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QUESTION: Mr. Armstrong, You say that wheat fell during the Great Depression during the Dust Bowl when supply would have declined. This makes no sense. Would you address that question?

ANSWER: Your problem is typical in analysis. It appears that 99% of the people always try to reduce some event to a single cause and effect. Everything is connected like a line of dominoes. You are not just pushing over a single one. The action has a ripple effect that moves through the entire world economy and is not even restricted to a single nation.

I do not make stuff up to try to prove a point. I have been curious to discover how things really work. When I say we have the largest database in the world, I am not joking. Just as I have been a collector of various things, that includes data. It is easy to find a yearly chart of wheat, but not daily or weekly during that period. Here is how wheat responded during the Great Depression on a weekly basis. Note that it peaked about 4 weeks before the stock market. Then you see a huge gap down in 1931.

This was caused by the wholesale defaults of just about every nation. Some went into a moratorium and suspended payments on their debt like Britain. But most outright defaulted and you can buy their bonds usually on eBay.

Here is the impact of the 1931 Sovereign Debt Crisis. The dollar soared on our index from roughly the 112 level to nearly 160. That was high which exceeded even World War I levels. That illustrates just how high the dollar rallied. Because wheat was priced in dollars, it fell in terms of dollars while rising in terms of other currencies because of their defaults.

…click on the above link to read the rest of the article…

What my Linux adventure is teaching me about our possible future

January 10, 2021

What my Linux adventure is teaching me about our possible future

I am a Linux ambassador of sorts. I’ve been using the Linux computer operating system since 2013. I can still remember the light feeling I had the day I broke free of the Microsoft Windows operating system.

No more constant worries about viruses hijacking or corrupting my computer. No more outlays to pay for each upgrade. No more worries that the next upgrade will be really lousy and buggy and remain so for months or even years. And, above all, no more freezes in the middle of my work and work lost as a result.

Now eight years into my Linux adventure I am wildly satisfied with that choice. That remains the case even though my most recent upgrade did not go as planned and got stretched out over several days. But this latest upgrade has made me think hard about why I stick with Linux and what the Linux way of doing things can tell us about a possible, better future.

I think some of the principles and structures I’m seeing are found in practically every pursuit, agriculture, education, the arts, politics, and commerce. If you are growing some of your own food, you are practicing these principles and creating similar structures. If you are teaching outside existing educational systems, you are likely doing the same. If you are writing, painting, singing, dancing or somehow expressing yourself artistically, you are probably already moving toward the world that the Linux community is pioneering in its own corner. If you created a business not only to have a livelihood, but because you want to change the world, you are almost certainly on the same path.

…click on the above link to read the rest of the article…

How Do You Know When Society Is About to Fall Apart?

November 5, 2020

How Do You Know When Society Is About to Fall Apart?

Meet the scholars who study civilizational collapse.

When I first spoke with Joseph Tainter in early May, he and I and nearly everyone else had reason to be worried. A few days earlier, the official tally of Covid-19 infections in the United States had climbed above one million, unemployment claims had topped 30 million and the United Nations had warned that the planet was facing “multiple famines of biblical proportions.” George Floyd was still alive, and the protests spurred by his killing had not yet swept the nation, but a different kind of protest, led by white men armed with heavy weaponry, had taken over the Michigan State Legislature building. The president of the United States had appeared to suggest treating the coronavirus with disinfectant injections. Utah, where Tainter lives — he teaches at Utah State — was reopening its gyms, restaurants and hair salons that very day.

The chaos was considerable, but Tainter seemed calm. He walked me through the arguments of the book that made his reputation, “The Collapse of Complex Societies,” which has for years been the seminal text in the study of societal collapse, an academic subdiscipline that arguably was born with its publication in 1988. “Civilizations are fragile, impermanent things,” Tainter writes. Nearly every one that has ever existed has also ceased to exist, yet “understanding disintegration has remained a distinctly minor concern in the social sciences.” It is only a mild overstatement to suggest that before Tainter, collapse was simply not a thing.

…click on the above link to read the rest of the article…

Can we Predict Collapses Before they Happen? What we Learned from the Pandemic

October 15, 2020

Can we Predict Collapses Before they Happen? What we Learned from the Pandemic

My 2019 book “Before the Collapse.” In it, I examined several scenarios of the future of humankind. Was I able to predict the current pandemic? Of course not in the details, but I think that I did note an important facet of the story: epidemics are never very deadly when they come alone. They become true killers only when they are associated famines. In the case of the current coronavirus pandemic, the human population is not so badly debilitated by famines that we should have expected disasters comparable to those caused by ancient epidemics. So, we could have been better prepared if we had paid more attention to history. But the main thing we learn from history is that people never learn from history. And so it goes. This post includes a review of the book written by Daniel Ruiz.

