[alan2102]

Look East. Behold the changing world.

https://www.gold-eagle.com/editorials_12/willie123112.html

The Coming Isolation of USDollar
Jim Willie CB
31 December 2012

[snip]

The typical human reaction to any infection, vermin, danger, or toxicity is to stand back, to isolate the agent, to trap it, to prevent its further spread or release, then to remove it in a safe secure way if possible using trained professionals. Eventually decisions must be made on the level of acceptable risk on the removal, like what is willing to be lost or damaged or killed in the process. Risk analysis, cost trade-offs, and minimization decisions must be evaluated and executed. The toxic agent in global trade, global banking, and global bond market is the USDollar. In 2009, the Jackass began making a certain firm point. Those nations that depart from the entire USDollar system early will be the leading nations in the next chapter, with stronger foundations, richer solvency, emerging economies, healthier financial markets, efficient credit engines, growing wealth, stronger political helm activity, and better functioning systems generally. Imagine a contaminated blood system that infects, corrupts, and destroys all interior organs from the spread of the toxin. Those nations that stick with the crumbling USDollar system stubbornly will find a horrible fate with devastating effects, rampant economic damage, broken financial markets, sputtering credit engines, tremendous loss of wealth, wrecked supply lines, poverty spreading like wildfire, ruined political structures, social disorder, isolation from the rest of the world, and a fast ticket to the Third World. That is EXACTLY what is happening in the last several months. A division has begun, as the East has been busily installing the next generation platforms, as related to trade, banking, and commercial integration.

[snip]

A Paradigm Shift is taking place, and the ASEAN-China summit gave proof positive in a seminal event of the vast changes in progress. The United States just suffered its worst humiliation ever as a nation on the Eastern global stage. It was exceeded only by the humiliation for a US president personally. The story went uncovered by the lapdog inept US press. The late November Asian summit meeting held in Phnom Penh included 15 Asian nations, which represent half the world’s population. They decided to form a Regional Comprehensive Economic Partnership that excludes the United States. The Asians are pushing to isolate the United States. Regard it as punishment for hegemony, or a reaction to prevent further capital drainage, or to protect from central bank abuse, or to wall off continued bond fraud export, or to defend against military aggression. Regard it as confirmation that China is the regional leader in Asia, even for military security. Regard it as a response to banker criminality, or simply for being totally full to the brim of American corruption and arrogance and abuse of position, led by creation of the USDollar as an elaborate weapon and credit card whose balance is never to be repaid. Abuse of power and sponsored financial corruption will have extreme consequences in the reshaping of global commerce and banking. The US will be isolated, so as to protect the rest of the world from its fascist exhibitions and deep manifestations.

[snip]

The new system will be decentralized, meaning not funneled through the major banks, not passing through the USFed as clearing house. Turkey will be essential in the formation of the Eurasia trade zone. First comes the Asian trade zone (the US excluded), and next comes the hand shake between the Asians and Europeans to create Eurasia. Some folks have expressed doubt toward the arrival of a vast trans-continental trade region. They seem painfully unaware of an incredible network of railway lines connecting Russia to Germany and China, and of a incredible network of liquified natural gas lines connecting Russia with all of Europe and Central Asia. Across the new trade zone and its diverse commerce, the USDollar will not be at the center. It is in fact being isolated, since it is a toxic agent. Everything US$-based is crumbling, from currencies to bonds to banks to credit lines to economies.

[snip]

The described isolation on numerous fronts, whether trade or COMEX or banks, all work toward the elimination of the toxic agent in the USDollar. The world wants a more just, more functional, more efficient, more equitable global trade system. The United States has abused its global reserve custodian position too long. The world is fighting vigorously to remove it. The usage of the USDollar as a credit card to finance its consumption binge without ability to pay will come to an end. The usage of the USDollar as a device to enable powerful aggression in war to advance syndicate interests like vertically integrated narcotics will come to an end. The usage of the USDollar as a banking monopoly device will come to an end. The usage of the USDollar as an instrument for bond fraud will come to an end. The usage of the USDollar as a free lunch device to finance the USGovt deficit will come to an end. When the USDollar is no longer the global reserve currency, the door to the Third World will be opened wide. When the USDollar is no longer the global reserve currency, the supply lines will be interrupted to the USEconomy, giving off a prominent Third World stench. When the USDollar is no longer the global reserve currency, the price inflation effect will become a national topic of grand debate and extreme anger. When the USDollar is no longer the global reserve currency, the United States as a nation will experience tremendous additional isolation and hardship, as most Third World nations do. The level of corruption within the USGovt and US banking corner offices is already far more entrenched than any Third World nation. The vote fraud for US national elections is equally prevalent, but more sophisticated.

When the USDollar is no longer the global reserve currency, the Gold Standard will be right around the corner, if not already in the implementation stage. The Gold price will react quickly to the removal of the USDollar from its prized perch of abuse. The center of the new trade settlement system will be GOLD, which is not even being discussed by the enlightened denizens of the gold community. It will be the basis of the Letters of Credit, in the form of gold trade notes. The short-term credit that facilitates trade will have a truly magnificent grand Gold core. The common agreement will be to make the Gold price at least $5000 per ounce, probably closer to $7000 per ounce. They will in the process dismiss, overrun, and put into oblivion the COMEX and the LBMA, rendering them to the scrap heap of irrelevance.

