Inevitability of DeGrowth: Our Current Debt and Energy Orgy Can't Last Much Longer

Even though we don't know precisely how the future will unfold, we know a few things about it:

  1. Of the 7.5 billion humans on the planet, virtually every individual wants to enjoy a high-energy consumption “middle-class” lifestyle. As a generous estimate, 1.5 billion people enjoy a high-energy consumption lifestyle today; the remaining six billion are aspirants hungry for all the goodies enjoyed by the 1.5 billion—all goodies based on affordable, abundant energy.
  2. Our dependence on debt to fuel growth—more extraction of resources, more energy, more manufacturing, more consumption and more earned income to pay for all this expansion of debt and consumption—has built-in limits: debt accrues interest and principal payments, which reduce the remaining income available to spend on consumption.  Our dependence on fast-rising debt just to maintain low rates of growth eventually limits our ability to pay for more consumption/growth. When most income is devoted to servicing debt, there isn’t enough left to buy more stuff or support additional debt.
  3. The debt needed to move the growth needle is expanding at a much higher rate than the growth it generates. While growth is stagnant, debt is expanding by leaps and bounds to unprecedented levels. (Global Debt Hits A New Record High Of $217 Trillion; 327% Of GDP)
  4. Wages are stagnating for the bottom 90% of the workforce. We can quibble about the causes, but there is no plausible evidence to support a belief that this trend will magically reverse.
  5. The cost of the most valuable energy--high-density, easy to transport—will slowly but surely become more expensive as the cheap, easy-to-extract energy sources are depleted, notwithstanding the temporary boost provided by the fast-depleting wells of the fracking “miracle.”
  6. There are limits on our exploitation of resources such as fresh water and wild fisheries. Humans can print currency (money) but we can’t print fresh water, energy, wild fisheries, etc. If one unit of currency currently buys one liter of petrol, printing 10 more units of money doesn’t create 10 more liters of fuel.  
  7. Creating currency out of thin air isn’t free in our system: all new currency is loaned into existence and accrues interest. As a result, all currency is a claim on future earnings. If we borrow enough from the future, and earnings remain flat or decline, eventually there’s not enough income left to support the debt service and the expanding consumption the status quo needs to keep itself glued together.

What’s the result if we add these up?

Simply put, debt-dependent consumption in a world in which wages stagnate for the bottom 90% and energy costs increase as demand outstrips supply is a system with only one possible end-point: collapse.

The Energy-Debt-Growth Connection

If we accept that energy will get increasingly scarce and costly, and real earned income for the vast majority of households is in structural decline, that means the global economy is in terminal trouble. As this chart shows, energy consumption per capita and GDP (gross domestic product, a measure of growth) are in near-perfect correlation: rising energy consumption per person is the foundation of economic expansion:

If energy consumption per person declines, so does GDP. If GDP/ economic expansion stalls, the global financial system--dependent as it is on the permanent expansion of debt and income to service that debt--has a problem.

In other words, energy, growth and debt are intrinsically linked. Analysts Gail Tverberg and Chris Martenson, among others, have been discussing the causal connections between energy, debt and the financial system for years. Here are recent examples of their work:

- The Looming Energy Shock (PeakProsperity.com)

- The Next Financial Crisis Is Not Far Away (OurFiniteWorld.com)

Simply put, the extraction of fossil fuel energy and the development of alt energy on a vast scale both require an equally vast expansion of interest-accruing debt, both to fund the actual extraction, processing and transport of energy and the consumers’ purchases of all the energy-intensive goods and services that keep the economy expanding.

Right now, oil and natural gas are relatively inexpensive compared to historical peaks, especially when prices are adjusted for inflation. Broadly speaking, the fracking “miracle” (based on expanding debt) has pushed supply temporarily higher than demand. (By temporary I refer to a timeline of a few years.)

The resulting collapse in energy prices, while welcome to consumers, negatively impacts energy companies' ability to seek new reserves (exploration and production), tap existing reserves that cost a lot to extract or build new alternative energy facilities on a large enough scale to matter.

As we witnessed in the 2008 spike in oil prices to $140 per barrel, soaring energy prices crush consumer spending, triggering stagflation and recession.

The solution is a Goldilocks price structure—energy prices that are not too high (for consumers), and not too low (for producers). The problem is that as energy costs ratchet higher while wages stagnate or decline, the financial capability of households and businesses to pay higher energy and debt-service costs and expand their consumption vanishes.

Something has to give: either consumption declines (triggering structural, permanent recession) or the energy sector goes bankrupt as its production costs cannot be covered by the price of energy consumers can afford to pay.

Meanwhile, the skyrocketing debt required to keep the entire status quo glued together is sapping income, reducing the every participants’ ability to pay for future growth.

