Discussion of Energy-Related Issues

[AdamA]

The basic problems with nuclear power, in my view, are that it results in catastrophic system failures far more often than the risk management models suggest, and it involves a commitment to store and monitor waste materials for longer periods that any human society has ever existed.

Thus, what one would expect to see going forward would be far more nuclear power station partial or full meltdowns than expected and more or less continuous nuclear waste-related environmental damage.

If we used nuclear energy with the same voracity that we used fossil fuels, the results would be disasterous.  The more available it became, the more waste there would be...it would likely increase at some exponential rate that would initially seem fine and then, suddenly, be a huge disaster.

[MediumTex]

I love the promise of nuclear power.  M. King Hubbert, who came up with the peak oil theory, confidently assumed that nuclear power would completely replace fossil fuels at some point.  It's a very appealing technology.

It just seems like even if the Fukishima incident is a 1 in 1,000 event, that's more frequent than people who signed up for nuclear energy were led to expect.

It's probably also not a good idea to build nuclear power plants near coastal areas known for tsunamis.  As we have seen, natural disasters can set in motion cascading system failures that might have been hard to anticipate, but in retrospect seem obvious.

Another problem with nuclear power is that many of these basically third world countries who want to invest in nuclear power don't have good track records of either government providing effective health and safety oversight, or the private sector being particularly concerned about the environmental effects of their business operations.

France seems to have had a good experience with nuclear power, other than thus far not solving the waste disposal problem any better than anyone else.

[KevinW]

An energy apocalypse seems unlikely to me due to two important capabilities of a free market society: 1) large-scale reaction to price signals, and 2) substitution-enabling technology.

First, if we let the price of energy float, people will naturally gravitate toward more economical ways of getting things done.  Gimmicky products like hybrid cars generate buzz, but there are a lot of bread-and-butter ways people can reduce energy consumption: living closer to work, migrating out of extreme climates, moving data instead of physical objects, etc.  If energy gets expensive enough millions of households will make these kinds of changes, and that adds up.

Second, when an essential input becomes prohibitively expensive it creates an incentive for people to develop other ways of getting things done.  In pre-industrial times economic output was limited by arable land and menial labor.  In Dark Ages Europe you could make a compelling case for "peak fief" or "peak peasants."  Eventually we developed agricultural and industrial technology that allowed us to substitute energy for those inputs.  I'm optimistic that price pressure will incentivize people to develop technology to substitute something else for energy.

[MediumTex]

When an essential input becomes prohibitively expensive it creates an incentive for people to develop other ways of getting things done.  In pre-industrial times economic output was limited by arable land and menial labor.  In Dark Ages Europe you could make a compelling case for "peak fief" or "peak peasants."  Eventually we developed agricultural and industrial technology that allowed us to substitute energy for those inputs.  I'm optimistic that price pressure will incentivize people to develop technology to substitute something else for energy.

I love "peak peasants".  That's good stuff.

The thing that's different this time is that whereas replacing peasant power with coal power resulted in a significant increase in efficiency, thus far I have seen no alternative to fossil fuels that will deliver similar gains in efficiency.  This might not be as big a problem if we had not built a global economy that requires constant growth in order to be healthy, but decreasing efficiency of energy inputs and continued economic growth do not seem likely to coincide with one another.

You make good points, though. 

I'm just ready to see a vision of a post-cheap fossil fuels world with something more reassuring than nuclear power plants built near fault lines as the answer to the energy problem.

[KevinW]

Thanks.

I guess I'm not hoping for a better way of generating electricity, so much as some outside-the-box innovation that makes it possible to do the same things in completely different ways.  Past examples are machines, fossil fuels, grid electricity, and the Internet.

In the "peak peasant" scenario, there are only so many peasants and so many acres of land, so economic growth is capped unless you steal someone else's land or enslave someone else's peasants, and that's a zero sum game.  That got pretty bad, but eventually we got machines that can do the work of 100 men, synthetic fertilizers, and other technologies that pretty much eliminated the bottleneck of peasants and land.

So yeah, I don't think nuclear power plants are necessarily going to be the thing that saves us.  It'll be nanorobots, strong AI, quantum teleportation, or some other game-changer from left field.

[KevinW]

Also, one really great feature of nuclear power is that the harmful waste is concentrated into small solid pellets.  It's easy to make whomever generates that waste responsible for dealing with it within the structures of our legal and economic systems.  And we know where it is, so we can deal with it when or if it becomes a problem.