[alan2102]

https://www.pimco.com/EN/Insights/Pages/Money-for-Nothin-Writing-Checks-for-Free.aspx

Investment Outlook
January 2013
Money for Nothin’
Writing Checks for Free

William H. Gross

[snip]

“Like gold,” [Bernanke] said, “U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Mr. Bernanke never provided additional clarity as to what he meant by “no cost.” Perhaps he was referring to zero-bound interest rates, although at the time in 2002, 10-year Treasuries were at 4%. Or perhaps he knew something that American citizens, their political representatives, and almost all investors still don’t know: that quantitative easing – the purchase of Treasury and Agency mortgage obligations from the private sector – IS essentially costless in a number of ways. That might strike almost all of us as rather incredible – writing checks for free – but that in effect is what a central bank does. Yet if ordinary citizens and corporations can’t overdraft their accounts without criminal liability, how can the Fed or the European Central Bank or any central bank get away with printing “electronic money” and distributing it via helicopter flyovers in the trillions and trillions of dollars?

Well, the answer is sort of complicated but then it’s sort of simple: They just make it up. When the Fed now writes $85 billion of checks to buy Treasuries and mortgages every month, they really have nothing in the “bank” to back them. Supposedly they own a few billion dollars of “gold certificates” that represent a fairy-tale claim on Ft. Knox’s secret stash, but there’s essentially nothing there but trust.

[snip]

Investors and ordinary citizens might wonder … why the fuss over the fiscal cliff and the increasing amount of debt/GDP that current deficits portend? Why the austerity push in the U.K., and why the possibly exaggerated concern by U.S. Republicans over spending and entitlements? If a country can issue debt, have its central bank buy it, and then return the interest, what’s to worry? Alfred E. Neuman for President (or House Speaker!).

Well ultimately government financing schemes such as today’s QE’s or England’s early 1700s South Sea Bubble end badly. At the time Sir Isaac Newton was asked about the apparent success of the government’s plan and he responded by saying that “I can calculate the movement of the stars but not the madness of men.” The madness he referred to was the rather blatant acceptance by government and its citizen investors, that they had discovered the key to perpetual prosperity: “essentially costless” debt financing. The plan’s originator, Scotsman John Law, could not have conceived of helicopters like Ben Bernanke did 300 years later, but the concept was the same: writing checks for free.

Yet the common sense of John Law – and likewise that of Ben Bernanke – must have known that only air comes for free and is “essentially costless.” The future price tag of printing six trillion dollars’ worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold.

[alan2102]

https://www.gata.org/files/QBAMCOItsTime-12-2012.pdf
It’s Time! by Lee Quaintance & Paul Brodsky, QB Asset Management
December 2012
[snip]
We certainly agree that gold should fundamentally be priced much higher than where it is presently [their figures on page 5 depict shadow gold prices of $10-20,000/ounce; see page 4 for explanation — alan2102] and that the way gold futures seem to be reliably stepped-on before Treasury auctions and Fed meetings is a bit snarky, but as for the progenitors of the crime? It might be better to look east. Conspiracy theorists should consider foreign dollar reserve holders that would like to take delivery of as much physical gold (and silver?) as possible in a very short time, and do so at cheap prices. It would be simple to do: fund offshore hedge funds that continually short gold futures through US bank accounts, thereby keeping the spot price and London fixings down. Physical gold could then be delivered to sovereign accounts directly from mines and through exports at the suppressed prices.
Why would sovereigns like China, Russia, even Japan and South Korea want to take physical possession of bullion at current prices and so quickly? The short answers are that they could not buy size required on exchanges without driving prices multiples higher and because there is likely to be a reset of the global currency system, soon.
END QUOTE

…………………………

The smart money is buying physical gold and silver, and dumping U.S. bonds (e.g. Bill Gross). And, as per the above, the big smart money is surely smart enough to rig the paper market and suppress the paper price while loading up on physical. This is very likely what is happening at this moment. It will continue happening until it cannot happen anymore. Then, Boom.

[alan2102]

Ha. Yes, they will be “allowed” to.

Gold, silver and other wealth are moving from West to East. The metals are being hoarded in the East, prior to the big reset. The official reserve numbers for China are grossly understated. Foolish Americans and Westerners are letting their metals go at today’s bargain prices — the mistake of a lifetime. But it is all part of the big pattern, which now cannot be stopped, or even slowed: decline of the West, rise of the East.

https://www.globalresearch.ca/china-is-quietly-becoming-gold-superpower/5310579
China Is Quietly Becoming Gold Superpower
Global Research, November 04, 2012
World’s Top Gold Producer Holding Onto All of Its Gold
While Western central banks have frittered away their gold, China is quietly building up its reserves.

https://www.gold-eagle.com/gold_digest_08/fekete101911.html
What Chinese Unemployment?
Antal E. Fekete
19 October 2011
[…snip…]
Gold…has the uncanny property that it leaves the place where it is not appreciated and seeks out places where it is welcome. One such place in the world today is China. China knows how to become the world’s #1 gold producer. China knows how to double its gold reserves unobtrusively in a couple of years. Incredibly, the Chinese government openly exhorts its people, all 1.34 billion of them, to have gold (and silver) on hand for a rainy day. The advice is wise. There is no free lunch. Be prepared for adversity. Be self-reliant. Have gold.

