Crypto Puzzle Craze

SUBHEAD: Will puzzle artwork be the next crypto-currency trend to go mainstream?

By Tyler Durden on 30 December 2018 for Zero Hedge -
Image above: "Amir Taaki and Cody Wilson" portraits embedded in a crpto-puzzle painting solved in 2014 with a prize of 3.5 BTC (BitCoins). Click to enlarge. From original article and ( Note this "painting" is derived from a photo of the two founders of "Dark Wallet" - a system for hiding the identities of BitCoin owners. See (

The cryptocurrency mania that drove the price of a bitcoin to $20,000 last year has come and gone, leaving a legion of deeply disappointed marginal buyers in its wake. But anybody who still believes in the long-term promise of crypto - and is looking to pick up some coins on the cheap - should try their luck at a crypto puzzle.

What's a crypto puzzle? Put simply, it's a burgeoning genre of artwork where viewers race against one another to solve a puzzle embedded in the picture.

Whoever wins is rewarded with a purse of cryptocurrency.

Though the phenomenon first emerged in 2014, when @coin_artist, the pseudonym of Marguerite deCourcelle, created Dark Wallet Puzzle, the first known cryptopuzzle, Business Week claimed in a recent feature about the trend that cryptopuzzles are still thriving - with buyers even paying hefty sums for pieces even after they have been solved.
Marguerite deCourcelle lives at the peculiar intersection of Bitcoin and art. Under the pseudonym @coin_artist, she’s credited with inventing the crypto-art puzzle, a genre of images hiding complicated ciphers that reward the first solver with a walletful of virtual currency. 
he most famous of these is an @coin_artist oil pastel from 2015 called Torched H34R7S, the final work in a series known as The Legend of Satoshi Nakamoto. Depicting a ­turtledove, chess pieces, and a ­phoenix surrounded by flames, the painting incorporates symbolic references to Bitcoin’s creator, as well as to Shakespeare and deCourcelle’s personal life.
An anonymous person solved the riddle in 2018, unlocking 5 Bitcoins, at the time worth about $50,000.
DeCourcelle started the Bitcoin-art-puzzle phenomenon in 2014 with Dark Wallet Puzzle, a painting of two leading crypto anarchists that hides a key. It led to a 3.4-Bitcoin reward. "I created it after realizing that without a third party litigating how money moves, that money could be ‘pulled out’ of anything," she says.
The result is a strange amalgam of the crypto and art-world universes, as crypto puzzles are beginning to "enter the mainstream through galleries, museums, international exhibitions, and even video games." In a way, winning crypto purses from solving these visual puzzles isn't that much different than the process of crypto mining - the only difference is that humans are solving the puzzles and not computers.

The Whitney Museum of American Art is planning to display its first crypto puzzle next spring. Until recently, most hidden-crypto-key artworks had been known only to nerdy collectors, their images circulated on websites such as Reddit and BitcoinTalk. Now they’re starting to enter the mainstream through galleries, museums, international exhibitions, and even video games. Many of the puzzles are also getting a bit easier to solve, giving more people a chance to crack the code and claim the coins. Some collectors are buying the art even after the puzzle has been solved and the ­digital currency extracted.
This spring artist Andy Bauch showcased “New Money,” a collection of mosaics, at the Castelli Art Space in Los Angeles. The patterns in the pieces, which were made of thousands of Lego blocks and included a 4-by-9-foot horizontal triptych, contained clues to troves of Bitcoin and other ­cryptocurrencies. "How seemingly arbitrary art prices are, and seeing crypto prices fluctuating wildly, I was curious,” Bauch says. "Will the ­cryptocurrency I put in this art appreciate? Will the art itself appreciate regardless of the cryptocurrency?"
Three of his works have sold - one of them for $14,000 - though the virtual coins hidden within one had already been taken before the show began. Per the unspoken rules of the ­crypto-art crowd, Bauch had posted photos of the works online, where anyone could view them and try to ­decipher their riddles.
The pieces are also getting some high-­profile attention from the art world. The Whitney Museum of American Art in New York plans to show a 16-millimeter film by Jennifer and Kevin McCoy that offers clues to a Bitcoin address.
The first solver will be named as one of the official donors of the piece, a distinction that can be resold or traded. At Bitcoin Art (r)evolution in Paris this fall, some 1,000 visitors in the course of a week viewed 40 works from @coin_artist and others, organizer Pascal Boyart says. He plans to embed crypto-art puzzles in his murals in the city’s streets.