Conversely CO2 waste escapes untraceable into the global atmosphere.  It's a tragedy of the commons scenario which is not addressed well by our economic system.  And the gases cannot be traced conclusively to their source, which makes it very difficult to prove trespass or liability through the legal system.

A nuclear power plant has to pay the true costs of dealing with its waste, and must pass those costs on to its customers, so nuclear energy's price better reflects its environmental and safety impacts.  I'd think economists and environmentalists would appreciate that.

[cabronjames]

The basic problems with nuclear power, in my view, are that it results in catastrophic system failures far more often than the risk management models suggest, and it involves a commitment to store and monitor waste materials for longer periods that any human society has ever existed

Thom Hartmann (progressive pundit) a few years back IIRC said (paraphrasing) "if the Ancient Egyptians had nuclear power, & stored the toxic waste material in the pyramids, current day Egyptians would still be having to guard the pyramids today, & would have to continue doing so for 1000s of years".

imho the current 1 or 2 generations that benefits from a given power plant, the ROI on nuclear power is exceptional.  The following 100+ generations, each individual genration faces a guarding the waste cost.  imho the ROI across all the generations may make nuclear non-economic, as MT notes.

Furthermore, as MT notes, no human civilization (what MT calls the "human software", as opposed to human hardware, like say the value of gold as money) exists for 100+ generations.

The 2011 Egyptian revolution is a vivid example.  Given the aforementioned Hartmann thought experiment, the guards/infrastructure guarding the toxic material might've fled the pyramid during the revolution, possibly leaving the waste at risk to be compromised, forcing an incremental "black swan" huge cost.

Having said all this, perhaps nuclear is still necessary for the next 20-100 years, due to peak oil, buying time to hopefully ramp up the scale & economic feasibility of renewable energy sources.

It reminds me of that (Churchill?) quote "Democracy is the least bad political system available".  Energy in our 21st Century may be a combination of the "least bad sources available".

[t-bear52]

While on this topic, I was intrigued with the proposals listed in this article:

http://seekingalpha.com/article/261334- ... c&wc_num=6

A possibility?

[BearBones]

Great thread. Thanks for starting, MT. Here’s my apocalyptic take.

My concern is not that alternative sources of energy are possible, but rather whether we may not have the time and resources to develop them before a “perfect storm”? hits, triggered by decreasing flow rates and increasing costs of production for fossil fuels (“peak oil”?), massive and exponentially-growing US and world debt, exponentially-growing world population, dwindling supplies of other essential commodities (rare earth metals, copper, iron, clean water) and, possibly, increasingly volatile weather patterns, wreaking havoc on predictable world agricultural production.

Take nuclear power as an example, something that is clean and efficient (arguably) once plants are built. Currently, there are 104 nuclear power reactors (65 plants) in the US, providing about 8% of our total domestic energy. In order for us to provide all of our current domestic energy from nuclear power, we would need about 1100 more reactors. Yikes! How about enough just to become independent of imported oil (about 70% of our oil and 30% of our total energy consumption is from overseas)? About 250 more, or almost 3 1/2 times what we have currently!

Not only does it take a lot of time to build a nuclear reactor, it is very expensive. Then comes the problem alluded to by MT, that most of the infrastructure of American transportation (and much of industrial production) is tooled around petroleum. This will take decades to change. The same dilemma exists for wind, solar, and geothermal. Great in theory, but we are decades from having these provide any useful alternative to the cheap oil that we have so taken for granted over this past century.

Just dig for more oil? The days of easy oil are largely behind us. US oil production peaked in 1971. The Saudis may be close to peak, since they are now moving into deep water to access new reserves. And oil companies are looking into such inhospitable places as the Arctic Ocean to erect new rigs.

Keep that gold in your PF (and maybe some natural gas and coal in your VP)!

[Pres]

A nuclear power plant has to pay the true costs of dealing with its waste, and must pass those costs on to its customers, so nuclear energy's price better reflects its environmental and safety impacts.

Very hard to implement.

As MT said, the waste is a problem "for longer periods that any human society has ever existed".

It's unclear who will be around to manage it and how much it will cost. So far we're expecting future generations to foot the bill, as for so many other problems.

[KevinW]

the waste is a problem "for longer periods that any human society has ever existed".

Sure, but are carbon emissions any different?

Once gases are in the upper atmosphere they're pretty hard to pull back down, and the fact that they're invisible doesn't mean they aren't a problem.

[Gumby]

It's not the size of the drink, it's the size of the straw.