After nearly one year from the start of the COVID-19 pandemic in China, we can say that, at the very least, we learned a lot from it. One lesson was that we should be much more careful about “model hubris”, to think that because a model is complex and detailed, it can predict the future. This problem is well described in a recent paper by Saltelli et al. in a recent paper in “Nature.”

But perhaps the most important lesson we learned was how easy the future can surprise us and how our perception of it can be remote from reality. We tend to judge on the basis of our past experience, but our mental models are often poorly calibrated. When the COVID-19 started diffusing in the West, many people panicked, some seemed to think that it really was the end of the world. Maybe they had in mind as a model the great plague of the Middle Ages, an image that has been with us for centuries.

…click on the above link to read the rest of the article…

Today’s Contemplation: Collapse Cometh VII

October 12, 2020

Today’s Contemplation: Collapse Cometh VII

Image for post — Pompeii, Italy (1993) Photo by author

Ha! It’s poetry in motion
Now she’s making love to me
The spheres are in commotion
The elements in harmony
She blinded me with science
(She blinded me with science!)
And hit me with technology
-Thomas Dolby, 1982 (She Blinded Me With Science)

***

Science, it turns outs, is a process not an answer. And, it usually has many answers from various sciences, each having their own methods and standards. When someone tells you, “the science says,” be skeptical. They are usually being paid to say what they are about to say or at least have been thoroughly indoctrinated by others who are paid. There is never just one answer to any supposedly scientific question.
-Kurt Cobb (Why am I feeling so anxious? The end of modernism arrives)

***

Unfortunately, there are many other misconceptions about science. One of the most common misconceptions concerns the so-called “scientific proofs.” Contrary to popular belief, there is no such thing as a scientific proof…all scientific knowledge is tentative and provisional, and nothing is final. There is no such thing as final proven knowledge in science. The currently accepted theory of a phenomenon is simply the best explanation for it among all available alternatives. Its status as the accepted theory is contingent on what other theories are available and might suddenly change tomorrow if there appears a better theory or new evidence that might challenge the accepted theory. No knowledge or theory (which embodies scientific knowledge) is final.
-Satoshi Kanazawa (Common Misconceptions About Science I: “Scientific Proof”)

…click on the above link to read the rest of the article…

The Four D’s That Define the Future

September 15, 2020

The Four D’s That Define the Future

When the money runs out or loses its purchasing power, all sorts of complexity that were previously viewed as essential crumble to dust.

Four D’s will define 2020-2025: derealization, denormalization, decomplexification and decoherence. That’s a lot of D’s. Let’s take them one at a time.

I use the word derealization to describe the inner disconnect between what we experience and what the propaganda / marketing complex we live in tells us we should be experiencing.

Put another way: our lived experience is derealized (dismissed as not real) by official spin and propaganda.

The current state of the economy is a good example. We see the real-world economy declining yet the officially approved narrative is that there’s a V-shaped recovery underway because Big Tech stocks are hitting new highs. In other words, we don’t need a real-world economy, all we need is a digital economy provided by Big Tech platforms.

This is derealization at its finest: the everyday world you experience directly no longer matters; what matters is stock prices and various statistics that all paint a rosy picture.

Meanwhile, the wealthiest class is fleeing soon-to-be-bankrupt cities. The wealthiest class has the means to buy the best advice and also has the most to lose, so I give their actions far more credence than official propaganda.

I’ve sketched out my thesis on denormalization in The “New Normal” Is De-Normalization and Here’s Why the “Impossible” Economic Collapse Is Unavoidable:

This is why denormalization is an extinction event for much of our high-cost, high-complexity, heavily regulated economy. Subsidizing high costs doesn’t stop the dominoes from falling, as subsidies are not a substitute for the virtuous cycle of re-investment.

The Fed’s project of lowering the cost of capital to zero doesn’t generate this virtuous cycle; all it does is encourage socially useless speculative predation. Collapse isn’t “impossible,” it’s unavoidable.

…click on the above link to read the rest of the article…

J.M. Keynes: The Time He Had A Point

September 28, 2019

J.M. Keynes: The Time He Had A Point

John Maynard Keynes once said:

“Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

While true, it doesn’t go far enough. The problem isn’t simply defunct economists or “scribblers of a few years back.”