These realities leave three possible futures:

  1. Energy prices move beyond what’s affordable, and the system breaks.

     

  2. Debt service costs rise above what’s affordable, and the system breaks.

     

  3. Both energy and debt service costs rise in tandem, and the system breaks. 

Magic Technology and Wishful Thinking to the Rescue

The consensus solutions to increasingly unaffordable energy are technological: new technologies are going to make energy abundant and so cheap it’s practically free.

While it’s true that there are many alternative energy technologies in development, the reality is few make financial sense and few have the potential to scale up rapidly enough to replace oil/coal/natural gas.

Take liquid fluoride thorium reactors. The consensus is that this form of nuclear energy is reliable and safe. Yet not a single working thorium reactor is in operation. (An update on the potential of LFTR power - PeakProsperity.com)

How about all those solar power technologies that are going to make electricity abundant and cheap everywhere? Magical thinking is appealing, but the reality is wind and solar make up roughly 2% of all energy consumed globally. These could double, triple, quadruple and then double again, and they wouldn't even begin to replace fossil fuels.

Even if wind/solar became dirt-cheap to manufacture, install and maintain (in the real world, we have to measure total life-cycle costs, not just the initial purchase price), these alt energy sources are intermittent, and that's a big problem for two reasons:

1. Batteries are not “free” and current technologies rely on scarce resources (lithium, etc.)

2. Utilities need to maintain significant power generation capacity to replace these sources during night, cloudy days, when the wind decreases, etc.

This means the entire infrastructure of fossil-fuel generated electricity must be maintained--a very costly requirement.

The other problem with the “electricity and storage will be nearly free” line of magical thinking is much of our transport system can't be switched to electricity--aircraft, container ships, etc.

Virtually every optimistic vision of a cheap, abundant energy future overlooks these problems, or assumes each will effortlessly be solved with some new whiz-bang technology that just so happens to be dirt-cheap.

But not all technologies that work on in lab are affordable and not all technologies scale from the lab to production on a global scale.

Maybe some lab will invent a battery based on a cheap, abundant resource like silicon, but the process of manufacture may still be horrendously expensive, i.e. require a lot of energy and costly machinery. Even if batteries can be manufactured at a low cost, they’re only serving the 2% of total energy being generated by intermittent sources.

Technological solutions are always the "answer," but the actual costs of scaling up new technologies to offset the decline in conventional oil is ignored or glossed over.

If scaling up a new energy source bankrupts consumers and producers alike, is it a solution?

Magical Thinking: Debt Doesn’t Matter

The other line of magical thinking is that debt doesn’t matter, because future growth will always provide us with enough income to service debt.  As noted above, the structural stagnation of earned income means this assumption is no longer valid.

The next line of defense is that super-low interest rates will make debt practically weightless.  But back in the real world, we find even interest rates near zero eventually burden governments and economies. Consider Japan, which has been running a 25+ year experiment in “debt doesn’t matter.” In 2015, the cost of servicing its astronomical debt was the largest single item in the government’s budget:

 

If this is the result of near-zero .1% interest rates, imagine the eventual impact of 1% or (gasp) 2% interest rates—never mind 4% or higher.

Let’s also consider the central bank balance sheet and policy that undergirds this hyper-expansion of debt.  This is a chart of the Bank of Japan’s balance sheet. If this looks sustainable to you, hmm, you might want to dial back your happy-meds:

And what good came of this unprecedented expansion of central bank “monetary easing”? The net result is a near-zero growth stagnant economy burdened with exploding debt remained glued together, arguably rescued not by the central bank but by the collapse of energy prices and the one-off expansion of China’s economy.

These realities force fact-based observers into pondering a future that consumes less energy per person and generates less income and debt per person--a DeGrowth economy.

The status quo—highly centralized, dominated by self-serving elites gorging on a highly unequal distribution of wealth and income--cannot survive a structural decline in earned income and the resulting collapse of debt, or a reduction in energy consumption per capita.  But humanity could do just fine.

In Part 2: A Blueprint For DeGrowth, we provide the blueprint for a DeGrowth economy that’s more sustainable than the status quo, and that leaves magical thinking at the door.

The economic/political paradigm of rising energy consumption and debt required to keep the whole status quo glued together is going away.  We can’t retain the existing socio-political-financial structures of this paradigm and expect to get different results; that’s a pretty good definition of insanity.

We need new models; not just for energy consumption and distribution, but for the creation and distribution of currency and political power. The good news is: they're out there.

Click here to read the report (free executive summary, enrollment required for full access)

Glenn Beck can't help but wonder, "What is wrong with us?" in light of the Left's latest move — canceling six Dr. Seuss books due to "hurtful and wrong" illustrations — that takes America one step closer to complete insanity. And now, school districts are jumping on board after President Joe Biden seems to have dropped Dr. Seuss from the White House's annual "Read Across America Day" proclamation.

