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Image | A Blueprint For DeGrowth
A Blueprint For DeGrowth
 PREVIEW

Executive Summary

  • Why we can cut energy consumption by 50% and still function
  • Why new systems of work, income & resource distribution are needed
  • The need for a new type of currency that can't be manipulated by the elites
  • The need for de-centralized governance & processes

If you have not yet read Part 1: The Inevitability Of DeGrowth available free to all readers, please click here to read it first.

In Part 1, we surveyed the fundamental dynamic of the present-day status quo, which is fatally dependent on expanding debt, energy consumption per capita, income and consumption of goods and services. Once debt and/or energy expansion stalls, the status quo collapses.

Which brings us to the question: what sort of economy could we have that consumes less energy every year and distributes resources to the populace in some sort of stable, reasonably just arrangement?

We can imagine a variety of unjust repressive regimes that hoard whatever energy and goodies are available for the ruling elites, and there are any number of dystopian films depicting a chaotic endless-war-anarchy scenario of ruthlessly Darwinian distribution systems ( “my lead takes your gold,” etc.).

But neither of these possibilities are set in stone. We could consciously choose to pursue DeGrowth, a set of guiding principles orbiting one basic idea: using less is not a bad thing, it’s a good thing, and it could be coupled with improvements in our quality of life.

Here in Part 2, we provide the blueprint for a DeGrowth Economy.

What Is DeGrowth?

These are the basic concepts of DeGrowth…

A Blueprint For DeGrowth
 PREVIEW

Executive Summary

  • Why we can cut energy consumption by 50% and still function
  • Why new systems of work, income & resource distribution are needed
  • The need for a new type of currency that can't be manipulated by the elites
  • The need for de-centralized governance & processes

If you have not yet read Part 1: The Inevitability Of DeGrowth available free to all readers, please click here to read it first.

In Part 1, we surveyed the fundamental dynamic of the present-day status quo, which is fatally dependent on expanding debt, energy consumption per capita, income and consumption of goods and services. Once debt and/or energy expansion stalls, the status quo collapses.

Which brings us to the question: what sort of economy could we have that consumes less energy every year and distributes resources to the populace in some sort of stable, reasonably just arrangement?

We can imagine a variety of unjust repressive regimes that hoard whatever energy and goodies are available for the ruling elites, and there are any number of dystopian films depicting a chaotic endless-war-anarchy scenario of ruthlessly Darwinian distribution systems ( “my lead takes your gold,” etc.).

But neither of these possibilities are set in stone. We could consciously choose to pursue DeGrowth, a set of guiding principles orbiting one basic idea: using less is not a bad thing, it’s a good thing, and it could be coupled with improvements in our quality of life.

Here in Part 2, we provide the blueprint for a DeGrowth Economy.

What Is DeGrowth?

These are the basic concepts of DeGrowth…

Image | The Inevitability Of DeGrowth
The Inevitability Of DeGrowth

Even though we don't know precisely how the future will unfold, we know a few things about it.

Simply put, debt-dependent consumption in a world in which wages stagnate for the bottom 90% and energy costs increase as demand outstrips supply is a system with only one possible end-point: collapse.
The Inevitability Of DeGrowth

Even though we don't know precisely how the future will unfold, we know a few things about it.

Simply put, debt-dependent consumption in a world in which wages stagnate for the bottom 90% and energy costs increase as demand outstrips supply is a system with only one possible end-point: collapse.
Image | The Value Drivers Of Cryptocurrency
The Value Drivers Of Cryptocurrency
 PREVIEW

Executive Summary

  • The critical value of scarcity
  • Understanding the utility of the blockchain
  • Will (can?) governments ban cryptocurrencies?
  • A coming geometric explosion in the price of cryptocurrency?

If you have not yet read Part 1: Understanding The Cryptocurrency Boom available free to all readers, please click here to read it first.

In Part 1, we surveyed the exciting but confusing speculative boom phase of cryptocurrencies. Here in Part 2, we will contextualize this mad swirl by running it through two filters: scarcity and utility.

What’s Scarce? Scarcity Creates Value

Regardless of one’s economic ideology or system, scarcity creates value and abundance destroys value.  When we say supply and demand, we’re really talking about scarcity and abundance and the rise or fall of demand for the commodity, good or service.