We are in the grip of economists who, far from being defunct, hold great power. Whether they hear voices in the air (or Twitter), I can’t say, but they are indeed madmen in authority.

Not all economists are in that category. Many provide valuable insight or are at worst harmless. They don’t pretend they can change human nature or prevent the inevitable.

Unfortunately, some economists do believe those things. Worse, they are in places from which they can wreak havoc, and they are.

Last weekend I received two emails referring me to articles about the economics profession that stirred my writing juices.

I don’t agree with everything in the articles. They are, however, important because they try, at least, to describe and possibly fix the problem Keynes identified.

We have to address them, not just economically but politically. We can’t just put our heads in the sand and think this will go away.

The whole debt bubble, the income and wealth inequality angst, a growing deficit which will get worse after the next recession, and lack of economic understanding among voters is all coming home to roost.

Better to think about that now, while we can still act and maybe even change things.

False Assumptions

The first item is a July 2019 TED talk by Nick Hanauer, a self-described Seattle “plutocrat” who founded and sold several companies.

…click on the above link to read the rest of the article…

Nothing Can be Reduced to a Single Cause & Effect be it Markets or Nature

January 31, 2019

Nothing Can be Reduced to a Single Cause & Effect be it Markets or Nature

QUESTION: Dear Mr. Armstrong,

Thanks for the Socrates forecast.

Just a question. What will possibly happen to existing Tropic Belt countries like my region South East Asia when the world is turning into global cooling? Any forecast?

Regards,

ANSWER: I am awaiting their data to run it through and see what comes out. This is what I mean about opinion. How can anyone forecast something without the data? What we do know is also that the Jet Stream moves up and down, so it would make sense that the Tropic Belt would also do the same. The Jet Stream has been dipping as well and creating a very diverse curve pattern. So this produced the COLDEST New Year’s Eve on record last year. This is also why you have people who want to claim it is irrelevant if people die of cold in Wales. They argue that since it is warm where they are in Canada, it must prove that Global Warming is real. They are not the brightest bulb in the box.

Then we have the Pacific Jet Stream. These people who always try to reduce any effect to a single cause should be barred from any research EVER!!! If you want to understand how interconnected our planet is then you also need to look at and study El Niño. The interconnectivity is similar to all the world financial markets, which create a level of complexity beyond most human’s ability to rationalize. Both the weather system and the financial system function on an extremely high level of complexity. The patterns and events in one place can affect life on the other side of the planet in both systems.

…click on the above link to read the rest of the article…

2019: Are you Ready for a New World War? A Statistical Analysis

December 31, 2018

2019: Are you Ready for a New World War? A Statistical Analysis

Detail from Picasso’s “Guernica” – 1937

With the end of 2018, also the centennial of the end of the Great War (or WWI) is past. It passed remarkably in silence: a few celebrations, but little or no discussion of the reasons and the consequences of that war, supposed to be the one that would “end all wars.”

Reasonably, it was too much to expect that wars would ever end but maybe we could have at least learned something from rethinking to a conflict that caused some 40 million victims. But that didn’t happen (if you can read Italian, you may be interested in a reflection of mine on the subject). The world situation, today, looks more and more similar to the military build-up that took place in Europe in the years preceding the Great War. The “Great Powers” are arranging their forces as if they were setting their pieces on a giant chessboard. At some moment, someone may well decide to make the first move. And in this giant chess game, the kings can wipe out all the pawns in a single move with their nuclear warheads.

It would be nice to follow Steven Pinker’s optimism about modern times becoming less violent. There may be such a trend for the past few decades, but it is always dangerous to extrapolate from a limited dataset. In this case, the optimism of Pinker seems to be simply wrong if measured over a time span of several centuries. This is the result of an analysis of the data for the conflicts of the past 600 years that myself and my coworkers Martelloni and Di Patti performed in 2018 — it was thought, in part, as a way to celebrate the centennial of the Great War.
…click on the above link to read the rest of the article…

Society As Platform — A New Frontier in Complexity Science

December 5, 2018

Society As Platform — A New Frontier in Complexity Science

Cities are profoundly complex incarnations of cultural evolution. Image Credit: Vincent Laforet

Humanity is now confronted with new challenges unlike anything we have experienced before. Our evolved history as a species has not prepared us for what is happening now. It is time to start seeing culture as a complex system that evolves according to Darwinian principles.

What do international terrorism, human-caused climate change, and the rise of speculative bubbles in finance have in common? At their heart, each is fundamentally a cultural phenomenon that is often confused with its more superficial elements associated with religion, politics, technology, or economics. There are hidden “governing dynamics” that arise as ideologies and worldviews, diverse modes of social organization with associated norms and practices, and the foundational ontologies and epistemologies that define what is real and knowable for a given society.

