Embodied Energy of Modern Human

[jacob]

What will be the signs that it is the right day to cash out Vanguard Global Wellington and deposit proceeds in Midwest Regional Credit Union account?

In practice, it will be the day that Vanguard stops as an ongoing concern and returns the funds to its customers.

The popular way of raising monies via equity (instead of bonds) on a mass scale is less than a century old and the American way of equity for retirement only a few decades old(*) and not by any means universal... so it would not surprise me if this way of doing things will be replaced on a similar timescale.

(*) And the 100% equity notion only a few years, thus perhaps hinting at something like a bubble if it weren't for the fact that the bond markets are still far larger than the stock markets... but at least retail investors are now trying as hard as possible to change this.

OTOH, global trade is literally ancient as are financial markets. But not as you and I know them.

What I expect is that various sectors of the economy will not fold simultaneously but rather one after another. As an example, consider the US auto-industry. Financially, it's been decimated, but it still exists and more importantly, you could have sold your position and moved the money to some other sector leaving some other person with the bag. Economically, US car manufacturers are considering killing of the sedan (to focus on SUVs). This means that sedans now must be supplied from Japan and South Korea.

https://www.bloomberg.com/news/features ... -for-death

Or just consider the US manufacturing sector.

So analogously to the supply of electronics, the capacity to construct sedans is going away locally (that's economic destruction), but since the financial markets are here, it's easier for an INDIVIDUAL to avoid the financial destruction. If you still want a sedan (for your taxi company), you now need a trans pacific supply line. Conversely, if you just need to go from A to B, you can pay for it with your finances and get whatever transportation your local area still provides.

TL;DR - I don't think the financial sector will be the first to go. The ability to transact without trust (in the counterpart) is simply too valuable. I do think that all the fancy structured products and high-speed trading will be dialed down simply because the energy costs and technology competition demands are too high. That also goes for crypto. (I can hear the nerds scream now )

[daylen]

This thread has been quite helpful to me! Thanks especially to Jacob!

So the most vital resources in the transition to the ecotechnic future will be water, seeds, soil fertility, ecological diversity, trees, and knowledge. I imagine all of the cars will be useful for making metal tools as well. When choosing a location for this future the best strategy would be to find a place that balances all the above with the necessary amount of human labor. The more skilled the local population the lower the demand/supply ratio of these resources. Also, a younger population will be more sustainable in the long term and more adaptable in the short term.

[7Wannabe5]

The popular way of raising monies via equity (instead of bonds) on a mass scale is less than a century old and the American way of equity for retirement only a few decades old(*) and not by any means universal... so it would not surprise me if this way of doing things will be replaced on a similar timescale.

Right, but not everything follows this rule of thumb. For instance, I own a book entitled "Detroit In Its World Setting" (1701-1951), and the author offers details of world history, scientific and commercial progress, and cultural progress for every year. The fashion of female attire is described in detail, and skirts get wider and narrower, and shorter and longer, over the course of 250 years, but no hint that young women will likely be attired in yoga pants in 2018 is offered. When is the last time you used a land-line phone or sent a telegram? I agree that Finance is a critical function of society, but so is Communications, and as far as I can see Communications has become synonymous with High-Tech, and putting that cat back in the bag is as likely as my great-granddaughter being found dressed in "mantilla, black patent leather shoes, lace mitts, large muff, and parasol." However, if an affluent young woman in 1842 had the wherewithal to demand such complex outre goods from the market, then I would imagine that it is possible that my affluent young great-granddaughter will similarly still be able to demand something like on to a smart-phone dyed to match her shoes. I don't think the less resource-full world of the future is going to reverse ratchet down in even measure alignment with rational notion of usefulness.

Anyways, I'm afraid I must admit that the one luxury good I would choose to afford for myself in the world of the near future would likely be the services of a muscular young gardener who would do my bidding. And now you are denying me even the possibility of a robot! Serious buzz-kill.

[Riggerjack]

Before the fossil fuel era, weren't (real?) historic rates of return on the order of 2-3%?