Sorry to dig up a 2-month-old discussion, but I saw this post today:

http://earlywarn.blogspot.com/2011/06/c ... leets.html

If China doesn't slow down it's rate of growth, then it sounds like the straw may be way too small to deal with future demand. If so, the quote from Bernanke suggests that gasoline may continue to be the major source of inflation in the global economy. $3.89 gasoline may seem quaint a few years from now.

[AdamA]

If China doesn't slow down it's rate of growth, then it sounds like the straw may be way too small to deal with future demand. If so, the quote from Bernanke suggests that gasoline may continue to be the major source of inflation in the global economy. $3.89 gasoline may seem quaint a few years from now.

Is it truly inflation, if that's the case, or does that just mean the gasoline will get expensive if we start to run out of it?

[Pkg Man]

If China doesn't slow down it's rate of growth, then it sounds like the straw may be way too small to deal with future demand. If so, the quote from Bernanke suggests that gasoline may continue to be the major source of inflation in the global economy. $3.89 gasoline may seem quaint a few years from now.

Is it truly inflation, if that's the case, or does that just mean the gasoline will get expensive if we start to run out of it?

It is not inflation if only gasoline is rising, that is a change in relative prices.  Inflation is a rise in the general price level (all prices). 

[Gumby]

If China doesn't slow down it's rate of growth, then it sounds like the straw may be way too small to deal with future demand. If so, the quote from Bernanke suggests that gasoline may continue to be the major source of inflation in the global economy. $3.89 gasoline may seem quaint a few years from now.

Is it truly inflation, if that's the case, or does that just mean the gasoline will get expensive if we start to run out of it?

It is not inflation if only gasoline is rising, that is a change in relative prices.  Inflation is a rise in the general price level (all prices). 

I think Bernanke was suggesting that if gasoline prices were to rise (because of scarcity), it could cause prices for all general goods to rise, regardless of the money supply situation. I mean, even the price of vegetables are directly affected by the cost of gasoline.

[AdamA]

I think Bernanke was suggesting that if gasoline prices were to rise (because of scarcity), it could cause prices for all general goods to rise, regardless of the money supply situation. I mean, even the price of vegetables are directly affected by the cost of gasoline.

Right...but that's just stuff getting scarce and expensive.  May adjust supply/demand curve, but won't cause inflation unless wages or credit increase. 

At some point, it doesn't even matter how much money circulates.  When something becomes truly scarce, those who have possession are not going to give it up easily in exchange for devalued currency. 

[Gumby]

I think Bernanke was suggesting that if gasoline prices were to rise (because of scarcity), it could cause prices for all general goods to rise, regardless of the money supply situation. I mean, even the price of vegetables are directly affected by the cost of gasoline.

Right...but that's just stuff getting scarce and expensive.  May adjust supply/demand curve, but won't cause inflation unless wages or credit increase.  

At some point, it doesn't even matter how much money circulates.  When something becomes truly scarce, those who have possession are not going to give it up easily in exchange for devalued currency.  

Yes, of course. But, the Fed is supposedly worried about Deflation at the moment. So, consider the pressures of deflation (from demographics and a sour economy) where the price of gasoline causes the price of nearly everything to rise dramatically due to scarcity (of oil/gas). Everything becomes more expensive but money is very tight. That sounds awful. But, it doesn't sound that far fetched either.

There was a time that oil used to reliably trade around $35/barrel (in 2011 dollars). Those days are long gone — due to increased demand that outpaces supply. Production of oil has barely increased since the 70s. If demand is only going to increase, as projected, we are in for some serious hurt.

[MediumTex]

I think Bernanke was suggesting that if gasoline prices were to rise (because of scarcity), it could cause prices for all general goods to rise, regardless of the money supply situation. I mean, even the price of vegetables are directly affected by the cost of gasoline.

Right...but that's just stuff getting scarce and expensive.  May adjust supply/demand curve, but won't cause inflation unless wages or credit increase.  

At some point, it doesn't even matter how much money circulates.  When something becomes truly scarce, those who have possession are not going to give it up easily in exchange for devalued currency.  

Yes, of course. But, the Fed is supposedly worried about Deflation at the moment. So, consider the pressures of deflation (from demographics and a sour economy) where the price of gasoline causes the price of nearly everything to rise dramatically due to scarcity (of oil/gas). Everything becomes more expensive but money is very tight. That sounds awful. But, it doesn't sound that far fetched either.