https://www.zerohedge.com/article/china-becomes-world%E2%80%99s-larest-gold-buyer-buys-935-tonnes-gold-coins-bars-q1-gold-ownership-ri
China Becomes World’s Larest Gold Buyer – Buys 93.5 Tonnes Of Gold Coins / Bars in Q1 – Gold Ownership Rising From Miniscule Levels
Submitted by Tyler Durden on 05/20/2011

https://www.zerohedge.com/news/hoarding-continues-china-has-imported-more-gold-six-months-portugals-entire-gold-reserves
The Hoarding Continues: China Has Imported More Gold In Six Months Than Portugal’s Entire Gold Reserve
Submitted by Tyler Durden on 08/15/2012

https://blogs.ft.com/beyond-brics/2012/08/17/sunny-skies-a-glimpse-into-chinas-gold-ambitions
Sunny skies: China’s gold ambitions
August 17, 2012 12:11 pm by Robert Cookson

https://www.goldismoney2.com/showthread.php?28324-Why-Are-the-Chinese-Buying-Record-Quantities-of-Gold-Forbes
01-31-2012 02:13 PM #2
Why Are the Chinese Buying Record Quantities of Gold?
[long article, much detail]

[alan2102]

kcl6750 post=6307 wrote:
The US $ is fast becoming a joke ! Even drug dealers in Colombia are reluctant to take payment in $ ! What does that tell you?

It tells you that the average Colombian drug lord is smarter than the average American — and probably than the average currency trader. But then I would expect drug lords to be pretty bright. What is surprising is that the average Asian peasant is smarter than the average American, at least in this respect. Indians in particular, but Chinese and others as well. They hold physical gold and silver. They don’t trust paper currencies or banks. Smart. Very smart.

[alan2102]

stoneleigh post=6053 wrote:
I have a great deal of patience with newbies and am happy to explain our worldview or point to specific primers (like Inflation Deflated for instance). I have less patience with people who have commented over a number of years, as alan has, and still quibble over our use of basic definitions.

I’m not quibbling. I said that your definitions might be superior to the conventional ones. I respect the passion with which you defend them. And for my own part, I find your definitions attractive. But all that is beside the point. As I said to both you and Ilargi: the issue is between you, on the one hand, and essentially ALL dictionaries and reference works (both print and online), combined with the understanding of almost everyone, everywhere (a few exceptions noted), on the other. As I said to Ilargi: I did not write the dictionaries, and I did not persuade billions of people to accept the definitions that they do now accept. This is not about me and my “quibbling”.

I made my points very clear. I would welcome your to reply to them — at your leisure. But if you choose not to, I’ll drop it.

Essentially, there is a limit to how many times we can go through the same loop, knowing perfectly well it will achieve nothing, especially when it happens on more than one thread simultaneously.

I don’t know that I’ve ever discussed the definition of “inflation” and “deflation” with you before. If I did, I forgot. I do remember getting in to this discussion on the old latoc (doomers.us), years ago, but that did not involve you.

Also, what is this about “more than one thread simultaneously”? We’re discussing this definitions issue here, and nowhere else. I posted a few things on another thread, about energy, but haven’t been back to that for a few days.

[alan2102]

stoneleigh post=6044 wrote: alan2102,
You are perpetuating, and indeed amplifying, confusion unnecessarily.

You will, I trust, forgive me if I disagree. I think “biflation” is a useful clarification, cutting through a great deal of unnecessary confusion created by this endless “inflation vs. deflation” debate. It expresses, in a single logical word, the phenomenon we now see, and the one most likely to intensify greatly in the coming years.

Our definition of inflation and deflation is not nearly as odd as you make it sound.

Consult ANY dictionary or reference work, or ask pretty much anyone anywhere, and you’ll see what I mean.

It is in fact the traditional definition, and is quoted by one of your sources (although the source also hedges its bets in a confusing way):

http://www.bing.com/Dictionary in·fla·tion [ in fláysh’n ] — higher prices: an increase in the supply of currency or credit relative to the availability of goods and services, resulting in higher prices and a decrease in the purchasing power of money [i.e. higher prices]. Synonyms: price rises, increase, price increases, rise.

There is no “hedging of bets” there. There is a clear focus and sine qua non: HIGHER PRICES. Increase in currency supply is mentioned, but only secondary to the key characteristic, the defining phenomenon: HIGHER PRICES.

“Inflation”, as defined in all reference works, and as understood by practically everyone, refers primarily not to any putative causal influence, such as currency supply, but to the bottom line, the unarguable end-of-the-day empirical phenomenon: HIGHER PRICES. The higher prices might be caused by increased currency supply; indeed, that is likely true, and I don’t deny it. There is also cost-push inflation, and demand-pull inflation. But those things are a different matter: they are interpretative and speculative, not integral to the definition of the word, by the lights of almost everyone. Yes, I appreciate that you do not like this, and that you prefer a different definition, with your favored theory of cause built-in. As I said to Ilargi: your beef in this regard is not with me, but with the rest of the world.

We have been pointing out that things that people use would be getting less affordable. You seem to be suggesting that this will happen at higher nominal prices, while we are saying it will happen at lower nominal prices. The important point is the affordability.

By focusing on “affordability”, you are doing, in essence, what you accuse me of doing, i.e. of glossing-over the cause of the thing, and proceeding direct to the bottom-line empirical phenomenon. And I agree with you: affordability is the key thing. The point of disagreement is that I think that affordability will be less influenced by deflation-/deleveraging-related events (including things like higher unemployment) than you do. Those things will be part of the picture, but relentlessly-increasing — even skyrocketing — nominal prices will be the most visible and most hurtful aspect. The cause of the affordability problem will be, in my view, more a matter of increasing prices than anything else.