In classical economic theory, scarcity is met with substitution: ground beef too expensive due to relative scarcity? Buy ground turkey instead.

But this model has weaknesses.  There aren’t always substitutes, or the substitutes are more expensive or problematic than what is now scarce.

As a general rule, profits flow to any scarcity of goods and services with high utility value.  We value what’s scarce and useful, and place little value on what’s abundant and of limited utility.

Currency has three basic functions: a store of value (it will retain its purchasing power over time), means of exchange (we can use it to trade goods and services, pay debts, etc.) and as an accounting mechanism to track assets, debts, income, expenses and exchanges/trades.

We assume all currency has this function, but only currency that is easily divisible and easily tradable enables easy accounting.  If a notched stick is a unit of currency, and one stick buys a pig, what do I use for purchases smaller than a pig?

In today’s world, a currency must be….

The Value Drivers Of Cryptocurrency
 PREVIEW

Executive Summary

  • The critical value of scarcity
  • Understanding the utility of the blockchain
  • Will (can?) governments ban cryptocurrencies?
  • A coming geometric explosion in the price of cryptocurrency?

If you have not yet read Part 1: Understanding The Cryptocurrency Boom available free to all readers, please click here to read it first.

In Part 1, we surveyed the exciting but confusing speculative boom phase of cryptocurrencies. Here in Part 2, we will contextualize this mad swirl by running it through two filters: scarcity and utility.

What’s Scarce? Scarcity Creates Value

Regardless of one’s economic ideology or system, scarcity creates value and abundance destroys value.  When we say supply and demand, we’re really talking about scarcity and abundance and the rise or fall of demand for the commodity, good or service.

In classical economic theory, scarcity is met with substitution: ground beef too expensive due to relative scarcity? Buy ground turkey instead.

But this model has weaknesses.  There aren’t always substitutes, or the substitutes are more expensive or problematic than what is now scarce.

As a general rule, profits flow to any scarcity of goods and services with high utility value.  We value what’s scarce and useful, and place little value on what’s abundant and of limited utility.

Currency has three basic functions: a store of value (it will retain its purchasing power over time), means of exchange (we can use it to trade goods and services, pay debts, etc.) and as an accounting mechanism to track assets, debts, income, expenses and exchanges/trades.

We assume all currency has this function, but only currency that is easily divisible and easily tradable enables easy accounting.  If a notched stick is a unit of currency, and one stick buys a pig, what do I use for purchases smaller than a pig?

In today’s world, a currency must be….

Image | Understanding The Cryptocurrency Boom
Understanding The Cryptocurrency Boom

Today, there are hundreds of cryptocurrencies, and a speculative boom has pushed bitcoin from around $600 a year ago to $2600 and Ethereum, another leading cryptocurrency, from around $10 last year to $370.

Where are cryptocurrencies in the evolution from new technology to speculative boom to maturation? Judging by valuation leaps from $10 to $370, the technology is clearly in the speculative boom phase.

In trying to predict which forms of cryptocurrencies will dominate the mature marketplace of the future, we know that markets will sort the wheat from the chaff by a winnowing the entries down to those that solve real business problems (i.e. address scarcities) in ways that are cheap and robust and that cannot be solved by other technologies.
Understanding The Cryptocurrency Boom

Today, there are hundreds of cryptocurrencies, and a speculative boom has pushed bitcoin from around $600 a year ago to $2600 and Ethereum, another leading cryptocurrency, from around $10 last year to $370.

Where are cryptocurrencies in the evolution from new technology to speculative boom to maturation? Judging by valuation leaps from $10 to $370, the technology is clearly in the speculative boom phase.

In trying to predict which forms of cryptocurrencies will dominate the mature marketplace of the future, we know that markets will sort the wheat from the chaff by a winnowing the entries down to those that solve real business problems (i.e. address scarcities) in ways that are cheap and robust and that cannot be solved by other technologies.
Image | Prepare For The Great Global Contraction
Prepare For The Great Global Contraction
 PREVIEW

Executive Summary

  • The repercussions of the Fed's Free Money Machine
  • Why debt-funded state control stagnates productivity
  • The importance of the 8-year cycle
  • What should guide investors' focus and decisions

If you have not yet read Part 1: How Long Can The Great Global Reflation Continue? available free to all readers, please click here to read it first.

