraging, and stagnant global wages. The proof of this growth comes from the best indicator of all: the growth of global energy consumption.
What Happened to the Future?
by Gregor MacdonaldImprobably, the global economy has returned to growth over the past four years despite the ravages of a deflationary debt collapse, a punishing oil shock, ongoing constraint from debt and deleveraging, and stagnant global wages. The proof of this growth comes from the best indicator of all: the growth of global energy consumption.
by
charleshughsmith
Executive Summary
- Identifying the 8 characteristics that signal a system is experiencing diminishing returns
- The powerful advantages simplification can offer
- Debt-avoidance as a forward strategy
- The criticality of creating parallel, self-reliant systems
If you have not yet read Our Era’s Definitive Dynamic: Diminishing Returns, available free to all readers, please click here to read it first.
In Part I, we surveyed examples of diminishing returns and touched upon the forces that generate devotion to systems beset by diminishing returns. In Part II, we’ll look a little deeper into the dynamics, with an eye on avoiding being ensnared in systems that are doomed by dwindling yields and rising costs.
Characteristics of Diminishing Return Systems
1. Friction. Sources of what I term 'friction' include procedural impedance between dissimilar systems, fraud, inefficiencies, and processes that no longer add value but that are accepted as “the way things work.” (I wrote about systemic friction for Peak Prosperity in 2011: How Much of the U.S. Economy Is Friction?)
Common examples include the proliferating “reward cards” from retailers that fill our wallets and purses with low-value complexity and our absurdly complex income tax system that costs billions of dollars while serving primarily as a conduit for special-interest tax breaks.
2. “Solutions” that do not address the root problem. One example is our healthcare system’s haphazard approach to mental health: A great many mentally ill people who fall between the system’s cracks end up being incarcerated, in essence passing the cost and responsibility for mental healthcare to the already-burdened criminal justice system. Imprisoning the mentally ill is clearly a diminishing-return “solution” to our systemic lack of mental health care.
How to Overcome Diminishing Returns
PREVIEW by charleshughsmithExecutive Summary
- Identifying the 8 characteristics that signal a system is experiencing diminishing returns
- The powerful advantages simplification can offer
- Debt-avoidance as a forward strategy
- The criticality of creating parallel, self-reliant systems
If you have not yet read Our Era’s Definitive Dynamic: Diminishing Returns, available free to all readers, please click here to read it first.
In Part I, we surveyed examples of diminishing returns and touched upon the forces that generate devotion to systems beset by diminishing returns. In Part II, we’ll look a little deeper into the dynamics, with an eye on avoiding being ensnared in systems that are doomed by dwindling yields and rising costs.
Characteristics of Diminishing Return Systems
1. Friction. Sources of what I term 'friction' include procedural impedance between dissimilar systems, fraud, inefficiencies, and processes that no longer add value but that are accepted as “the way things work.” (I wrote about systemic friction for Peak Prosperity in 2011: How Much of the U.S. Economy Is Friction?)
Common examples include the proliferating “reward cards” from retailers that fill our wallets and purses with low-value complexity and our absurdly complex income tax system that costs billions of dollars while serving primarily as a conduit for special-interest tax breaks.
2. “Solutions” that do not address the root problem. One example is our healthcare system’s haphazard approach to mental health: A great many mentally ill people who fall between the system’s cracks end up being incarcerated, in essence passing the cost and responsibility for mental healthcare to the already-burdened criminal justice system. Imprisoning the mentally ill is clearly a diminishing-return “solution” to our systemic lack of mental health care.
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