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How wealth dies

surplusenergyeconomics.wordpress.com

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Re: How wealth dies

#51

Post by parliament32 »

johnnyanmac wrote: post #18
parliament32 wrote: post #7

Earlier quoted context omitted.

Why is this hard? Calculate the expected value of each option, do a risk analysis, apply risk factor (based on your own tolerance), biggest number wins.

Risk analysis depends highly on your views of the world? "Are we in/heading towards a recession?""will the stock market continue its explosive growth"? "Do I as a person favor stability or prefer to take a bit of risk?" All these will influence your EV.

Well yes, precisely. Which is why nobody can give this guy an objective answer to his question -- it's entirely dependent on him and his views. That being said, there is absolutely an analytical way to approach the problem, which is what I outlined.

Re: How wealth dies

#52

Post by measurablefunc »

ghostly_s wrote: post #38
measurablefunc wrote: post #20

This is a great article. It clearly explains what people like Nate Hagens have been saying for some time now. The real economy is about EROI & materials, money & financial activity can not change the amount of fossil fuels available for industrial processes regardless of any clever financial engineering.

Less an article than an op-ed.

Which part do you disagree with?

Re: How wealth dies

#53

Post by mwkaufma »

fragmede wrote: post #43
mwkaufma wrote: post #27

>> Rather, what we need to do is to calibrate the physical economy such that we can benchmark the monetary against the material. This enables us to avoid the futility of measuring the monetary only against itself. Garden-variety Gold Standard quackery.

That may be 100% true, but the market can remain irrational longer than you can remain solvent, and in this case, gold has been doing awkwardly well under current conditions.

By the article's _own_ parable: if you were starving on a desert island, you wouldn't be relieved to be airdropped a briefcase full of gold. You're benchmarking money to money.

Re: How wealth dies

#54

Post by rmah »

fragmede wrote: post #43
mwkaufma wrote: post #27

>> Rather, what we need to do is to calibrate the physical economy such that we can benchmark the monetary against the material. This enables us to avoid the futility of measuring the monetary only against itself. Garden-variety Gold Standard quackery.

That may be 100% true, but the market can remain irrational longer than you can remain solvent, and in this case, gold has been doing awkwardly well under current conditions.

IMO, combining gold money arguments with observations about the price of gold is contradictory. If gold is money, then you should never wonder about the "price of gold" as gold should be used to price things.

Re: How wealth dies

#55

Post by AnimalMuppet »

apsurd wrote: post #31
preem_palver wrote: post #15

Earlier quoted context omitted.

Keep 12 months living expenses in cash/t-bills. Depending on your age, increase to 24 mos if kids etc 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...

I enjoyed the linked post overall, but want to highlight one thing: >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…

But it doesn't, does it?

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.

Re: How wealth dies

#56

Post by mwkaufma »

avs733 wrote: post #34
mwkaufma wrote: post #27

>> Rather, what we need to do is to calibrate the physical economy such that we can benchmark the monetary against the material. This enables us to avoid the futility of measuring the monetary only against itself. Garden-variety Gold Standard quackery.

I kept having my bad vibes meter triggered by the italics so thanks for making the connection for me.

My spider sense was going off because they spend the first several pages constructing the most obtuse definition of Inflation without just saying it.

Re: How wealth dies

#57

Post by treis »

Etheryte wrote: post #22

The problems this article outlines are very real, but the explanation for the underlying mechanics doesn't really pass any kind of a sniff test for me. The central thesis is that real economic growth is stagnating because the overhead for producing energy grows with time. But this is not the case! Fossil fuels will run out eventually, yes, but nearly every other type of energy production does not suffer from this, an…

It points out a problem but ignores the obvious solution. We want the nominal value of stocks, houses, and essentially everything to continually increase. The escape hatch is that these can increase in value slower than inflation and thus be reduced in real value.

Re: How wealth dies

#58

Post by rmah »

startupsfail wrote: post #47
fizx wrote: post #39

The goal of post-modern society is to create wealth without additional energy costs. 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.

Kids glued to "fun" (addictive) video games on their phones is not wealth, it is the feeder channel for these "efficient" health "care" schedulers, in your other example.

That is, IMO, arguable. Entertainment has always been valued by humans. It is just the non-physical equivalent of fancy clothing or jewelry. And clothing/jewelry is most certainly a form of wealth. So, it can be argued that things that you can buy that make you feel better emotionally or increase your social status are forms of wealth.

That some forms of entertainment may be detrimental if abused in the long-term is an orthogonal topic.

Re: How wealth dies

#59

Post by kmeisthax »

> Renewables, and for that matter nuclear power as well, cannot materially slow, let alone reverse, the relentless rise in ECoEs caused by the depletion of oil, natural gas and coal. Neither can technology halt this trend, since the potential of technology, far from being infinite, is bounded by the limits imposed by the laws of physics.

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.

Re: How wealth dies

#60

Post by rmah »

johnnyanmac wrote: post #16
cyberax wrote: post #8

> On this basis, global material prosperity has grown by 25% since 2004, which is nowhere near claimed “growth” of 96% in real GDP over that period. Moreover, the 25% rise in aggregate prosperity has been matched by the rise in population numbers over those twenty years. 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 th…

It doesn't make sense. But that is exactly how policy makers justify how "the economy is doing good!" The GDP was never intended to be used as an indicator of national economic well being; only a simple statistic to measure how much money is exchanged between people. 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 cost…

First, you are correct. However, the reason GDP is used as a proxy metric for economic growth because it's convenient. Doing so does make a few assumptions though, foremost of which is that the structure of the economy will change very little from year to year. If that is so, than a rise in GDP should correspond to a rise in economic prosperity (and by extension wealth). Thus, using GDP change to measure changes in prosperity works (more or less) year by year. but the longer the periods you compare (5 years, 10 years, 20 years), the less meaningful the number becomes.
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