Image above: Detail of crypto artwork by Nanu Berk from an article about her thoughts on the new art industry. From (

As the genre gains prominence in the mainstream art world, DeCourcelle is finding new ways to monetize the concept, including digital puzzles that resemble video games and selling pieces to collectors who are looking to own a piece of crypto history.
DeCourcelle, who has an art degree from Eastern Oregon University, made the final piece of The Legend of Satoshi Nakamoto series when she found herself suddenly single and parenting two small children, living in a rented room at a friend’s house with no steady means of support.
She spent four months working at night, during her boys’ naptimes, and between freelance projects to finish the painting, for which she’d already pledged 3.5 of her own Bitcoins in prize money.
She survived in the meantime by selling the original Dark Wallet Puzzle painting for 10 Bitcoins, or about $3,000 at the time.
"I just wanted a piece of that history," says buyer Brooke Royse-Mallers, a Bitcoin investor and avid crypto-puzzle-solver. "The history of Bitcoin’s evolution and my evolution with it, I guess. That painting helped me learn more about the technology without being a coder."
Though most crypto puzzles aren't worth much, DeCourcelle says she's been offered as much as $1 million for her work over the years. That should give remaining crypto entrepreneurs hope: If they're dissatisfied with the retail price, they can try packaging it with a visual puzzle to boost the price.


Jigsaw Dali

SUBHEAD: Artist uses jigsaw puzzles, with the same die cut pattern, to make these surreal mashups.

By Rusty Blazenhoff on 11 November 2018 for Boing Boing -

Image above: Horse meets train in surreal world. From original article.

[IB Publisher's note: There are more images  by Tim Klein in the Boing Boing site's article, as well as a photo essay of the artist's embroidering his car with yarn in hypnotic detailed patterns ASwee (]

Oh boy, I think I have a new hobby. I've just learned that you can combine puzzles, that have the same die cut, to make really awesome pieces of art. It had never occurred to me that manufacturers of mass-produced puzzles cut different puzzles of theirs in the same way, making the pieces interchangeable. It makes complete sense, of course, but my mind is still blown!

I learned about the art of "puzzle montage" from one of the readers of my inbox zine, Marcia Wiley (she's the gal in Seattle who's fixing up that cool old Checker Cab). She was visiting the Bay Area and we met up for the first time this past Friday. That's when she told me about her friend Tim Klein, who makes incredible puzzle montages. I'm excited to share his work with you.

In an email exchange, Tim told me that he learned about puzzle montages from the man who first made them, art professor Mel Andringa of Cedar Rapids, Iowa, "As far as I know, he and I are the only artists ever to pursue it seriously. And I think he's moved on to other things nowadays, so I may be the sole surviving practitioner."

And this is what Tim shared with me about his process:
...By selecting pieces from two or more compatible puzzles, I assemble a single "puzzle mashup" with surreal imagery that the publisher never imagined.

Sometimes the results are merely chuckle-making, such as my combination of King Tut's burial mask with the front of a truck, which I call "King of the Road".

But my favorite montages are ones in which the whimsical is tinged with something a bit deeper, such as "The Mercy-Go-Round (Sunshine and Shadow)", in which a fairground carousel whirls riders around a church from the light to the dark and back again -- or "Surrogate", in which a strange hybrid of beer can and teddy bear opens its fuzzy arms and tells you to "consider yourself hugged".