Prices have, however, fallen where international wage arbitrage has been a major factor, such as for electronics, which illustrates other price drivers at work.

You’re absolutely right. That IS one area where prices have gone down — way down.

These confounding factors are one reason we use our clear and precise definition of inflation. To do otherwise takes all the explanatory and predictive value out of the concept,

Well, instead of fighting the whole world with an odd new definition, why not invent a new word, and leave the old words to be what they are? Much, much easier that way. I know this from hard experience. It is practically impossible to get people to accept an atypical definition — I mean “people” outside of a very small group, to whom you are directly speaking. And it is tough to get even THAT tiny group to get it and stick with it! Such are the pressures of universal social acceptance of a standard definition. You can fight the dictionary, but it is like fighting city hall. Very tough. And the very moment you let up, everything will go back to the way it was.

Ask yourself: why is it so important to you to build a theory of cause into the definition of these words? Why are you not arguing with the word “price”, and attempting to build a theory of cause into THAT word? Why not just let these words mean what they mean, and figure some other way to make your point?

which suits the powers that be perfectly well by the way. They don’t really want people to understand the system.

You’re certainly right about that.

As the deflationary dynamic picks up momentum, we will see nominal prices fall.

In some sectors, yes, we’ll be seeing some real bargains:

https://alan2102.wordpress.com/2012/11/05/inflation-deflation-or-biflation/
[snip]
— tony urban real estate, condos, etc.; possibly ALL
real estate
— fancy cars
— fancy consumer hard goods, e.g. big-screen tvs
— stocks and bonds, mutual fund shares
— vacations, hotels, cruises
— most or all services (massage, bookkeeping, you
name it)
— medical services except for clear essentials

Watch and see over the next few years.

Indeed. My hat is in the ring, as is yours. We’ll see!

[alan2102]

stoneleigh post=6032 wrote:
The dynamic you are pointing to is essentially what we have been predicting at TAE all along

TAE has predicted increased prices of food, fuel, most consumables, medical services, education, most commodities, precious metals, and generally most things that people actually buy and use?

It is…more important to understand affordability (ie prices in real terms) than to look only at movements in nominal prices.

I don’t know about “more” important, but it is true that the prices don’t give the full picture. Continual price increases of almost everything that people actually buy and use, in daily life, does not fully reflect affordability when incomes are dropping — as they are, modestly. The price increases are, in real (affordability) terms, even worse than they appear. But the price increases are still the main thing, by far. That could change, of course, but that is the way it is for now.

What we have said at TAE is that the money supply will contract substantially on the collapse of credit. Prices will follow to the downside

I’m having trouble correlating that with the first pull-quote, above.

but as purchasing power will fall faster than price for most people, everything will become less affordable (ie prices will rise in real terms even as they fall in nominal terms).

Well, deflationists have told me for 15 years that prices of the things mentioned will fall in nominal terms, but so far it has not happened. Maybe that will change. Maybe they will be vindicated, yet.

In any case, I’m having trouble with your statement that “The dynamic you [alan] are pointing to is essentially what we have been predicting at TAE all along”. That does not seem to be the case, at all. The dynamic I am pointing to is increases in nominal [yes, nominal] prices of most common consumer goods and services, aka “inflation” as commonly defined (see reply to Ilargi, above). That’s what I have expected for 15 years, that is what has happened during that time, and that is what I expect to continue for some time to come.

Prices have risen during the rally as a lagging indicator of ‘heroic’ attempts at reflation. As such, prices tell you what has been happening, not what will happen.

Just to be clear: I’ve never taken price changes to be predictive, with confidence, of further price changes. No intelligent person would think that. On the other hand, it is true that trends, once in motion, tend to continue, often for a lot longer than anyone expects. And it is evident that heroic attempts at reflation will continue indefinitely, probably with increasing intensity.

Keeping terminology clear is important to presenting a consistent argument that all discussion participants can understand.

I certainly agree with that. And as such, if you wish to use idiosyncratic definitions (e.g. of “inflation”), you must be especially careful to present your definition anew, in almost every document or discussion, in order to ensure understanding. That’s a lot of work. It might make more sense just to use the conventional definitions, and make your point (regarding precursor monetary phenomena, etc.) in a different way.

Biflation does not exist.

It exists, and is happening right now, given near-universally-accepted definitions of “inflation” and “deflation” (which I understand that you reject).

[alan2102]

ilargi post=6035 wrote: “In my opinion, biflation is not at all a useful concept. It just muddies the waters.”

My thoughts exactly, Nicole.

Biflation is nothing but another way for people who don’t understand what inflation/deflation is, to make sense of what they see but can’t explain. It doesn’t help them, they need to go back to the real definitions.

What you mean by “real definitions” is YOUR definitions. And that’s fine. Define words as you please, for your purposes; just make certain that the definitions are clear up front, every time the words are used, when your definitions do not comport with conventional and broadly-accepted ones.

In the case of “inflation” and “deflation”, the definitions found in all dictionaries and reference works, apparently without exception, are inconsistent with your definitions. I accept that you want to use your own definitions, and as I say that’s fine. Just don’t pretend that yours are any more “real” than others’. If anything, the situation is the opposite of that.

Inflation and deflation cannot exist simultaneously.

As conventionally defined, they can, and do; it is happening right now. Yes, I understand that by your definitions, the situation is otherwise.

Please note that I’m not saying your definitions are wrong. Maybe they’re right, and far superior to others. Maybe they represent unique and brilliant insight on your part. I don’t know. But I do know that they are idiosyncratic and inconsistent with reference works and general (“man on the street”) understanding.