The thing that probably makes the scenario you describe a real disaster is when short term rates are already at 0%.  Normally in such a scenario there is at least some mitigation that can occur through easing interest rates. 

In the current environment, sustained high energy prices can really create a lot of problems.  I think, however, that there is no need to worry about sustained inflation in such an environment, since the whole economy would probably tip back into recession pretty quickly, which would set off a new round of demand destruction as people ran out of money to pay higher prices for everything and just stopped spending.

I think that one significant difference between the current environment and the 1970s is that during the 1970s the whole economy was not in the midst of a post-asset bubble deflationary trend and demographics were very different.  These two factors (plus strong labor unions that could demand higher wages in response to higher prices) set the stage for sustained 1970s inflation in a way that seems unlikely today--i.e., the current secular trend with asset prices is deflationary, demographics point toward secular economic contraction and the U.S. worker has very little leverage against the threat of offshoring of jobs, which puts a lid on wage increases.

We've created quite a dilemma for ourselves.

[Gumby]

I think that one significant difference between the current environment and the 1970s is that during the 1970s the whole economy was not in the midst of a post-asset bubble deflationary trend and demographics were very different.  These two factors (plus strong labor unions that could demand higher wages in response to higher prices) set the stage for sustained 1970s inflation in a way that seems unlikely today

Except that China and India will be consuming world resources at a faster pace than we will — which will drive up the cost of everything.

Be sure to see the slideshow...

http://businessinsider.com/jeremy-grant ... ces-2011-6

For example, (from the slideshow) China accounts for 9% of the world's GDP. And it's already using 53% of the world's cement. If we have a deflation while resources are becoming very scarce, isn't that a perfect storm for disaster?

[Gumby]

More from Grantham's presentation:

Summary of the Summary

The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.

Summary

[list][list][*]Until about 1800, our species had no safety margin and lived, like other animals, up to the limit of the food supply, ebbing and flowing in population.
[*]From about 1800 on the use of hydrocarbons allowed for an explosion in energy use, in food supply, and, through the creation of surpluses, a dramatic increase in wealth and scientific progress.
[*]Since 1800, the population has surged from 800 million to 7 billion, on its way to an estimated 8 billion, at minimum.
[*]The rise in population, the ten-fold increase in wealth in developed countries, and the current explosive growth in developing countries have eaten rapidly into our finite resources of hydrocarbons and metals, fertilizer, available land, and water.
[*]Now, despite a massive increase in fertilizer use, the growth in crop yields per acre has declined from 3.5% in the 1960s to 1.2% today. There is little productive new land to bring on and, as people get richer, they eat more grain-intensive meat. Because the population continues to grow at over 1%, there is little safety margin.
[*]The problems of compounding growth in the face of finite resources are not easily understood by optimistic, short-term-oriented, and relatively innumerate humans (especially the political variety).
[*]The fact is that no compound growth is sustainable. If we maintain our desperate focus on growth, we will run out of everything and crash. We must substitute qualitative growth for quantitative growth.
[*]But Mrs. Market is helping, and right now she is sending us the Mother of all price signals. The prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%. From 2002 until now, this entire decline was erased by a bigger price surge than occurred during World War II.
[*]Statistically, most commodities are now so far away from their former downward trend that it makes it very probable that the old trend has changed – that there is in fact a Paradigm Shift – perhaps the most important economic event since the Industrial Revolution.
[*]Climate change is associated with weather instability, but the last year was exceptionally bad. Near term it will surely get less bad.
[*]Excellent long-term investment opportunities in resources and resource efficiency are compromised by the high chance of an improvement in weather next year and by the possibility that China may stumble.
[*]From now on, price pressure and shortages of resources will be a permanent feature of our lives. This will increasingly slow down the growth rate of the developed and developing world and put a severe burden on poor countries.
[*]We all need to develop serious resource plans, particularly energy policies. There is little time to waste.[/list]

[/list]

[MediumTex]

I think that one significant difference between the current environment and the 1970s is that during the 1970s the whole economy was not in the midst of a post-asset bubble deflationary trend and demographics were very different.  These two factors (plus strong labor unions that could demand higher wages in response to higher prices) set the stage for sustained 1970s inflation in a way that seems unlikely today

Except that China and India will be consuming the resources at a faster pace than we will — which will drive up the cost of everything.

Be sure to see the slideshow...

http://businessinsider.com/jeremy-grant ... ces-2011-6

I think it's certainly fair to say that high energy prices are here to stay, though the factor that I think is going to surprise people will be the extreme volatility in energy prices that is also likely to be with us to stay.