[editor note: "Mercy", not "Merry"]

The imagery in jigsaw puzzles published nowadays tends to be very busy, often consisting of densely-packed collages constructed with Photoshop. But for my purposes, I favor puzzles from pre-digital years, when the picture was typically a photograph of a single subject, such as a galloping horse or a ballerina or the Empire State Building.

As I visit thrift stores and garage sales in search of vintage puzzles, I sometimes feel like an archaeologist, taking great pleasure in discovering and "reconstructing" strange, shattered images whose shards have been languishing in suburban game closets for decades.
Take a look at some of his work (click to embiggen) and then go here to see the rest and to read Tim's notes about the specific pieces:

Image above: King Tut face on tractor trailer grill. From original article.

Image above: Summer invades winter during global warming. From original article.

Image above: Church goes far to attract worshipers. From original article.


Some of the Lights On

SUBHEAD: We should be redefining Energy Security as keeping at least "Some of the Lights On".

By Kris De Decker on 10 December 2018 for Low-Tech Magazine -

Image above: Keeping some of the lightbulbs on is better than all or nothing. From (

What is Energy Security?
What does it mean for a society to have “energy security”? Although there are more than forty different definitions of the concept, they all share the fundamental idea that energy supply should always meet energy demand. This also implies that energy supply needs to be constant – there can be no interruptions in the service. [1-4]

For example, the International Energy Agency (IEA) defines energy security as “the uninterrupted availability of energy sources at an affordable price”, the US Department of Energy and Climate Change (DECC) defines the concept as meaning that “the risks of interruption to energy supply are low”, and the EU defines it as a “stable and abundant supply of energy”. [5-7]

Historically, energy security was achieved by securing access to forests or peat bogs for thermal energy, and to human, animal, wind or water power sources for mechanical energy. With the arrival of the Industrial Revolution, energy security came to depend on the supply of fossil fuels.

As a theoretical concept, energy security is most closely related to the oil crises from the 1970s, when embargoes and price manipulations limited oil supply to Western nations.

As a result, most industrialised societies still stockpile oil reserves that are equivalent to several months of consumption.

Although oil remains as vital to industrial economies as it was in the 1970s, mainly for transportation and agriculture, it’s now recognised that energy security in modern societies also depends on other infrastructures, such as those supplying gas, electricity, and even data.

Furthermore, these infrastructures increasingly interconnect and depend on each other.

For example, gas is an important fuel for power production, while the power grid is now required to operate gas pipelines. Power grids are needed to run data networks, and data networks are now needed to run power grids.

This article investigates the concept of energy security by focusing on the power grid, which has become just as vital to industrial societies as oil. Moreover, electrification is seen as a way to decrease dependency on fossil fuels – think electric vehicles, heat pumps, and wind turbines.

The “security” or “reliability” of a power grid can be measured precisely by indicators of continuity such as the “Loss-of-Load Probability” (LOLP), and the “System Average Interruption Duration Index” (SAIDI). Using these indicators, one can only conclude that power grids in industrial societies are very secure.

For example, in Germany, power is available for 99.996% of the time, which corresponds to an interruption in service of less than half an hour per customer per year. [8]

Even the worst performing countries in Europe (Latvia, Poland, Lithuania) have supply shortages of only eight hours per customer per year, which corresponds to a reliability of 99.90%. [8]

The US power grid is in between these values, with supply interruptions of less than four hours per customer per year (99.96% reliability). [9]

How Secure is a Renewable Power Grid?

In the current operation of infrastructures, the paradigm is that consumers could and should have access to as much electricity, gas, oil, data or water as they want, anytime they want it, for as long as they want it.

The only requirement is that they pay the bill. Looking at the power sector, this vision of energy security is quite problematic, for several reasons.

First of all, most energy sources from which electricity is made are finite – and maintaining a steady supply of something that’s finite is of course impossible. In the long run, the strategy to maintain energy security is certainly doomed to fail. In the shorter term, it may disrupt the climate and provoke armed conflicts.

