How wealth dies(surplusenergyeconomics.wordpress.com) |
How wealth dies(surplusenergyeconomics.wordpress.com) |
You can blame Moloch or wall Street or whatever for making it functionally impossible for whatever multipolar market-actor reasons, but with the right choices we could have plenty of energy today, just as we could (but don't) feed everyone on Earth.
Eventually the will bea point where it does actually become physically impossible to generate that much power without melting the Earth's crust or boiling the seas, but that's a long, long way away.
For example plenty of energy likely means far more nuclear reactors, and the unfortunately truth is that most can be used to breed plutonium, so while we could be living with energy abundance, we also at least slightly increase the chance of global nuclear war. (IMO probably still worth it but it's no longer a super clear right/wrong).
With food, the problem is not producing it, it's the distribution. You aren't going to get it distributed in many countries that need it without overthrowing governments which will include lots of killing and bombing. Now it being the right choice to feed everyone is much murkier.
"Just build more houses" is the fix for many (but not all) of the US economy problems. Not sure about the UK, but I wouldn't be surprised if it applies there too.
Some nits:
The “energy cost of energy” metric seems a bit suspect and I wonder how it’s calculated. One reason I would expect it to go up because solar power is getting cheaper, and therefore it makes more sense to “waste” it on overprovisioning. Another is that the costs of fossil fuel are getting higher in some places. More detail is needed to see if it means anything.
Stock market valuations are in large part based on expectations about future growth. Perhaps these expectations are wrong? But I’m not sure that tells us anything one way or another about the wealth we already have. Perhaps some better way is needed to understand the present and past.
This assumes that the GDP growth and the material prosperity are in a simple linear relation. I don't think this makes sense.
A small solar panel that can charge battery-powered night lights and a couple of cell phones produces negligible energy. Just a few minutes of air-conditioning consumption for a house in the US. Yet it can completely transform the life of households in an African town.
Why would this be the case? Are fossil fuels uniquely low cost in terms of energy in? I can't imagine them beating the ECoE of "put this magic panel on your roof and get free energy whenever the sun is out, for decades". If the problem is that you don't get solar during the night, then that's a question of battery technology. And that's not even a problem with nuclear reactors!
And saying that technology is "bounded by the limits [of physics]" is not useful. That doesn't say where the limits are, only that there are limits. Yes, at some point, we'll have almost 100% efficient solar panels being fed into batteries with the highest practical energy density. But we're nowhere near that.
Insamuch as the western world is being hit with increasing ECoEs, it's from people who either can't or won't switch from chemical fuels to something with a lower ECoE. It would be more useful to identify those industries and show any evidence of cost disease in those industries brought about by the dependence on diminishing reserves of fossil fuels.
Finally, be aware that he's been predicting imminent economic collapse for almost 20 years now. He'll probably be correct someday (assuming he lives a very long life), but that doesn't mean much IMO.
Garden-variety Gold Standard quackery.
This has been going on for forty years. There's literally decades of gold production sitting in hoards all around the world.
Gold prices could get very strange very fast.
If I write software that schedules health care more efficiently, I've created value and therefore wealth. If I make a video game that's more fun than the previous generation of games, likewise.
That some forms of entertainment may be detrimental if abused in the long-term is an orthogonal topic.
* Energy physics puts an upper bound on material wealth
* The disparity between notional and material wealth is large and growing
* Notional wealth figures are largely speculative / fictitious
Claims that could be true (if empirically verified):
* Material wealth is decreasing
* Energy is decreasing
* The monetary system will collapse
Claims that have been implied but not demonstrated or argued:
* There is a causal link between decreasing energy supplies and monetary system collapse
Overall it smells like 2004-era peak oil doomerism. I’m not saying it’s wrong, it could just be early. Intrigued but not convinced.
Sure, but that's such a high upper bound that it may as well be false from our perspective in 2025. We use a miniscule fraction of the energy we receive from the sun.
Then there is the question of how much of that potential we want to turn into waste heat inside the atmosphere, which is more governed by how much radiative cooling we have rather than how much energy is incident or available on the earth.
I think that humanity would be limited by pollution and ecosystem destruction before energy for most human scale material wealth. The bit where it becomes tricky is energy does change what how easily and fast you can do things, which may place enough of a real world limit.
isn't true. Prices go up and down all the time, the money supply figures change all the time. It doesn't mean the financial system must crash. Unless by 'crash' you mean prices go up and down, which they always do.
