This has been a long hiatus from blogging and now with the “termination dust” of new snow on the Tetons and outside temperatures less conducive to hiking and gardening and building, there is more time to reflect of all the interesting happenings in our world. I would like to draw attention to a recent post on thoildrum website and a valuable contribution by one of the long term editors who goes by the name of gail the actuary. It is her take on The Limits to Growth hypothesis from 1972 and how the recent world financial crisis might interact with their model. I will post the LTG illustration of various feedback loops as well as my response to her superb essay.
Here is the graph which will get the ball rolling:
And after you read her essay, here is my reply:
I also have a bit of a quibble that I rarely see criticism of how GDP is calculated inconsistently not only in the US but across the world. It would seem obvious that the US deficit borrowing which counts as + GDP should be subtracted from GDP in all deficit years. That of course would lead to downward GDP revisions for the past decade. For example pulling off this years deficit would drop our GDP from $14.6 Trillion to $13 Trillion or so. It is hard for this writer to stomach the fact that a huge portion of our GDP is financialization, real estate transactions and various financial and insurance and governmental services which of course is paper pushing generating nothing of lasting durable value. We still produce “things” of course but that is now a trivial 9% of the economy and a good portion of that manufacturing is aerospace and defense and armament “things.” If you contrast how GDP is calculated for the US with countries that are not top heavy with paper pushers, countries such as the northern European countries and the BRIC countries where manufacturing is a much higher proportion of their economies, economies that produce things for export as well as domestic consumption, then you would find that the US share of world GDP would be lower than commonly assumed. The additional fact that increases the risk to a US collapse is how little the US produces of things that people need in their day to day activities as well as what industry needs in terms of tools, clothing, transportation, industrial tools, critical minerals and so forth. I now find that even box cutters which brought down 2 airliners in 2001 are almost entirely produced in China. If you add the political system which is held in universal contempt by a huge majority of citizens layered as a pathetic feed back loop to our current predicament, it would seem that all these factors are baked into a cake which is not going to turn out well no matter what is done, no matter what is proposed.Once a system has passed the point of no return, there may not be solutions to avoid decline and collapse. Growth may now be nearing an end as energy becomes ever more scarce and dear, and all those economic assumptions built up since Adam Smith may have to be tossed onto the dung heap of history.