Well, that seems hard to measure. Pre fuel, we had a few empires, and the mess of Europe, where the primary means to wealth was to gather your brothers, and go kills your nieghbors and take their stuff. What is the return on such activities? This went to the top, Kings played the same games. And wealth was measured in output, not ROI, but raw output. So if you say stole Cornwall, it was worth the taxes generated, the foodstuffs grown or pastured, and some strong backs to help go steal the next county.

So 2-3% of what, annually? The cash price of the land? That price is based on how the king feels about you. The cost of training and mobilising an army? Pay out better be more than that, or you are broke in a hurry with a bored army on your land.

Going forward a bit, we get.to the Whigs. A merchant class. And much like today's silicone valley, the returns are highly variable with lots of folks losing their shirts and a serious survivorship bias to the superstars who built commercial empires like the Dutch East Indies Company.

The closest you could come to an ancient version of modern markets is the Italian financial markets. The birthplace of bonds and bond trading. But again, returns are highly variable, with a strong survivorship bias... See the pattern here?

[jacob]

@Riggerjack - https://www.amazon.com/History-Interest ... 0471732834 ... You can read the rates right off of various bank notes, etc. The Roman Empire had a functional mortgage market. In between [unstable] governments, finance was dominated by global [as far as they knpw] trading houses. It was quite convenient to carry a letter of credit (backed with the full credit of the branch office) from, e.g. Londinium to Paris, not being subjected to robbers. Some of the letters (pen on ink) recovered from Vindolanda (a Roman outpost in England) mentions personal debts of considerable size---similar to typical debts of today, like a year's salary---to be paid back with interest.

The ~3% is the real return on cash now for cash later.

[7Wannabe5]

Photosynthetic efficiency is approximately 3%.

[Riggerjack]

The ~3% is the real return on cash now for cash later.

And what was the default rate? And how costly were collections? And when the coin was debased, how did that work out? And when you loaned money to the local mayor, and his daughter married the emperor, how did that work out?

From my understanding of history, politics we're where the money was. It's good to be king, but it's better to be the court clerk, nobody kills the court clerk, but if you want to be heard you better pay him. And if you want to build I mill on the river, you need a patent from the king, which will spell out how long you have it, and what your taxes are. All those terms are available at special rates for those the king likes, and a different set of rates for the other people.

We just don't have the records to go into ancient finances with accuracy. We can estimate based on what we found, but we don't have a dataset anything like what we have for modern investment.

Or from another perspective, in the situations described by you and 7w5 come to pass, under what circumstances would you loan out your resources for investment? And how would you secure it? And how would you collect if the borrower decided not to pay? And factoring all of that in, is 3% the price you would expect to get?

[jacob]

Oh, that is the risk free rate, similar to how we would quote the risk-free or the prime-rate today. Credit risk adds on top of that... so your 600 credit score person would be prime-rate+15% or whatever. You lend to 100 people ... 15% of them default .. => you end up with prime-rate returns. People have understood this since people invented lending. Note, there's no such thing as a risk-free bond. Not even treasuries. We just like to pretend they are.

Credit risk at the time of lending is a matter of the reputation of the borrower. Much like today's ratings and credit scores. Until the recently (the past few hundred years), kings and princes had terrible reputations and had to lend at high rates. The go-to for stable loans were transnational trading and banking companies. You'll note that today, long-term top-rated corporate bonds trade at rates around 1% higher than treasuries. It shouldn't be hard to imagine that this could easily be the other way around. Just like there's a too big to fail, there's a too big to lop your head off, especially when credit comes from outside the borders.

In contrast to the 20th century, rates were a lot stabler and generally lower in the past. You can't debase gold and silver coins as fast/"volatilely" as paper, so it's easier to derive real from nominal. In any case, the linked book is 1000 pages long as not as boring as one might think. Lots of records. In terms of history, transaction records is some of the earliest and some of the more abundant.

Standard financial lending is thousands of years old. In the Dark Ages when usury was religiously illegal and demanded a 0% interest rate, smart people figured out how to lend in one currency and demand payment back in another essentially contracting a currency swap to take advantage of one currency inflating faster than the other. That was 800 years ago.