The whole things seems kind of cranky.
you look at the UK example[0] - energy production / consumption has been going down. likewise quality of life has been going down. but yet if you listen to the economists / politicians they will tell economy is doing okay.
energy and how its used is what determines how successful an economy is. & like the prof says - money alone doesn't produce goods. energy does. money is just a transfer mechanism - which on its own is useless.
[0] - https://ourworldindata.org/grapher/per-capita-energy-use
"Put another way, very little of the world’s supposedly enormous wealth actually exists in any meaningful sense."
Citation overwhelmingly needed. His claim that the economy is disintegrating is supported by the argument that: "you know, just look around." But what we're looking around and seeing is wealth accumulating at the very top.
The mistake he's making is thinking that if most people aren't doing well, then nobody is doing well, that the 1% aren't even really rich because their wealth is all a fiction.
In fact, wealthy people are really, actually wealthy. They are unimaginably wealthy. It is literally beyond the author's imagination how wealthy they are, leading him to the truly absurd conclusion that they're not really even wealthy at all.
"Nobody could be that wealthy, could they?!" Yes, my dude. Yes, they actually can be that wealthy. Indeed, they actually are.
I've been watching my investment accounts, particularly the TSLA fraction, and see-sawing between "This has got to collapse soon, I should..." and "You cannot time the market, idiot".
I'm dissatisfied with the inaction, but I can't come up with a coherent theory about how I should act... Bleah.
If you don’t have a coherent theory to {act}ively hold an asset, you probably shouldn’t be acting to hold it, and be acting to sell it.
This is equally true for TSLA and NVDA as it is for VOO and BRK.
Why? Because when prices are too low you need to be able to hold (and ideally buy) with conviction and when prices are too high you need to be able to sell with conviction, although the latter is less important if you have steady income.
If you don’t have a theory of value, you’ll be able to do neither effectively, and risk loss of principal and opportunity in a downturn.
This affects me because the urgency toward ownership and being less dependent on future money is prudent in some ways, but also naive in others?
When I think about owning property and being free of monthly rent, there's a truth to that. And it feels nice to say we've achieved generational wealth. But maintaining the property costs money and property taxes are recurring, forever. So I've relaxed on this idea that it'll be markedly different from rent.
Curious how you think about it?
What do I do with the cash?
A) keep it as cash
B) Pay off the mortgage
C) Buy some QQQ
D) Buy some T-notes
E) there is no E. I am a simple man. Let's start with a simple solution.
Complete and utter horseshit
And always have gone up for decades!
It's really great!
Another bold, unsupported claim in the OP is that renewables and nuclear cannot materially slow the effects of resource depletion. I mean, yes, there's not an infinite amount of land, rare earth metals and the sun won't last forever, but the resource depletion absolutely looks different from an internal combustion engine (and an efficient ICE or gas power station is the same outcome for lower material cost than an inefficient one, for that matter)
But it only takes a few examples counter to what a public service should do to show that GDP reliance creates anti-patterns. e.g. rising healthcare costs is good for the GDP while universal healthcare is bad.
GDP is still useful. I don't think there are examples of countries that had drops in GDP without being in deep trouble. It exploits the fact that economies [almost] never change quickly, so when you're looking at just one country, the GDP is a reasonable indicator of the overall state.
Where the GDP sucks is when people try to compare the _rates_ of GDP growth between countries.
Yeah, I felt that this was the weakest point of the argument presented.
I do like calling out the absurdity of "wealth" in various assets though, as well as the notion that we need to map this "wealth" back ultimately to energy (which makes sense, as we need energy for basically everything).
Maybe, we should start with putting solar on the roof :)
Just because there is a risk of apocalypse, doesn't mean it's a good idea to try and time it.
- You will sleep 5% better every night from here on out if your mortgage is paid off
- You'll sleep 5% worse every night from here on out if you have 300k riding in the markets
A - Never. Cash with no return is just decaying with inflation.
B - Depends on interest. If your mortgage interest is lower than no-risk interest (e.g. SGOV) then no, you'd be throwing money away by paying off the mortgage. If OTOH your mortgage interest is substantially higher than no-risk interest, then yes, paying it off (or at least overpaying monthly) is a good idea. There is a gray area if your mortgage interest is slightly higher than no-risk return right now. Numerically it makes sense to pay the mortgage, but there is also a safety aspect in keeping the liquid cash on hand.
So that leaves some combination of C & D. The best ratio there is a harder question to answer.
I'm a simple man myself, so I'm answering in order to verify my own reasoning.