Humanity has gone from subsistence living where our daily survival was a struggle to weave healthy relationships with the natural ecosystems around us to one of living within social niches of our own creation. Long ago, it was rocks carved into spear tips that determined our ability to acquire food. Now it is the use of fossil fuels extracted by large machines, which are then sent to refineries for modification and redistribution, eventually finding their way into chemical fertilizers used to extract nutrients from the soil.

All of this arose through the processes of cultural evolution.

Every major challenge in the world today is deeply and profoundly cultural — and cultural systems are always complex. They are comprised of many interacting parts with critical interdependencies that are not reducible to usefully meaningful modular parts. There are threshold effects, phase transitions, chaotic attractors, various kinds of self-organization, and all are deeply dynamic and emergent as evolutionary processes at the intersection of culture and the environment.

…click on the above link to read the rest of the article…

For Whom is Peak Oil Coming? If you own a Diesel Car, it is Coming for you!

November 26, 2018

For Whom is Peak Oil Coming? If you own a Diesel Car, it is Coming for you!

At the beginning, the idea of “peak oil” seemed to be relatively uncomplicated: we would climb from one side and then go down the other side. But no, the story turned out to be devilishly complex. For one thing, there is no such a thing as “oil” intended as a combustible liquid — there are tens, perhaps hundreds, of varieties of the stuff: light, heavy, sour, sweet, shale, tight, dumbbell, and more. And each variety has its story, its peculiarities, its trajectory over time. Eventually, all the oil curves have to end to zero but, in the meantime, there is a lot of wiggling up and down that continues to take us by surprise. Mostly, we didn’t realize how rabidly the system would deny the physical reality of depletion, much preferring to “legislate scarcity” on the basis of pollution.

Here, Antonio Turiel writes a fascinating post telling us how the peak is coming “from below,” affecting first the heavy fraction of crude oil: diesel and fuel oil. That’s already causing enormous problems for the world’s transportation system, as well as for the owners of diesel cars, and the situation will become much more difficult in the near future. The light fraction, the one that produces gasoline, seems to be still immune from peaking, but that will come, too.(U.B.)

The Peak of Diesel Fuel: 2018 edition.

By Antonio Turiel (translated from “The Oil Crash“)

Dear Readers,

Six years ago we commented on this same blog that, of all the fuels derived from oil, diesel was the one that would probably see its production decline first.

…click on the above link to read the rest of the article…

Connected and vulnerable: Climate change, trade wars and the networked world

November 12, 2018

Connected and vulnerable: Climate change, trade wars and the networked world

The increasing connectedness of the global economic system has long been touted as the path to greater prosperity and peaceful relations among nations and their peoples. There’s just one hitch: Complex systems have more points of failure and also hidden risks that only surface when something goes wrong.

For example, our dependence on cheap shipping to move commodities and finished goods has resulted in a system vulnerable to environmental disruption, particularly climate change, and to rising political and military tensions.

The extreme drought in Germany last summer, the warmest ever recorded in the country, has resulted in such low water in the Rhine River that shipping has been greatly curtailed. Ships can only be loaded lightly so as to avoid running aground. Consequently, many more barges and other vessels have been pressed into service to carry the lighter but more numerous loads along the river. This has driven up the cost of shipping considerably. In addition, fuel tankers have not been able to reach some river ports resulting in scattered fuel shortages. Some industrial installations along the river have had to reduce operations.

The natural inhabitants of the river have also suffered as die-offs of fish and other marine life have spread along the river.

A world away trade tensions between China and the United States are resulting in an unexpected threat to the preparedness of the U.S. military. The neoliberal program of free trade embraced by one U.S. president after another regardless of party has resulted in curious vulnerabilities for the military.

Because of the hollowing out of American manufacturing—as much of it migrated to China’s low-cost labor market—the military can no longer fulfill certain needs from U.S. or even European manufacturers. Instead, the only place to source certain supplies is China, a country many now consider a potential military adversary of the United States.

…click on the above link to read the rest of the article…

Why Economists Can’t Understand Complex Systems: Not Even the Nobel Prize, William Nordhaus

October 16, 2018

Why Economists Can’t Understand Complex Systems: Not Even the Nobel Prize, William Nordhaus

The “base case” scenario of “The Limits to Growth” 1972 report to the Club of Rome. The strong non-linearity of the behavior of complex systems — including the global economy — is nearly impossible to understand for people trained in economics. William Nordhaus, the recent Nobel prize winner in economics, is no exception to the rule. In this post, I’ll report how, at the beginning of his career, Nordhaus criticized “The Limits to Growth”, showing in the process that he had understood nothing of the way complex systems work.

After having been awarded the Nobel prize in economics of this year, William Nordhaus has been often presented as some sort of an ecologist (see, e.g. this article on Forbes). Surely, Nordhaus’ work on climate has merit and he is one of the leading world economists who recognize the importance of the problem and who propose remedies for it. On the other hand, Nordhaus’ approach on climate can be criticized: he tends to see the problem in terms of costs and solvable just by means of modest changes.

Nordhaus’ approach to climate change mitigation highlights a general problem with how economists tend to tackle complex systems: their training makes them tend to see changes as smooth and gradual. But real-world systems, normally, do what they damn please, including crashing down in what we call the Seneca Effect.

On this point, let me tell you a little story of how Nordhaus started his career at Yale by an all-out attack against system dynamics, the method used to prepare the 1972 study “The Limits to Growth,” showing in the process that he had understood nothing on the way complex systems work.

…click on the above link to read the rest of the article…

Fishtailing into the Future

October 5, 2018

Fishtailing into the Future

The opening chapters of Michael Lewis’s new book, The Fifth Risk, detail the carelessness of the Trump transition team in the months leading up to his swearing-in as president. Former New Jersey governor Chris Christie led the team, with its binders full of possible agency chiefs, before he was summarily canned by Steve Bannon, who would be dumped soon himself by the ascending Golden Golem of Greatness. There was, in fact, a set of rigorous protocols for managing the transition of power based on decades of cumulative practice — and anxiety over the frightening nuclear demons at the core of US power — and they were disdained, to the horror of the permanent bureaucracy waiting in place for leadership.

In those months after the election, Mr. Trump was apparently dazed and confused by his unexpected victory, and completely unprepared to actually run the country. His super-sized “stable genius” brain surveyed the scene and his field-of-view saw nothing but swamp from sea to shining sea, populated by lizards, snakes, raptors, and poisonous insects, with higher-order mammalian predators in the C-suites. When he finally caught on to the game being played, Mr. Trump rounded up his own menagerie of crispy critters and sent them forth to run operations like the Department of Energy — in that case, former Texas governor Rick Perry, who knew next-to-nothing about the department’s responsibilities, and had sworn to abolish it in the primary elections (when he remembered it existed).

The politics around these deadly serious matters are interesting enough, and Michael Lewis, as always, excels at unpacking the fraught mysteries of highly complicated systems run by comically limited humans. But something else emerges from this story, perhaps unintentionally: that the complexities of government are now hopelessly unmanageable, no matter who is in charge of them, and that the actual path of this still-growing complexity leads to criticality and collapse.

…click on the above link to read the rest of the article…

Dealing With Collapse: The Seneca Strategy

October 1, 2018

Dealing With Collapse: The Seneca Strategy

The ruins of the Egyptian Pyramid of Meidum, perhaps the first large building to collapse in history (*). The collapse of large structures is part of a fascinating field of study that we may call “Collapsology.” I already wrote a book on this subject, titled “The Seneca Effect” (Springer and Oekom 1917), available in English and in German. Now, I am writing a second book with Springer which expands and goes more in depth into the matter with the idea of being a “collapse manual” dedicated to how to understand, manage, and even profit from collapses. It should be titled “The Seneca Strategy” and it will be available in 2019.

About 2,000 years ago, the Roman philosopher Lucius Annaeus Seneca wrote to his friend Licilius noting that “growth is slow, but ruin is rapid“. It looks obvious, but it was one of those observations that turn out to be not obvious at all if you go in some depth into their meaning. Do you remember the story of Newton’s apple? Everyone knows that apples fall from trees, isn’t it obvious? Yes, but it was the start of a chain of thoughts that led Isaac Newton to devise something that was not at all obvious: the law of universal gravitation. It is the same thing for Seneca’s observation that “ruin is rapid.” Everyone knows that it is true, think of a house of cards. But why is it like this?

Seneca’s observation – which I dubbed “The Seneca Effect” (or the “Seneca Cliff” or the “Seneca Collapse”) is one of the key elements we need to understanding the developments of what we now call the “science of complexity.” In the space of a few decades, starting since the 1960s, the development of digital computing has allowed us to tackle problems that, at the time of Newton (not to mention those of Seneca), could not be studied except in a very approximate way.
…click on the above link to read the rest of the article…

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