Part of the peak oil theory that doesn't get much attention is the post-peak price volatility that it predicts.  People often imagine the price of oil grinding up to $200, $300 and beyond per barrel.  IMHO, the more likely scenario is repeated price spikes, followed by price collapses, so that the future price of oil will look like the heart rate monitor of a patient in cardiac arrest being repeatedly shocked back to life, only to flatline again.

If you look at the price of oil since about 2007, this theory has more or less matched reality--in 2008 prices spiked, the economy went into recession and prices collapsed.  When the Fed was able to revive the patient through a Pulp Fiction-style shot to the chest, the price of oil immediately shot back through the roof, and now we are on the verge of another recession triggered by high energy prices, except the patient is now much sicker than he was in 2008 and the Fed doesn't necessarily have another kitchen sink to throw at the problem.

Such interesting (and scary) times.

[MediumTex]

More from Grantham's presentation:

Summary of the Summary
The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.

Summary

[list][*]Until about 1800, our species had no safety margin and lived, like other animals, up to the limit of the food supply, ebbing and flowing in population.
[*]From about 1800 on the use of hydrocarbons allowed for an explosion in energy use, in food supply, and, through the creation of surpluses, a dramatic increase in wealth and scientific progress.
[*]Since 1800, the population has surged from 800 million to 7 billion, on its way to an estimated 8 billion, at minimum.
[*]The rise in population, the ten-fold increase in wealth in developed countries, and the current explosive growth in developing countries have eaten rapidly into our finite resources of hydrocarbons and metals, fertilizer, available land, and water.
[*]Now, despite a massive increase in fertilizer use, the growth in crop yields per acre has declined from 3.5% in the 1960s to 1.2% today. There is little productive new land to bring on and, as people get richer, they eat more grain-intensive meat. Because the population continues to grow at over 1%, there is little safety margin.
[*]The problems of compounding growth in the face of finite resources are not easily understood by optimistic, short-term-oriented, and relatively innumerate humans (especially the political variety).
[*]The fact is that no compound growth is sustainable. If we maintain our desperate focus on growth, we will run out of everything and crash. We must substitute qualitative growth for quantitative growth.
[*]But Mrs. Market is helping, and right now she is sending us the Mother of all price signals. The prices of all important commodities except oil declined for 100 years until 2002, by an average of 70%. From 2002 until now, this entire decline was erased by a bigger price surge than occurred during World War II.
[*]Statistically, most commodities are now so far away from their former downward trend that it makes it very probable that the old trend has changed – that there is in fact a Paradigm Shift – perhaps the most important economic event since the Industrial Revolution.
[*]Climate change is associated with weather instability, but the last year was exceptionally bad. Near term it will surely get less bad.
[*]Excellent long-term investment opportunities in resources and resource efficiency are compromised by the high chance of an improvement in weather next year and by the possibility that China may stumble.
[*]From now on, price pressure and shortages of resources will be a permanent feature of our lives. This will increasingly slow down the growth rate of the developed and developing world and put a severe burden on poor countries.
[*]We all need to develop serious resource plans, particularly energy policies. There is little time to waste.[/list]

It looks like Grantham might have been reading William Catton's "Overshoot."

If you want to see the entire elephant that Grantham is touching on in his description of tusks and trunks, check out Catton's book.  You may or may not agree with Catton's argument and conclusions, but his logic is much tighter and his analysis much broader in scope than you are likely to see anywhere else when the topic Grantham is touching on comes up.

[Gumby]

It looks like Grantham might have been reading William Catton's "Overshoot."

If you want to see the entire elephant that Grantham is touching on in his description of tusks and trunks, check out Catton's book.  You may or may not agree with Catton's argument and conclusions, but his logic is much tighter and his analysis much broader in scope than you are likely to see anywhere else when the topic Grantham is touching on comes up.

Interesting. I'll try to check it out.

Grantham seems to be waking some people out of their shells a bit.

Here's one interesting anecdote he recently recounted:

Four years ago I was talking to a group of super quants, mostly PhDs in mathematics, about finance and the environment. I used the growth rate of the global economy back then – 4.5% for two years, back to back – and I argued that it was the growth rate to which we now aspired.

To point to the ludicrous unsustainability of this compound growth I suggested that we imagine the Ancient Egyptians, whose gods, pharaohs, language, and general culture lasted for well over 3,000 years.