Please note also that I did not write the dictionaries, and I am not responsible for what hundreds of millions of people believe to be the definition of “inflation” and “deflation” (higher and lower prices, respectively). Your beef is not really with me, it is with them — the dictionaries, other reference works, and common understanding.

From my post:

https://alan2102.wordpress.com/2012/11/05/inflation-deflation-or-biflation/

Note:

I recognize that others may have their own (atypical) definitions of “inflation” and “deflation”, but in this post I am using “inflation” to mean what dictionaries and other common reference works say it means, and what almost everyone understands it to mean: higher prices. (While its mirror-opposite, “deflation”, means lower prices.)

Vis:

http://www.bing.com/Dictionary in·fla·tion [ in fláysh’n ] — higher prices: an increase in the supply of currency or credit relative to the availability of goods and services, resulting in higher prices and a decrease in the purchasing power of money. Synonyms: price rises, increase, price increases, rise.

en.wikipedia.org/wiki/Inflation — In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.

http://www.investorwords.com/2452/?inflation.html — Definition of inflation: The overall general upward price movement of goods and services in an economy.

[alan2102]

Addendum to previous:

The solar PV industry is a victim of its own success and efficiency in grinding out ever-more panels at ever-lower prices. The Chinese did subsidize the industry to some extent, but the stark reality is that — subsidies or no — economies of scale and other advancements have fundamentally changed the dynamic. PV panels have suddenly become, or are rapidly becoming, a cheap commodity item, rather than (as they were formerly) exotic high-tech things at high prices. Chinese subsidies to the PV industry probably just sped up what was inevitable, anyway.

(And btw let’s give the PRC two cheers for the speeding up. We needed it. We need these new technologies, and we need them FAST. A bit of “artificial” government support for development in heretofore under-developed industries is very much in order.)

The market is now glutted with cheap panels, and no one is making any money, for the time being. This is bad if you’re an executive or investor in solar PV companies, but good if you are consumer looking for a deal. It is also good — great, actually — if you’re a global citizen concerned about sustainability, the environment, and the transition to renewables. As prices crash, the economic reasons not to implement solar vanish, while the demand for green technologies (even at higher prices) is rising fast. Investors will also do well, eventually, but it will take a couple years for things to settle out.

We have the makings here of a transformation that even the solar boosters of a few years ago could barely have imagined. I certainly could not have imagined it. I was a hard solar skeptic for many years. No longer. Events have raced past me; changing facts have compelled me to change my opinion. I have been PROVEN WRONG. And I’m rather pleased about that.

———————-

Interesting rant:

https://tech.dir.groups.yahoo.com/group/energyresources/message/126971
From: Catapult Research [mailto:jamessmith@…]
Sent: Wednesday, 22 June 2011 4:27 AM
Subject: SunPower

[…snip…]

Polysilicon for solar is getting cheaper and cheaper by the day. Last year it dropped over 20%. It may drop another 20% this year. It is dropping so fast that First Solar which uses an alternate form of solar technology (“thin-film” solar doesn’t use polysilicon) may be in real trouble. But the bigger picture here is that the cost of going solar is dropping faster than the analysts realize and they do not accurately assess the future take-up of solar in the US.

Yes— feed-in tarriffs that suppport solar power in Italy and Germany are being reduced but in the US it may be just getting started. New Jersey is now attracting bigger players. Both Home Depot and Lowes now offer programs which give you free solar panels on your roof (provided you live in NJ where solar credits are offered to solar electric producers). You sign over your solar credits to Home Depot or Lowes or some other solar contractor and you get your electric power for free! It is big. In some ways this is more attractive than the feed-in tarriffs offered in Europe.

[…snip…]

Free Market Mavens are living in a theoretical world that doesn’t exist in real life. We offer over $42 billion in subsidies for oil and gas exploration and that is still considered “free market capitalism,” but if someone pads your electric bill by 2 cents to pay for solar power subsidies and solar credits to solar producers, the Free Market Mavens go nuts!

[…snip…]

But make no mistake, solar is going to be far bigger than anyone now realizes. The New Jersey program will be copied by other states and you will see solar go viral. The solar credits of New Jersey will make the feed-in tarriffs in Europe look relatively small by comparison. Already New Jersey has over 3000 solar contractors. There are a lot of jobs being created via solar. Germany created 500,000 good paying jobs via their feed-in tarriffs for solar and I don’t see why the US can’t create a million solar jobs.

[…snip…]

What is the real risk? The risk is not that solar will continue to stay beaten down as it is now. The risk is that Utilities will wither and die. In the 1950s electric demand was rising at 9.5%. “Electricity usage” increased 0.5 percent a year on average for the decade that ended 2010, down from 2.4 percent a year during the 1990s, according to the Energy Information Administration” (WSJ –“As Demand for Power Wanes, Utilities Turn to Mergers, Friday June 17th). The risk is NOT that solar will go away or remain a bit player in the energy market, the risk is that utilities will see demand drop so fast that they will go away or get merged into monster utilities that will use their greater political power to raise rates on the remaining idiots who choose to pay for electricity instead of opting for free electricity from Home Depot or Lowes.