In Part 1, we asked these questions: can we just keep doubling and tripling the economy’s debt load every few years? What if household incomes continue declining? Are these trends sustainable?

In the near-term, we asked: is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?

Let’s start by looking at the mechanism that funds the government’s deficit spending, i.e. its ability to borrow and spend enormous sums of money year after year.

The Free Money Machine

The state can afford to continue or increase fiscal stimulus (deficit spending) because the central bank (the Federal Reserve) has created what amounts to a free money machine. Here’s how the machine works.

The federal government issues $1 trillion in new bonds to fund another $1 trillion in deficit spending. The central bank (Federal Reserve) creates $1 trillion with a few keystrokes, and buys the $1 trillion in bonds with newly created money.

The Federal Reserve earns interest on the $1 trillion in bonds it now owns, but it returns this income to the Treasury, minus the Federal Reserve’s relatively modest expenses of operation. Let’s say the bonds carry an interest rate of 2.5%.  The government pays the Federal Reserve $25 billion in annual interest, and the Federal Reserve returns $20 billion annually, so the net cost of borrowing and spending $1 trillion is an insignificant $5 billion.

If this isn’t entirely free money, it’s extremely close to free money.

So in ten years, the Federal Reserve owns $10 trillion more in federal bonds (assuming the bonds are long-term and didn’t mature).

It's no wonder that some economist propose…

Prepare For The Great Global Contraction
 PREVIEW

Executive Summary

  • The repercussions of the Fed's Free Money Machine
  • Why debt-funded state control stagnates productivity
  • The importance of the 8-year cycle
  • What should guide investors' focus and decisions

If you have not yet read Part 1: How Long Can The Great Global Reflation Continue? available free to all readers, please click here to read it first.

In Part 1, we asked these questions: can we just keep doubling and tripling the economy’s debt load every few years? What if household incomes continue declining? Are these trends sustainable?

In the near-term, we asked: is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?

Let’s start by looking at the mechanism that funds the government’s deficit spending, i.e. its ability to borrow and spend enormous sums of money year after year.

The Free Money Machine

The state can afford to continue or increase fiscal stimulus (deficit spending) because the central bank (the Federal Reserve) has created what amounts to a free money machine. Here’s how the machine works.

The federal government issues $1 trillion in new bonds to fund another $1 trillion in deficit spending. The central bank (Federal Reserve) creates $1 trillion with a few keystrokes, and buys the $1 trillion in bonds with newly created money.

The Federal Reserve earns interest on the $1 trillion in bonds it now owns, but it returns this income to the Treasury, minus the Federal Reserve’s relatively modest expenses of operation. Let’s say the bonds carry an interest rate of 2.5%.  The government pays the Federal Reserve $25 billion in annual interest, and the Federal Reserve returns $20 billion annually, so the net cost of borrowing and spending $1 trillion is an insignificant $5 billion.

If this isn’t entirely free money, it’s extremely close to free money.

So in ten years, the Federal Reserve owns $10 trillion more in federal bonds (assuming the bonds are long-term and didn’t mature).

It's no wonder that some economist propose…

Image | How Long Can The Great Global Reflation Continue?
How Long Can The Great Global Reflation Continue?

Given the extraordinary failure of both Keynesian stimulus and private-sector credit growth to create a self-sustaining cycle of expansion whose benefits flow to the entire workforce rather than to the top few percent, what can we expect going forward? Can we just keep doubling and tripling the economy’s debt load every few years? What if household incomes continue declining? Are these trends sustainable?

In the near-term, is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?
How Long Can The Great Global Reflation Continue?

Given the extraordinary failure of both Keynesian stimulus and private-sector credit growth to create a self-sustaining cycle of expansion whose benefits flow to the entire workforce rather than to the top few percent, what can we expect going forward? Can we just keep doubling and tripling the economy’s debt load every few years? What if household incomes continue declining? Are these trends sustainable?

In the near-term, is this Great Reflation running out of steam, or is it poised for yet another leg higher? Which is more likely?
Image | The Benefits & Challenges Of Maintaining A Retreat Property
The Benefits & Challenges Of Maintaining A Retreat Property
 PREVIEW

Executive Summary

  • The matrix of factors to consider in a Plan B residence
  • What to know abot eacf of the five key factors
  • Not all second homes are fully functional
  • The challenges & benefits of maintaining two separate fully functional residences

If you have not yet read Part 1: Does Your Plan B Include a Second Place to Live if Plan A Doesn’t Work Out? available free to all readers, please click here to read it first.