Starting with only a cubic meter of physical possessions (to make calculations easy), I asked how much physical wealth they would have had 3,000 years later at 4.5% compounded growth. Now, these were trained mathematicians, so I teased them: “Come on, make a guess. Internalize the general idea. You know it’s a very big number.”?

And the answers came back: “Miles deep around the planet,”? “No, it’s much bigger than that, from here to the moon.”?

Big quantities to be sure, but no one came close.

In fact, not one of these potential experts came within one billionth of 1% of the actual number, which is approximately 10 raised to the 57th power, a number so vast that it could not be squeezed into a billion of our Solar Systems.

Go on, check it.

If trained mathematicians get it so wrong, how can an ordinary specimen of Homo Sapiens have a clue? Well, he doesn’t.

So, I then went on. “Let’s try 1% compound growth in either their wealth or their population,”? (for comparison, 1% since Malthus’ time is less than the population growth in England). In 3,000 years the original population of Egypt – let’s say 3 million – would have been multiplied 9 trillion times! There would be nowhere to park the people, let alone the wealth.

Even at a lowly 0.1% compound growth, their population or wealth would have multiplied by 20 times, or about 10 times more than actually happened. And this 0.1% rate is probably the highest compound growth that could be maintained for a few thousand years, and even that rate would sometimes break the system.

The bottom line really, though, is that no compound growth can be sustainable. Yet, how far this reality is from the way we live today, with our unrealistic levels of expectations and, above all, the optimistic outcomes that are simply assumed by our leaders.

I guess that answers our question if infinite growth is possible. It's definitely not possible!

[MediumTex]

I guess that answers our question if infinite growth is possible. It's definitely not possible!

The trick is to be able to create an optimistic scenario for humanity when armed with this information.

I think that humanity's basic problem is that we evolved based upon making decisions that were optimized for short time periods (such as one human lifetime or less).  As we have discovered great caches of non-renewable resources and seen our societies erupt in size and complexity as a result, this bias in our decision making toward shorter term results has created the conditions for some spectacularly bad outcomes.

It's certainly impossible to predict how this will unfold over the next 1,000 years or so, but past eras of civilization have followed a predictable course of ascendance and then decline, as natural resource constraints rendered certain ways of life obsolete.  This was Joseph Tainter's basic argument in "The Collapse of Complex Societies", which was a book with a lot of filler, since the basic premise was so easy to describe and the argument for the validity of the premise so easy to make (in many ways Tainter's argument seems almost too obvious to require much documentation from past societies).

If you had walked up to one of the Egyptian pharoahs and told him that in a few thousand years the only thing that would remain of his way of life and his system of beliefs would be some monuments and markings on stones, he probably would have scoffed at you the same way people today are quick to scoff at people who suggest that this high-tech high-consumption world we have built is not sustainable.

I think that one of the basic concepts people don't fully appreciate is that we have built a world economy that requires perpetual growth.  For example, if you think about the premises behind many forms of debt, it is that the future will always be larger than the present, which will allow people to fund future consumption AND pay off past debt out of future earnings.  When this set of economic premises begin to be invalidated--even on a small scale--as they were in 2008, it helps one understand just how poorly our economic system functions when growth ceases.

I think that when faced with this degree of structural cognitive dissonance, it is entirely understandable that central bankers and politicians would throw everything they have at the problem, but everything they have is ultimately unlikely to buy more than a little extra time until certain underlying forces that do not appear in economic models begin to intrude on certain carefully cultivated human delusions.

The good news (sort of) is that I think a lot of this stuff will unfold long after most of us have "run out of runway"  (to quote LoneWolf), though sooner or later these ideas WILL become impossible to ignore and the same process is likely to unfold as we have seen throughout history, and it will likely lay the groundwork for some future civilization that IS able to provide better answers to the problems of sustainability and survival than we have come up with in the last 200 year burst of explosive economic, industrial and population growth.

Not to pile on, but even assuming that we do solve all of the problems described above, we are also going to have another Ice Age at some point (if history is any guide to these things), and that is going to be a real challenge for whatever human populations may be around then, even if they have come up with an economic system that doesn't destroy the ecosystems necessary for human life.  

The ultimate challenge for humanity is to find a fate for itself that differs materially from that of the dinosaurs and every dominant species that came before us.  The ability to pull this off will be the ultimate test of whether our superior intelligence really confers any long term survival advantage.  

[Gumby]

That was supposed to be optimistic?

I guess now we have Soylent Green to look forward to  ;D