[…snip…]

Solar: In the 1970s solar cost $1.00 per kwh to produce electricity, but now it costs less than 30 cents per kwh and dropping very fast. Again, within just a few short years, solar will be cheaper than coal, nat gas, and nuclear. The CEO of GE ,Jeffrey Immelt, believes it will take 5 years for solar to get there, but I think it is going to happen in only 2 or 3 years. The point here is that at the same time that solar is dropping by 20% a year, we have the real costs of coal, nuclear, and nat gas rising exponentially. If you factor in the “externalities” of pollution, then solar is already cheaper than coal, nat gas, and nuclear.

[…snip…]

We are told every single day that solar can never be more than 1% of the energy mix. That is patently false. I have a 9kw system on my roof which I had installed in 2004. With newer panels that are 30% to 40% more efficient I could easily have a 15 kw system on the back roof if I installed today. That is enough solar power to cover all my home electric needs and a couple of electric cars to boot. The dirty little secret is that we can get off oil. We can get off nuclear. We can get off Nat Gas. But you won’t hear that from the Media. My take is that solar will be far bigger than anyone now expects. People might be slow in figuring this stuff out, but they are not as stupid or corrupt as the politicians that run the country. Keep in mind that every other commercial on TV now is from the Oil & Gas Industry telling you that fracking for Nat Gas is a clean energy alternative. Shale-Gas deposits in the US alone is worth more than $5 trillion. You can buy a lot of advertisements and a lot of politicians with that kind of money.

[alan2102]

Stoneleigh writes:

Solar is particularly expensive in comparison with currently available alternatives. Grid parity – cost competitiveness with other sources – is a distant dream, hence the requirement for disproportionately large subsidies:

Not a distant dream at all. It WAS a distant dream, in 1990, perhaps 2000. But not now. Costs have fallen off a cliff over the last 20 years, and grid parity already exists in places, depending on latitude and other factors. (Need I mention that solar PV will never reach grid parity in Alaska?)

Further, the complaint about “large subsidies”, and hidden costs, must be taken in proper context; to wit, that our other energy technologies have themselves been the recipients of vast subsidies over the decades, and have been racking-up massive hidden costs (“externalities”) all along. The true cost of gasoline was estimated, in circa 1999 (when gas was a buck a gallon), to be $10-15 per gallon; heaven only knows what the true cost is today. It costs $TRILLIONS to maintain the military and other structures that secure the oil. Viewed in that context, solar and other alternatives are entirely competitive. They are probably super-competitive, given a fair and complete accounting. We have major-ass accounting problems — with the systems already installed and running, not with the newcomer alternative energy technologies, about which there has been altogether too much caviling, e.g. about “subsidies” which are trivial in the big picture. (And it is interesting to reflect on why this is true. What do you call that desperate desire to rationalize and justify the path already taken, the decisions already made? Whatever it is called, it seems deeply embedded in us.)

Most amusing passage in the Wiki snippet below: The European Photovoltaic Industry Association expected grid parity in many of the European countries by 2020, with costs declining to about half of those of 2010. “However, [their] report was based on the prediction that prices would fall 36 to 51% over 10 years, a decrease that actually took place during the year the report was authored.”

:cheer: Isn’t that a hoot?

The truth is that solar PV has gained great momentum in just the last couple years, and is now moving ahead so rapidly that it is tripping forward over itself. And then we come along, as it is on the ground smarting from the fall, and say: “Oh my gosh! How terrible! The bubble has burst! The solar industry is collapsing!” Haha. Maybe we should learn the difference between falling down because of exhaustion, and falling down because of too much robustness.

https://en.wikipedia.org/wiki/Grid_parity
Predictions from the 2006 time-frame expected retail grid parity for solar in the 2016 to 2020 era,[7][8] but due to rapid downward pricing changes, more recent calculations have forced dramatic reductions in time scale, and the suggestion that solar has already reached grid parity in a wide variety of locations.[2] The European Photovoltaic Industry Association (EPIA) defines the moment at which the value of PV electricity equals the cost of traditional grid power as dynamic grid parity. EPIA expects that PV power achieves this target in many of the European countries by 2020, with costs declining to about half of those of 2010.[1] However, this report was based on the prediction that prices would fall 36 to 51% over 10 years, a decrease that actually took place during the year the report was authored. The line was claimed to have been crossed in Australia in September 2011,[9] and module prices have continued to fall since then. By late 2011, the fully loaded cost of solar PV was projected to likely fall below $0.15/kWh for most of the OECD and reach $0.10/kWh in sunnier regions like the southern United States or Spain.[10] This is below the retail rate for power in much of the OECD already.
Photovoltaics are now starting to compete in the real world without subsidies. Shi Zhengrong has said that, as of 2012, unsubsidised solar power is already competitive with fossil fuels in India, Hawaii, Italy and Spain. As PV system prices decline it’s inevitable that subsidies will end. “Solar power will be able to compete without subsidies against conventional power sources in half the world by 2015”.[11][12]
As of 2011, the cost of PV has fallen well below that of nuclear power and is set to fall further.[13] The average retail price of solar cells as monitored by the Solarbuzz group fell from $3.50/watt to $2.43/watt over the course of 2011, and a decline to prices below $2.00/watt seems inevitable:[13]
For large-scale installations, prices below $1.00/watt are now common. In some locations, PV has reached grid parity, the cost at which it is competitive with coal or gas-fired generation. More generally, it is now evident that, given a carbon price of $50/ton, which would raise the price of coal-fired power by 5c/kWh, solar PV will be cost-competitive in most locations. The declining price of PV has been reflected in rapidly growing installations, totalling about 23 GW in 2011. Although some consolidation is likely in 2012, as firms try to restore profitability, strong growth seems likely to continue for the rest of the decade. Already, by one estimate, total investment in renewables for 2011 exceeded investment in carbon-based electricity generation.[13]
The dramatic price reductions in the PV industry have been causing a number of other power sources to become less interesting. Nevertheless, there remains the widespread belief that concentrating solar power (CSP) will be even less expensive than PV, although this is suitable for industrial-scale projects only, and thus has to compete at wholesale pricing. One company stated in 2011 that CSP costs 12¢(US)/kWh to produce in Australia, and expects this to drop to 6¢(US)/kWh by 2015 due to improvements in technology and reductions in equipment manufacturing costs.[14] Greentech Media predicts that LCoE of CSP and PV power will lower to $0.07 – $0.12/kWh by 2020 in California.[15]