On the radio program Tuesday, Glenn argued that deleting books is the perfect example of fascism, and asked when we as a country will finally realize it.

"They are banning Dr. Seuss books. How much more do you need to see before all of America wakes up? ... This is fascism!" Glenn said. "We don't destroy books. What is wrong with us, America?"

Watch the video below to hear more from Glenn:


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Former Democratic presidential candidate and Hawaii representative Tulsi Gabbard and Glenn Beck don't agree much on policy, but they're in lockstep on principles.

On "The Glenn Beck Podcast" this week, Tulsi spoke with Glenn about one of her last acts in Congress, introducing the "Protect Women's Sports Act," which she says would "strengthen, clarify, and uphold the intent of Title IX to provide a level playing field for girls and women in sports." But since then, the Biden administration has gone in the opposite direction, and has supported allowing biological men to compete in women's sports.

Watch the video clip below to hear why Tulsi took a stand for female athletes:


Watch the full interview with Tulsi Gabbard here.

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Later this week, former President Trump will attend CPAC and give his first major policy appearance since leaving office. Sources close to the President reveal he will focus on "the future of the Republican Party and the conservative movement."

The future of the GOP is a question that demands real discussion before elections in 2022 and 2024. Right now, I can see three possible answers for how you act:

  1. Those in power and senior positions will ignore the reasons behind Donald Trump winning in 2016. They will be vindicated in their minds because they outlasted him, as they view DC as a job for life. These leaders will go back to business as usual and seek forgiveness from the left, hoping for unity and acceptance in the future.
  2. The second outcome is another section of the party that is understandably very angry over the left's Presidents treatment. They still support and believe in Trump. They think it's time to take off the gloves and treat Biden/the left exactly how they treated Trump.
  3. The few policy positions offered in public will be centered solely around opposing the left. They will also make the case how the left suck, are dangerous, and how you need them in power. The next four years are merely a countdown for Trump to run again and right the wrong of 2020.
  4. The third outcome is very similar to the second, but with one key difference. While they appreciate everything Trump accomplished while in office, they feel it's time to unite behind another candidate.
Question

Which of these three positions will work best for the American people? Which helps built a political base for elections in both 2022 and 2024?

If you seek to help save America, it is critical to do some soul searching. Whether you love or hate him, Donald Trump got 75 million votes and made advancements in key demographics. What did he do well that you can develop further? In what areas was he poor, and how can you improve?

I want to raise six principled points everyone on the right should be forced to consider in the run-up to 2024.

1 - Understanding American Exceptionalism

FACT: America is an exceptional nation. If you read enough of world history, you will find ample evidence that America acted in ways that made it unique and significantly different from other countries in the past and modern times. These reasons must be understood and promoted through the culture and body politic.

One of those reasons is the layout of your Declaration of Independence. If you look around politics today, you will see people on all political sides telling you what they hate, why the other side is the enemy, and how they must be defeated.

In the Declaration of Independence, Jefferson also made that case against the English when he listed 27 grievances against the King. So how is the layout key? It took Jefferson 357 words to get to those grievances. Your Declaration is your mission statement: it tells everyone in the world what America aspires to be. It states the belief that all were created equal, all had certain rights that come directly from God, and that it is the government's job to protect rights -- not give people rights.

The left is successfully painting everyone on the right to be a terrorist who enjoyed the Capitol Hill riots. If you ever want to win another election, it will be critical to explain what you stand for to the American people.

After all, ask yourself which makes you the most passionate to vote - removing someone from office or voting for a vision and change you believe in?

2 - The Constitution

Is there a better place to start this vision than the Constitution? Yes, it is mostly ignored today by those in power and is only referenced by politicians and media when it fits a narrative.

The Constitution is a beautiful and complex document but is primarily based on a straightforward principle. The government should be extremely limited in its power, but it should be as close to the people as possible where there is a clear need for government. Who can argue with this principle?

Who wants someone they have never met, dictating how they live their life?

This is why the Constitution grants the President no real power, and gives Congress 18 clauses of power, listed under Article 1, Section 8. Any and every power not mentioned there belongs at the state level.

3 - Finances

The power structure in DC has changed many times over the last twenty years, with both parties having the opportunity to rule the different federal branches. There have been two periods where one party controlled all the power in DC:

  • 2008-2010: Obama / Dem
  • 2016-2018: Trump / GOP

Despite these changes, your government continually grows, you continue to spend money you don't have, and in ten out of the last thirteen years, you have added over $1,000,000,000,000 to your national debt, which now sits just under $28 trillion. Does this seem sustainable to you? Of course not, but sadly your finances only get worse.

America has revenue of over $3.2 trillion every year, yet DC has not passed a budget since 2008. Can you imagine any business running that way? Do you think Apple, Amazon, or Disney have a budget? It is time to get America on a path to financial sustainability, work towards a balanced budget, and explain to the American people how you will achieve it.