A. will have negative returns from inflation. D. defends against inflation but is too conservative. B. There's arguably negative value in holding more equity in terms of opportunity cost since you already have > 200% position in equity. source: I believe this guy https://www.youtube.com/watch?v=j4H9LL7A-nQ
Trading yourself is just not worth it. You'll lose money long-term. An exception here is if you want to hold shares of a company long-term as a form of investment.
If your mortgage is a fixed rate at a reasonable interest, then keep it. If there's a high inflation episode, you'll be able to benefit from it.
If cash remaining -> if mortgage rate >4% pay down mortgage (locking in 4%+ yield). If you want to average 50% towards mortgage 50% VOO (S&P Index fund)
Deeper post ->https://monetarymusings.substack.com/p/how-to-not-blow-up-wh...
>The real insight: paying down your mortgage reduces your monthly burn, which reduces the chance you’ll need to sell stocks in a downturn. It’s not about math, it’s about resilience.
This seems more emotional than anything. The feeling of paying off a mortgage and being relieved of some monthly burden. But there will always be monthly burdens, that's life. Everyone needs monthly cashflow. So the insight of putting extra cashflow into a mortgage to offset the burden is just reversing the purpose of why you got the mortgage in the first place? What I mean is money has time value, a mortgage is paying for the time. So being in a hurry doesn't automatically insightfully make sense.
The post is all about resilience, I suppose my point is that there will always be a need for monthly costs, so trying to be free of the stress of a monthly cost -a time cost- is overly emotional in my view.
Locking in 4% AFTER TAX yield ... if you invest the $300K and it earns 4% you still can't pay the mortgage interest with those funds
So that 300,000 is the money you need to passively support your house after you've paid it off.
The practice part is important but when you are comfortable, nibble a little with small amounts.
(Note: I ended up breaking my rule by continuing to trade after losing $5000, but then did great in the markets anyway in the long run LOL)
With the rest, I would put some in a vanguard account. And then invest where? I want to say index funds but the market is very strange. The biggest companies have too much wealth soaked up. Is this sustainable? Is this a bubble? Who knows...
All these will influence your EV.
If I have $300K on my mortgage and a monthly payment of $2000, and I pay an extra $100K, that 100K reduces the principal of the mortgage by $100K, and so the mortgage will run for several years less than it would have. But my monthly payment is still $2000 for the years I have left on it.
There are other ways to structure it - you can pay ahead, paying next month's payment this month so that you don't have to pay anything next month if you don't want to. Can you pay $100K so that you don't have to pay the next 50 months' payments? I don't know, but probably. You have to be clear with them what you are trying to do, though.
Owning and living on a farm is not for everyone as it does tie you down more than a random apartment somewhere. If you're the type who wants to fly off to some trendy destination on a whim a farm might not be for you.
I think the modern indicator is how GDP growth last year would have been almost entirely flat had it not been for the massive amounts of AI spending. Something that as of now (regardless of thoughts of long term job aspects) is only constrainting the material market.
I don't fault the author for that usage because I know they are basically using the same language such policy makers use, and using it to disprove a really odd (but common) usage of GDP as this way to measure long term prosperity.
My own personal financial history has been more damaged by actions taken, than by forbearance and waiting. "Time in the market beats timing the market", style. So I wait for the moment when I've got Something Better To Do with the money, and then I act. And try not to second-guess later.
One possible solution to my framework is (1) to only buy things for which you have a coherent theory (2) that coherent theory holds water over the duration of your investing life.
It's possible that you had a coherent theory for purchasing TSLA at a certain price. If that price has out-run your theory, there is no contradiction in selling that TSLA and parking it in some place you have a coherent theory for, like VOO. This is maturity and humility, not hubris.
If I were in your position, I'd try to ask myself: does this decision to rollover TSLA into something I better-understand (e.g. VOO) fall inside or outside the pattern of "my own personal financial history has been more damaged by actions taken".
FWIW, "Time in beats timing" is a truism that applies to market-spanning indices, not a choice between individual securities. It would be a mistake to apply that logic to individual positions, unless you've given yourself the arbitrary restriction of only buying or selling TSLA and nothing else!
Of course more efficient usage isn't necessarily a good thing.
For an internet forum, I've found it easier to ask direct, actionable questions like "should I buy this couch" than "is [couch brand] good?". Even if what I really wanted to get at was the former. Maybe the brand isnt good but the price is a steal. Maybe the brand is so utterly trash that you couldn't give it away. But putting the brand into the question instead of a direct 'thing' changes the discourse.