[alan2102]

Golden Oxen post=6006 wrote: This could easily become a Black Swan event that takes the entire financial system down if it is not handled properly.

Their idiocy in storing this amount of asset documents in the basement of a flood prone area does little to instill confidence.

One can only assume the worst when wondering what is going on in the minds of those with assets at the location.

Ilargi, This was a most revealing article, one of your best, the MSM has buried it from view, and I thank you for bringing it to the attention of TAE readers.

Agreed. Great find.

Widely quoted, and deservedly so:

“The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds title.” — Anonymous

To which can now be added:

“…of which nobody is sure who holds title, and even if they think they’re sure, the actual documents are likely to now exist only as a soggy moldy illegible mess in the basement of the DTCC”.

[alan2102]

ilargi post=5908 wrote: Unsubsidized rooftop solar right now seems like it has a reasonable payback period at about 12 years, with expected equipment lifespan of 20-25 years.

Then why are all those companies, GE, Siemens etc., closing their solar divisions?

That’s easy. Because the Chinese built vast production capability, and undercut everyone’s prices. Hence a big shake-up in the industry. This is the same as what the Chinese did to other industries.

We’ll have cheap PV panels for years. The solar PV revolution will continue, (indeed, is just beginning), at least in the lower latitudes. It is a very attractive and useful technology, and eminently viable on both a dollar cost basis as well as an EROEI basis. It is not the solution to all energy problems, obviously, but it is very useful, and will be a growing part of the mix for many decades.

fine read, btw:

https://www.theoildrum.com/node/3047
Photovoltaics: From Waste to Energy-maker
Posted by Engineer-Poet on October 8, 2007 – 9:00am
[…big snip…]
To summarize the points above,
— We’ve been ignoring a major supply of silicon-
containing material.
— This material can be made into elemental silicon
very cheaply.
— The silicon product is ready for direct fabrication
into raw wafers for PV cells.
— These PV cells may be extremely cheap: about 3 peak
watts per dollar.
— If we used all the annual supply of this silicon
source, we could create peak capacity of about 10% of
US average electric consumption every year.
— If we used the stockpiles accumulated over the last
several decades, we could go a lot faster than that.

[alan2102]

Roger Yates post=5888 wrote: “No amount of political will can achieve the physically impossible”.
This is a political statement.

I’ll have to differ. It is not a political statement. It is more like a tautology. It reduces to: “The impossible is not possible.” Hard to argue with that.

By physically impossible you mean that it is not possible to maintain our present profligate lifestyles with other than cheap fossil fuels.

Right. That’s what she means, as I take it. The good news, however, is that we need not, and ought not, maintain our present profligate lifestyles, and we can actually become MORE prosperous, healthy and happy if we give them up. And the other good news (see my post above) is that we can wring vastly more goods (human need-meeting things) from given levels of resource use. Our society is massively, outrageously inefficient.

Talk of “physical impossibility” is misleading unless these points are made clear. Yes, of course it is physically impossible for things to carry on the way they have been the past 50-75 years. But then, it would be idiotic, and totally unnecessary for any valid purpose, to carry things on they the way they have been the past 50-75 years. Which is not to say that we won’t do just that — idiots that we are. :unsure:

We will therefore need to change our expectations.That is a political task. Humanity has been through worse. It is doable. We really are able to get off the tiger’s back of consumerist growth and reorganising society in a sustainable way. You appear to take the present modal of profligacy as a given. I am disputing that.

Everyone takes the present mode of profligacy as a given.

It reduces to: “catastrophe is inevitable because change is impossible”. Of course, the first clause will be correct if the second clause is correct. And even if change is possible, it will still be a very difficult, challenging time. No bowl of cherries, this.

[alan2102]

stoneleigh post=5877 wrote: Roger Yates wrote: “This article is basically arguing that the present economic and political power structure is inviolable. Of course this is not true. It may be that people are not willing to challenge it. That is likely. But I think it is nonsense to suggest that, given our technical abilities and organisational scope, we cannot build a system of renewables, and quickly. Political and economic systems CAN be changed. All the material resources are in place. It is simply a question of will and organisation. To suggest that the present power structures cannot be changed, as if they were some natural force like gravity or entropy is risible. This whole issue can, and should be reduced to this kind of fundamental debate. All you are saying is that we are behaving like idiots. We already know that.”

I am left wondering if you read the article, since you raise a straw man argument. I have, in fact, argued that no amount of political will can achieve the physically impossible, no matter what kind of political system is in place.

I am left wondering if you read what Roger wrote. Roger said that “all the material resources are in place”, i.e. he does not agree with you that the transition is “physically impossible”. And if it is true that it is physically possible, as Roger suggests, then doing it is in fact a matter of political and mass will.