4 - Taxes

Do you remember discussing taxes during the Tea Party?

We used to make the simple moral case to the American people: any money you earn is yours, you should use it to plan your life, and the government has no right to take it from you. This was so successful around 2012 that Herman Cain ran for President with one primary policy: the 9-9-9 plan.

If America is to return to prosperity after Covid, lower taxes and a simpler tax code must be a central theme.

5 - Cutting Government

Look at the size of the US government in 2021. Are you happy? Can you name the numerous departments? Is it now the freedom-loving Americans' position that agencies like Education, Energy, EPA, and Commerce are constitutional bodies of government and are well-run?

How about the IRS, which targeted Tea-Party groups under President Obama? Do they deserve support, or is it time to start sharing a vision of the departments that should be abolished?

This principle used to be a big part of the Conservative platform. It played a massive role in 2012 when Rick Perry ran for President. His campaign was destroyed in 45 short seconds when he could not remember the three agencies he would abolish.

Maybe it's time to refresh this debate but change the parameters. How about we discuss the agencies that should be kept?

6 - Bill of Rights

Today, the Bill of Rights is under constant attack. The far-left/woke mob hates free speech, and they seek to cancel anyone with an opposing view. However, the attacks on the Bill of Rights don't always come from the left.

America has a second amendment that guarantees you the right to bear arms. The last time the GOP held both houses of Congress and the Presidency, they banned bump stocks - but who really NEEDS a bump stock?

As the years have passed, some have admitted they are open to red flag laws. Is this still the case?

While the second amendment may be under attack, it is clear the fourth amendment is dead. Regardless of which party holds power in DC, the NSA is given continuous ability to spy on Americans. The simple, principled case from Rand Paul of "get a warrant" always falls on deaf ears.

The Bill of Rights should be a unifying document for most Americans, as the principles are self-evident and a significant part of any freedom platform going forward.

Conclusion

America will face significant challenges over the coming years. As the government continues to grow, the far left get more hostile, and central planners seek a great reset. If you share my concern, then now is the time to forget our tribes and ignore the debate on who should be President in 2024.

It's time to work hard to build a platform by raising a banner of bold colors, not pale pastels. We must share a clear vision to the American people of a bright future where they are free, prosperous, and can pursue their happiness.

When the platform is built and successful, people can identify the best candidate to run in 2024.

"First, you win the argument, and then you win the election." — Margaret Thatcher

Jonathon Dunne is a keynote speaker, weekly podcast host on Blaze Media, and published author on major platforms such as The Blaze, Glenn Beck, Libertarian Republic, Western Journalism, and Constitution. Since 2012, he has reached millions with his message of American exceptionalism.

You can find him on social media – Facebook, Twitter, MeWe

Sen. Rand Paul (R-Ky.) is under fire for questioning President Joe Biden's nominee for an assistant health secretary position, Dr. Rachel Levine, about her alleged support for giving children puberty blockers and sex-change surgeries.

During a confirmation hearing Thursday, Paul pointedly asked Levine, who is a transgender woman, about her support for allowing children to change their sex, and whether she believes children are capable of making such life-altering decisions.

Levine evaded the question, answering instead with a vague statement about the complexities of transgender medicine, which she would again reiterate for Paul's subsequent questions.

Watch a video clip of the confirmation hearing here.

Predictably, Paul has been labeled "transphobic" and accused of trying to derail Levine with "transphobic misinformation" by the leftist media.

On the Glenn Beck Radio Program Friday, Paul said his questioning Levine had nothing to do with who she is or the fact that she is a transgender adult, but was about the question of gender changes for children.

"The interesting thing is, none of it was directed towards her personally or who she is. It was directed towards the question of whether children can consent. And this is an intellectual question. It's not an inflammatory question. It's a question of serious consequences," he explained. "Most people would argue that children can't really make an informed consent. You know, we have laws against a man having sex with a 12-year-old, even if the 12-year-old says 'yes', because we don't think a 12-year-old is capable of consenting. They just aren't old enough to make the decision."

Paul went on to add, "I guess the danger is, you have to have some chutzpah. You have to have some guts, some courage to stand up because it is a culture out there where ... everybody is saying I made transphobic comments yesterday. All I did was ask whether a minor could consent to this kind of dramatic surgery. Nothing I ever said was hateful. I said nothing hateful about these people. I said nothing hateful about adults who choose to do this. But the culture is out there is so strong that so many in office are afraid to speak out. And it's getting worse.

"There's a handful of us that will speak out in the Senate. There's a handful in the House, and we just have to grow our ranks. But we have to resist or it just will roll over us. And we'll live in this terrible cancel culture world where nobody speaks out, and everybody is afraid to say anything."

Watch the video below to catch more of the conversation:

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