Basically, if there's trade, there's lending. In the situation I describe/foresee, trade will still exist.

[7Wannabe5]

I am so silly. I didn't even check the internet for the current availability of garden robots. Here are a few:

https://www.kickstarter.com/projects/ro ... for-home-g

https://www.kickstarter.com/projects/33 ... smart-gard

https://farm.bot/

What I was thinking of would be kind of a combination of the first one and the 3rd one. I should have known that the Roomba team would come up with a garden version, because I was standing in front of a display of Roombas the other day, telling my BF that if there was a garden version that is what I would like for my birthday present. My lungs are in terrible shape, so I am looking forward to spring gardening projects, but not feeling like I could actually do much. Like when I was a little girl and I would have an asthma attack halfway through a tap dancing class.

The 3rd one somewhat resembles a Jacquard loom, which is the other model I was considering. The term "carpet gardening" refers to the practice of growing a great quantity of colorful annuals in a greenhouse and then planting them out in a design like a woven carpet. This practice was deemed to be in garish low taste when the more naturalistic perennial-based ornamental garden style was developed and popularized. Vita Sackville-West's White Garden representing the epitome of refinement. Most flowering plants, if not bred towards human whimsical preference, tend towards orange blooms. So, the flower garden of an 18th/19th century poor person, being closer to the field, would have tended more towards the shades of POTUS hair and/or processed cheese-food.

Of course, a productive annual vegetable patch (or the mono-crop farm field)will also tend towards either insignificant, rough, or monotone aesthetic with the added downside of being nothing but a barren flat of soil out-of-season. However, many perennial or woody fruit producers will create the loveliest display possible when they blossom. Therefore, a well-designed and well-maintained garden created in alignment with the tradition of the French Potager/Italian Kitchen Garden, the philosophy of perma-culture, and/or the related concept of the edible landscape (first popularized by Rosalind Creasy) will provide and tend towards maximizing advantages and emergent qualities that are lost with either an overly-refined focus on rare aesthetic qualities or an overly-efficient focus on caloric/$$ production per square ft. The quality of complexity can't be summed up with a calculator, therefore the gardener must to some degree relax into trust of her intuitive sense that the self-seeding Johnny-Jump-Ups running rogue with happy purple and white faces, through her patch of tiny, but uniquely delicious, Alpine strawberries, under the lovely, yet durable, cast-iron structure set in place to support the growth of her hyacinth beans, represents a good beyond simple measure, as we all venture forward into the post-Cartesian future.

Anyways, the other toy (translate into INTJ-ese as "tool") I really wanted as a birthday present was a microscope that takes digital pictures, so I can follow along with the work of Elaine Ingham on soil microbes and beneficial tiny insects at my garden sites. Nobody in my immediate social circle will buy me one of these for a birthday present because they know that I will take pictures of what lives in their bathtub.

[Riggerjack]

@ Jacob,

The book is recommended to my library, along with the other he wrote about the bond markets. I'm still in accumulation phase, so $77 for a book isn't likely. Yes, I'm familiar with your false economy stance on saving money on books, but I still haven't read a few others that are on the shelf.

I wasn't aware of any big financial houses operating prior to the Italians in the middle ages. My impression was of much smaller, independent trading merchant houses. I'll need to dig further, but not today. Thanks for setting me straight.

[ThisDinosaur]

@Riggerjack
https://archive.org/details/historyofinteres00home

[7Wannabe5]

I wonder why 3% is so consistent? What are underlying factors?

If Option A is lending your money to somebody else for the purpose of facilitating trade or business, then the opportunity cost of Option B -using the funds to facilitate trade or business for yourself should be considered. What I am suggesting is that, all other things being the same, there is less risk and more profit in lending money to yourself. If those engaged in Finance are experiencing less risk and more profit than those engaged in Business then I would suggest that the system is not sustainable.