It is likely that Roger is right. But to understand why he is right requires venturing outside of the walled doom-garden of peak-oil catastrophism. (This is something that I personally did not start doing until about 2007 — after being in the peak oil doomerism fold for 8 years — and I’m ashamed that it took me so long.) There is a whole world of literature, seldom or never mentioned in that dreary garden, which addresses resource issues and comes to very different conclusions. This literature must be digested before one can form an authentic, high-quality Big Picture view of things. This is not about mindless cornucopianism or pathetically-naive Pollyanna-ism. I’m talking about competent analyses by very intelligent and well-informed people, fully aware of the resource issues that concern peak oil doomers.

The biggest single issue is WASTE, and the fact that most resources are simply pissed-away without contributing anything to the meeting of human needs. After studying the issue for some years, I’ve become convinced that human needs of everyone on this planet could be met on a fraction of the resources currently being used; perhaps 10%, perhaps less. That does not make the situation permanently sustainable, but it would open up enormous breathing room, and certainly indicates that near- or mid-term catastrophe is readily avoidable. The wildcard of course is political and mass will, just as Roger indicated.

This subject has been hashed-out at length elsewhere, and I can’t reconstruct it all in less than numerous long posts.

Here’s a good start, however. Read the first two posts on this thread, and if you have time, follow the links. And if you really want to be informed, actually read the Factor 5 book, among other important works of similar nature.

https://www.hubberts-arms.org/general-discussion/factor-5-resource-efficiency-vs-%27resource-shortage%27/

Topic: Factor 5: Resource Efficiency vs. “Resource Shortage”
(Read 1605 times)

alan2102
Factor 5: Resource Efficiency vs. “Resource Shortage”
« on: May 23, 2011, 03:59:31 PM »

NEW BOOK: Factor 5: Transforming the Global Economy through
80% Increase in Resource Productivity

In a nutshell: this is a plan to dramatically improve resource/energy efficiency, achieving most existing human and social needs (including, IMO, a great deal that is not strictly needed, but appears “needed” to the average person) at a small fraction of the resource and environmental cost. The emphasis is on the developed world, but it is highly relevant to the developing world as well.

This book reflects what I and secularanimist have been saying in many past posts: that the waste built-in to our system is so huge that it is senseless to dwell on “resource shortages” until that waste is wrung-out. What we have is not a shortage of resources so much as a longage of stupidity and ignorance. This book appears to be a detailed explanation and exploration of that point, with a specific blueprint for finding our way out of it. It is backed with extensive case studies and examples of operating systems. This is not techno-fantasyland or a gee-whiz Free Energy joyride. In fact, it deals almost exclusively with off-the-shelf technology (and tweaks thereof), and operates within the existing energy-resource situation (e.g. does not assume the building of vast numbers of new nuclear power plants).

Further, the authors claim that….

[…snip… continues at the link…]

———————-

Also:

https://www.naturaledgeproject.net/Documents/F500Introduction.pdf
FACTOR 5: Transforming the Global Economy through 80%
Improvements in Resource Productivity
Introduction: Factor 5 – The Global Imperative
By Ernst von Weizsäcker

https://grist.org/energy-efficiency/2011-02-23-rebounding-to-a-smarter-energy-efficiency-perspective/
Rebounding to a smarter energy efficiency perspective
By John A. “Skip” Laitner
“It turns out that our actual level of energy efficiency – when we properly work through the numbers, as my colleague Bob Ayres has recently done – is an even more anemic 13 percent. That is, we waste about 87 percent of all the energy we throw at the economic problem.”

[alan2102]

gurusid post=5849 wrote: Hi Folks,
the inflation is likely to be in commodities, while assets crash through the floor. The scenario of houses being cheaper than a loaf of bread is not impossible.

Yes. It is called “biflation” — a useful concept. Prices of food, fuel and most consumables goes up, while financial “assets”, real estate, luxury goods, etc., go down. I’ve put together a few notes about it, here:
Inflation? Deflation? or Biflation?
Inflation? Deflation? or Biflation?

[alan2102]

SteveB post=5992 wrote:
Gold and silver only have the value that they’re sold or traded for.

That would be true of any investment, I believe.

Doubling is irrelevant if the owner holds it all the way back down to–and perhaps past–its purchase price.

Indeed. Which is why it is not a good idea to buy at the parabolic tail end of a bull market. In gold and silver, we’re years away from that point.

The best use of gold is in the form of a ring. Get a spouse, a true partner. Then the rest won’t matter so much (as if it really did in the first place).

Apples and oranges — both very good to eat.

Gold won’t buy happiness, but happiness won’t pay the bills.

[alan2102]

Carl post=5869 wrote:
(Since) 2008, over $40TT of the global ‘money’ supply vanished without a trace. Think about that.

And yet, amazingly, prices for everything that people actually need and buy continue to increase, and gold and silver have doubled. Who woulda thunk?

[alan2102]

20:00:
“When I say loss of purchasing power, I mean that people won’t have any dollars”

I wish she would stop using the phrase “purchasing power” when she means WEALTH, or effective wealth. People not having dollars means (in a dollar-dominated context) that they are poor; it says nothing about the purchasing power of the dollars, which might be low, or high. I realize that one can properly refer to “purchasing power” of individuals (rather than money), but it confuses matters in discussions monetary. Better to stick with the main definition, i.e. having to do with the value of monetary instruments, and their relative ability to buy stuff, rather than individuals’ financial state or wealth.

PS: Nicole has a very nice, mellifluous voice, and a fine, dignified way of expressing herself.

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