In Part 1 we reviewed the three basic categories of Plan B Residences: temporary (to ride out an emergency); semi-permanent (to weather a recession/loss of income) and permanent (replacing Plan A residence with Plan B residence).

In Part 2, we’ll consider a Matrix of Factors that will help us choose the inevitable trade-offs of costs and benefits, and add a category—permanent maintenance of two fully functional residences.

The Matrix of Factors

While there are many factors in any Plan B, I’ve pared the key factors in Plan B residences down to five: cost, control, security, depth of resources and functions enabled. Each is on a sliding scale from low to high. There are costs and benefits to each being low, medium or high.

 

Let’s go over each factor.

Cost:

While cost measured by price is self-explanatory, this also includes opportunity costs (what else could have been accomplished with the money?), time (the hassle factor of how long it will take to get something done) and labor—how much labor must be invested to accomplish a goal.

There is even a stress cost: how much will this goal/project add to my stress load? Even if the money needed is on hand, the overall cost can be high in terms of time, hassle, stress and opportunity cost.

Control:

By this I mean ownership (of the land, the house, etc.), contractual control (of jointly owned assets, of any hired labor, etc.) and functional control, i.e. residency.  As many have discovered to their regret, it’s possible to have legal ownership/control but end up with effectively zero functional control, as your house might be occupied by squatters or family members who morphed from allies to enemies.

Control is important because…

The Benefits & Challenges Of Maintaining A Retreat Property
 PREVIEW

Executive Summary

  • The matrix of factors to consider in a Plan B residence
  • What to know abot eacf of the five key factors
  • Not all second homes are fully functional
  • The challenges & benefits of maintaining two separate fully functional residences

If you have not yet read Part 1: Does Your Plan B Include a Second Place to Live if Plan A Doesn’t Work Out? available free to all readers, please click here to read it first.

In Part 1 we reviewed the three basic categories of Plan B Residences: temporary (to ride out an emergency); semi-permanent (to weather a recession/loss of income) and permanent (replacing Plan A residence with Plan B residence).

In Part 2, we’ll consider a Matrix of Factors that will help us choose the inevitable trade-offs of costs and benefits, and add a category—permanent maintenance of two fully functional residences.

The Matrix of Factors

While there are many factors in any Plan B, I’ve pared the key factors in Plan B residences down to five: cost, control, security, depth of resources and functions enabled. Each is on a sliding scale from low to high. There are costs and benefits to each being low, medium or high.

 

Let’s go over each factor.

Cost:

While cost measured by price is self-explanatory, this also includes opportunity costs (what else could have been accomplished with the money?), time (the hassle factor of how long it will take to get something done) and labor—how much labor must be invested to accomplish a goal.

There is even a stress cost: how much will this goal/project add to my stress load? Even if the money needed is on hand, the overall cost can be high in terms of time, hassle, stress and opportunity cost.

Control:

By this I mean ownership (of the land, the house, etc.), contractual control (of jointly owned assets, of any hired labor, etc.) and functional control, i.e. residency.  As many have discovered to their regret, it’s possible to have legal ownership/control but end up with effectively zero functional control, as your house might be occupied by squatters or family members who morphed from allies to enemies.

Control is important because…

Image | Does Your Plan B Include a Second Place to Live If Plan A Doesn’t Work Out?
Does Your Plan B Include a Second Place to Live If Plan A Doesn’t Work Out?

Maintaining a functional separate retreat residence is a responsibility that comes with real costs and complexities. But if done right, it can yield great returns during both good times and bad.
Does Your Plan B Include a Second Place to Live If Plan A Doesn’t Work Out?

Maintaining a functional separate retreat residence is a responsibility that comes with real costs and complexities. But if done right, it can yield great returns during both good times and bad.
Image | Doing ‘Retreat’ Right
Doing ‘Retreat’ Right
 PREVIEW

Executive Summary

  • Understanding the difference between Artificial and Economically-Viable Communities
  • What to look for in a retreat community
  • Why regional assets matter
  • The importance of "path dependence" in a retreat location

If you have not yet read Part 1: Having A 'Retreat' Property Comes With Real Challenges available free to all readers, please click here to read it first.

In Part 1, we considered the nature of security and independence, and found that the intuitively appealing remote cabin in the woods (RCITW) is actually highly insecure and does not reduce dependence on fragile global supply chains at all—it may well increase our dependence and vulnerability to disruptions.

Security is a function of an engaged community (eyes on the street, knowing one’s neighbors, reciprocity of caring) and occupancy. The remote cabin that’s rarely occupied is the acme of insecurity.

Here in Part 2, we’ll consider the qualities that create security and resilience in communities.

Artificial Communities vs. Economically Viable Communities

If we reckon a community is a collection of dwellings, we might be tempted to view all collections of dwellings as being roughly equal. This would be a great mistake, for communities divide very naturally into artificial communities and economically viable communities.

In artificial communities, security is poor and difficult/costly to improve.  In economically viable communities, the multiple layers of stakeholders provide self-reinforcing homegrown security.

Artificial communities are consumer communities—they produce essentially nothing. Economically viable communities produce goods and services as a function of their natural-resource advantages (good soil, adequate water, river ports, coastal harbors, advantageous weather, etc.) and concentrations of capital (rail lines, banks, universities, an entrepreneurial culture supported by local government, etc.).

History has not been particularly kind to defensive strategies, which is what most artificial communities are. This is why…

Doing ‘Retreat’ Right
 PREVIEW

Executive Summary

  • Understanding the difference between Artificial and Economically-Viable Communities
  • What to look for in a retreat community
  • Why regional assets matter
  • The importance of "path dependence" in a retreat location

If you have not yet read Part 1: Having A 'Retreat' Property Comes With Real Challenges available free to all readers, please click here to read it first.

In Part 1, we considered the nature of security and independence, and found that the intuitively appealing remote cabin in the woods (RCITW) is actually highly insecure and does not reduce dependence on fragile global supply chains at all—it may well increase our dependence and vulnerability to disruptions.

Security is a function of an engaged community (eyes on the street, knowing one’s neighbors, reciprocity of caring) and occupancy. The remote cabin that’s rarely occupied is the acme of insecurity.

Here in Part 2, we’ll consider the qualities that create security and resilience in communities.

Artificial Communities vs. Economically Viable Communities

If we reckon a community is a collection of dwellings, we might be tempted to view all collections of dwellings as being roughly equal. This would be a great mistake, for communities divide very naturally into artificial communities and economically viable communities.

In artificial communities, security is poor and difficult/costly to improve.  In economically viable communities, the multiple layers of stakeholders provide self-reinforcing homegrown security.

Artificial communities are consumer communities—they produce essentially nothing. Economically viable communities produce goods and services as a function of their natural-resource advantages (good soil, adequate water, river ports, coastal harbors, advantageous weather, etc.) and concentrations of capital (rail lines, banks, universities, an entrepreneurial culture supported by local government, etc.).

History has not been particularly kind to defensive strategies, which is what most artificial communities are. This is why…

Image | Having A ‘Retreat’ Property Comes With Real Challenges
Having A ‘Retreat’ Property Comes With Real Challenges

A flurry of recent headlines has highlighted the financial elites’ interest in secure retreats (a.k.a. bug-out locations) should the trucks stop rolling. 

The intuitive solution to many, from the super-wealthy on down, is some version of a hideaway in the woods: a remote locale known only to the owner, where the owner can burrow safely away until the storm passes.

It turns out security and independence are tricky qualities, and surprising reversals are not just possible but likely: what appears to be secure at first glance might be highly insecure, and independence turns out to be highly relative.
Having A ‘Retreat’ Property Comes With Real Challenges

A flurry of recent headlines has highlighted the financial elites’ interest in secure retreats (a.k.a. bug-out locations) should the trucks stop rolling. 

The intuitive solution to many, from the super-wealthy on down, is some version of a hideaway in the woods: a remote locale known only to the owner, where the owner can burrow safely away until the storm passes.

It turns out security and independence are tricky qualities, and surprising reversals are not just possible but likely: what appears to be secure at first glance might be highly insecure, and independence turns out to be highly relative.
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