I didn't learn the economics definition of entrepreneur until after I had already been running a small business for over 10 years. Turns out that I was a pretty crappy entrepreneur, because I was paying myself less than I could have sold myself for on the open employment market, so even though my business always made a profit, my entrepreneurial value was negative. Whenever somebody is self-aware happily choosing to do this, their activity can be described as "lifestyle business." For instance, in my case, the fact that as a self-employed person I could choose to stop working at 2 PM take the dog for a walk in the woods and start a pot of soup, while also avoiding a 45 minute commute through deer country made the trade off a good one.

So, what I am trying to communicate or promote with my rather silly example of garden robot is the notion of a more even spread over Zones of Global Investment/Finance/Salaried-Employment for Large Concern/Small Business-Self-Employment/Production for Home Use. Therefore, it seems a bit wrong-minded, or philosophically inconsistent, to put greater constraints on technology or other resources as applied to Lifestyle Business or even Home Production than one would apply to the larger businesses in which one might be invested. I mean it's kind of like not only deciding to attempt to save money by learning how to cook, but also applying constraint that only tools fashioned from stone will be used. Or like having a temp job as an administrative assistant and suggesting to your supervisor that you should start writing with quill and ink. IOW, you are dooming any small local enterprise to quick death after conception if such an enterprise is artificially constrained to only make use of local resources while larger enterprises swill at will. One of the few advantages small does have over gargantuan is the nimbleness to make quick decisions and re-tool or alter supply lines at the margin. IOW, a small businessperson should almost always choose to depreciate faster, because she likely will only survive if she does depreciate faster.

Also, it is of non-trivial importance to distinguish between tool, resource and product when considering application of new or high technology. For instance, I was one of the first kids on the block to buy a smart phone with a decent camera and scanner attached, because I needed such a tool in order to continue to compete in a business in which I was core engaged in recycling and adding informational value to waste product. The hundreds of dollars I invested in high-tech tool was nothing compared to the thousands of dollars of used books I was up-cycling. When I was actively engaged in the business, I had to take time every 3 months or so to consider how technology was changing and how I would have to change with it if I hoped for my business to survive/thrive. This is essentially no different than making similar determinations when behaving as active investor deciding which technology stock to next purchase. A small business person has no more rational notion of cast-iron BIFL tools than an investor has of cast-iron BIFL tech stock. IOW, it's kind of like an ethical dichotomy which is similar but opposite to Lady on the Street/Slut in the Sheets.

[jacob]

The risk-free rate was roughly arbitraged to "solid wood" growth rate (oak for ship masts, etc.) + population growth (which used to be much lower because the death rate was much higher), so basically trees that one would need to leave alone for decades so they would attain a useful/large size. It's not really relevant today because there aren't enough of those trees left to be of material impact on the economy. Modern forests are managed for much higher turnover.

[7Wannabe5]

Well, I must straight-forwardly admit that what it comes down to is the question of whether I detest the idea of working full-time for somebody else enough to compromise my highest values in the realm of what I am willing to do as a small business person. I am attempting to rationalize or justify this action on the basis of something like "Well, the rest of you guys are making money by investing in all sort of businesses which engage in all sorts of practices, and its only distance from decision-making or operations that is allowing you the luxury of maintenance of white gloves through imaginary dichotomy between functions of consumption and production."

Of course, I'm really just debating with myself and hoping for some 3rd alternative to pop up out of nowhere.

In the realm of perma-culture or small urban market garden /small orchard production, a non-silly important decision is whether or not to make use thick black plastic in order to facilitate weed control and soil warmth. Weeding is the second most human labor intensive activity in agriculture, second only to harvesting. Of course,in modern food chain, processing and transportation further down the line prior to consumption is 80% of the cost. Both Curtis Stone and the Ontario orchardist I mentioned earlier decided that they had to say "Yes" to black plastic.

A similar issue in used book dealing is the volume of shipping where making your own shipping envelopes/boxes out of recycled cardboard becomes too much of a chore or not cost-effective. I couldn't even afford to pay sub-minimum wage to my teenage kids and/or their friends to craft such materials.