The International Energy Agency (IEA), which was set up following the first oil crisis in the early 1970s, encourages the use of renewable energy sources in order to diversify the energy supply and improve energy security in the long term.

A renewable power system is not dependent on foreign energy imports nor vulnerable to fuel price manipulations – which are the main worries in an energy infrastructure that is largely based on fossil fuels.

Of course, solar panels and wind turbines have limited lifetimes and need to be manufactured, which also requires resources that could come from abroad or which can become depleted. But, once they are installed, renewable power systems are “secure” in a way and for a period of time that fossil fuels (and atomic energy) are not.

Furthermore, solar and wind power provide more security concerning physical failure or sabotage, even more so when renewable power production is decentralised. Renewable power plants also have lower CO2-emissions, and the extreme weather events caused by climate change are a risk to energy security as well.

However, in spite of all these advantages, renewable energy sources pose fundamental challenges to the current understanding of energy security.

Most importantly, the renewable energy sources with the largest potential – sun and wind – are only intermittently available, depending on the weather and the seasons.

This means that solar and wind power don’t match the criterium that all definitions of energy security consider to be essential: the need for an uninterrupted, unlimited supply of power.

The reliability of a power grid with a high share of solar and wind power would be significantly below today’s standards for continuity of service. [10-14]

In such a renewable power grid, a 24/7 power supply can only be maintained at very high costs, because it requires an extensive infrastructure for energy storage, power transmission, and excess generation capacity.

This additional infrastructure risks making a renewable power grid unsustainable, because above a certain threshold, the fossil fuel energy used for building, installing and maintaining this infrastructure becomes higher than the fossil fuel energy saved by the solar panels and the wind turbines.

Intermittency is not the only disadvantage of renewable energy sources. Although many media and environmental organisations have painted a picture of solar and wind power as abundant sources of energy (“The sun delivers more energy to Earth in an hour than the world consumes in a year”), reality is more complex.

The “raw” supply of solar (and wind) energy is enormous indeed.

However, because of their very low power density, to convert this energy supply into a useful form solar panels and wind turbines require magnitudes of order more space and materials compared to thermal power plants – even if the mining and distribution of fuels is included. [15]

Therefore, a renewable power grid cannot guarantee that consumers have access to as much electricity as they want, even if the weather conditions are optimal.

How Secure is an Off-the-Grid Power System?
Today’s energy policies related to electricity try to reconcile three aims: an uninterrupted and limitless supply of power, affordability of electricity prices, and environmental sustainability.

A power grid that is mainly based on fossil fuels and atomic energy cannot achieve the aim of environmental sustainability, and it can only achieve the other goals as long as foreign suppliers do not cut off supplies or raise energy prices (or as long as national or international reserves are not depleted).

However, a renewable power grid cannot reconcile these three goals either. To achieve an unlimited 24/7 supply of power, the infrastructure needs to be oversized, which makes it expensive and unsustainable.

Without that infrastructure, a renewable power grid could be affordable and sustainable, but it could never offer an unlimited 24/7 supply of power.

Consequently, if we want a power infrastructure that is affordable and sustainable, we need to redefine the concept of energy security – and question the criterium of an unlimited and uninterrupted power supply.

If we look beyond the typical large-scale central infrastructures in industrial societies, it becomes clear that not all provisioning systems offer a limitless supply of resources.

Off-the-Grid microgeneration – the local production and storage of electricity using batteries and solar PV panels or wind turbines – is one example.

In principle, off-the-grid systems can be sized in such a way that they are “always on”. This can be done by following the “worst-month method”, which oversizes generation and storage capacity so that supply can meet demand even during the shortest and darkest days of the year.

However, just like in an imaginary large-scale renewable power grid, matching supply to demand at all times makes an off-the-grid system very costly and unsustainable, especially in high seasonality climates. [16-18]

Therefore, most off-the-grid systems are sized according to a method that aims for a compromise between reliability, economic cost and sustainability. The “loss-of-load probability sizing method” specifies a number of days per year that supply does not match demand. [19-21]

n other words, the system is sized, not only according to a projected energy demand, but also according to the available budget and/or the available space.

Sizing an off-the-grid power system in this way generates significant cost reductions, even if “reliability” is reduced just a little bit.

For example, a calculation for an off-the-grid house in Spain shows that decreasing the reliability from 99.75% to 99.00% produces a 60% cost reduction, with similar benefits for sustainability. Supply would be interrupted for 87.6 hours per year, compared to 22 hours in the higher reliability system. [16]

According to the current understanding of energy security, off-the-grid power systems that are sized in this way are a failure: energy supply doesn’t always meet energy demand.

However, off-gridders don’t seem to complain about a lack of energy security, on the contrary. There’s a simple reason for this: they adapt their energy demand to a limited and intermittent power supply.

In their 2015 book Off-the-Grid: Re-Assembling Domestic Life, Phillip Vannini and Jonathan Taggart document their travels across Canada to interview about 100 off-the-grid households. [22]

Among their most important observations is that voluntary off-gridders use less electricity overall and routinely adapt their energy demand to the weather and the seasons.

For example, washing machines, vacuum cleaners, power tools, toasters or videogame consoles are not used at all, or they are only used during periods of abundant energy, when batteries can accommodate no further charge.

If the sky is overcast, off-gridders act differently to draw less power and have some more left over for the day after.

Vannini and Taggart also observe that voluntary off-gridders seem to feel perfectly happy with levels of lighting or heating that are different from the standards that many in the western world have come to expect. Often, this shows itself in concentrating activities around more localised sources of heat and light. [22]

Similar observations can be made in places where people – involuntarily – depend on infrastructures that are not always on.

If centralised water, electricity and data networks are present in less industrialised countries, they are often characterised by regular and irregular interruptions in the supply. [23-25]

However, in spite of the very low reliability of these infrastructures – according to common indicators of continuity – life goes on.

Daily household routines are shaped around disruptions of supply systems, which are viewed as normal and a largely accepted part of life.

For example, if electricity, water or Internet are only available during certain times of the day, household tasks or other activities are planned accordingly. People also use less energy overall: the infrastructure simply doesn’t allow for a resource-intensive lifestyle. [23]
More Reliable, Less Secure?

The very high “reliability” of power grids in industrial societies is justified by calculating the “value of lost load” (VOLL), which compares the financial loss due to power shortages to the extra investment costs to avoid these shortages. [1][10] [26-29]

However, the value of lost load is highly dependent on how society is organised. The more it depends on electricity, the higher the financial losses due to power shortages will be.

Current definitions of energy security consider supply and demand to be unrelated, and focus almost entirely on securing energy supply.

However, alternative forms of power infrastructures like those described above show that people adapt and match their expectations to a power supply that is limited and not always on. In other words, energy security can be improved, not just by increasing reliability, but also by reducing dependency on energy.

Demand and supply are also interlinked, and mutually influence each other, in 24/7 power systems – but with the opposite effect. Just like “unreliable” off-the-grid power infrastructures foster lifestyles that are less dependent on electricity, “reliable” infrastructures foster lifestyles that are increasingly dependent on electricity.

In their 2018 book Infrastructures and Practices: the Dynamics of Demand in Networked Societies, Olivier Coutard and Elizabeth Shove argue that an unlimited and uninterrupted power supply has enabled people in industrial societies to adopt a multitude of power dependent technologies – such as washing machines, air conditioners, refrigerators, automatic doors, or 24/7 mobile internet access – which become “normal” and central to everyday life.

At the same time, alternative ways of doing things – such as washing clothes by hand, storing food without electricity, keeping cool without air-conditioning, or navigating and communicating without mobile phones – have withered away, or are withering away. [30]

As a result, energy security is in fact higher in off-the-grid power systems and “unreliable” central power infrastructures, while industrial societies are the weakest and most fragile in the face of supply interruptions.

What is generally assumed to be a proof of energy security – an unlimited and uninterrupted power supply – is actually making industrial societies ever more vulnerable to supply interruptions: people increasingly lack the skills and the technology to function without a continuous power supply.

Redefining Energy Security
To arrive to a more accurate definition of energy security requires the concept to be defined, not in terms of commodities like kilowatt-hours of electricity, but in terms of energy services, social practices, or basic needs. [1]

People don’t need electricity in itself. What they need, is to store food, wash clothes, open and close doors, communicate with each other, move from one place to another, see in the dark, and so on.

All these things can be achieved either with or without electricity, and in the first case, with more or less electricity.

Defined in this way, energy security is not just about securing the supply of electricity, but also about improving the resilience of the society, so that it becomes less dependent on a continuous supply of power.

This includes the resilience of people (do they have the skills to do things without electricity?), the resilience of devices and technological systems (can they handle an intermittent power supply?), and the resilience of institutions (is it legal to operate a power grid that is not always on?).

Depending on the resilience of the society, a disruption of the power supply may or may not lead to a disruption of energy services or social practices.

For example, although our food distribution system is dependent on a cold chain that requires a continuous power supply, there are many alternatives.

We could adapt refrigerators to an irregular power supply by insulating them much better, we could reintroduce cold cellars (which keep food fresh without electricity), or we could relearn older methods of food storage, like fermentation.

We could also improve people’s skills in terms of fresh cooking, switch to diets based on ingredients that don’t need cold storage, and encourage local daily shopping over weekly trips to large supermarkets.

If we look at energy security in a more holistic way, taking into account both supply and demand, it quickly becomes clear that energy security in industrial societies continues to deteriorate. We keep delegating more and more tasks to machines, computers and large-scale infrastructures, thus increasing our dependency on electricity.

Furthermore, the Internet is becoming just as essential as the power grid, and trends like cloud computing, the Internet of Things, and self-driving cars are all based on several interconnected layers of continuously operating infrastructures.

Because demand and supply influence each other, we come to a counter-intuitive conclusion: to improve energy security, we need to make the power grid less reliable. This would encourage resilience and substitution, and thus make industrial societies less vulnerable to supply interruptions.

Coutard and Shove argue that “it would make sense to pay more attention to opportunities for innovation that are opened when large network systems are weakened and abandoned, or when they become less reliable”. They add that the experiences of voluntary off-gridders “provide some insights into the types of configuration at stake”. [30]

Arguing for a less reliable power supply is sure to be controversial. In fact, “Keeping the lights on” is a phrase that is often used to justify energy reforms such as building more atomic plants, or keeping them in operation past their planned lifetimes.

To achieve real energy security, “keeping the lights on” should be replaced by phrases like “keeping some of the lights on”, “which lights should we turn off next?”, or “what’s wrong with a bit more dark?”. [31]

Obviously, a less reliable energy supply would bring fundamental changes to routines and technologies, whether it is in households, factories, transport systems, or communications networks – but that’s exactly the point. Present ways of life in industrial societies are simply not sustainable.

[1] Winzer, Christian. "Conceptualizing energy security." Energy policy 46 (2012): 36-48.

[2] Sovacool, Benjamin K., and Ishani Mukherjee. "Conceptualizing and measuring energy security: A synthesized approach." Energy 36.8 (2011): 5343-5355.

[3] Kruyt, Bert, et al. "Indicators for energy security." Energy policy37.6 (2009): 2166-2181.

[4] Cherp, Aleh, and Jessica Jewell. "The concept of energy security: Beyond the four As." Energy Policy 75 (2014): 415-421.

5] Energy security, International Energy Agency.

[6] Lucas, Javier Noel Valdés, