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The Holy Trinity
I like trying to get to the internal organs of the matter. Not just the heart, but also the brain, the kidneys, the stomach, the lungs, the skeleton. My conversation with Tim Garrett last week did just that, centring the matter of the universe alongside energy and human civilisation. This holy trinity speaks to the bigger picture, the holistic system, the body, mind and soul of reality and of the crisis. Perhaps we should refer to it as the wholy trinity.
Language is one of the ways I get to the heart, finding clues in our linguistics which reveal fundamental truths about the world. Speaking to physicists is another, and it amazes me that those in the know about the laws of the universe are not questioned more often about how to build functioning societies, or maybe what’s wrong with our own. Our economies cannot outsmart the laws of physics, no matter the linguistic tricks we pull (hello Net Zero carbon accounting). To me, physics gets to the skin of the matter, the ultimate boundaries we come up against in this particular universe. Perhaps it also gets to the stomach, for the laws of thermodynamics say a lot about our economic appetite.
Simply: The more energy available to a thing, the more it grows. And, for that thing to maintain itself, it needs an energy surplus because it is constantly expending energy in its search for and consumption of energy. Things grow into their energy surplus, and the more energy available, the more the thing will grow, and the bigger the appetite will become: things grow in order to find more resources in order to maintain themselves.
The Economy Is Cooked
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The Economy Is Cooked
Hours ago, European Central Bank chief Mario Dragho conceded: “The growth cycle may have peaked”
Of course, those paying attention to the data already knew this. Our politicians and central planers have been peddling to us the fantasy that the global economy is strengthening, finally ready to fire on all cylinders after nearly ten years of dependence on monetary stimulus.
That just ain’t so.
The Federal Reserve of Atlanta’s GDPNow measure, which gives a forecast of Q1 2018’s expected GDP, is currently coming in at 2.0%, down from the much more vigorous 5.4% growth predicted as recently as early February:
Generating this growth, meager as it is, has required a tremendous amount of new debt. So much more so that the US will soon have a worse debt-to-GDP ratio than perennial fiscal basket-case Italy:
U.S. Debt Load Seen Worse Than Italy’s by 2023, IMF Predicts (Bloomberg)
In five years, the U.S. government is forecast to have a bleaker debt profile than Italy, the perennial poor man of the Group of Seven industrial nations.
The U.S. debt-to-GDP ratio is projected widen to 116.9 percent by 2023 while Italy’s is seen narrowing to 116.6 percent, according to the latest data from the International Monetary Fund. The U.S. will also place ahead of both Mozambique and Burundi in terms of the weight of its fiscal burden.
The numbers put renewed focus on the U.S. deteriorating budget after the enactment in December of $1.5 trillion in tax cuts, and the passage more recently of $300 billion in new spending. President Donald Trump’s administration argues that the tax overhaul combined with deregulation will help the economy accelerate, which in turn will generate enough extra revenue to avoid any fiscal fallout.
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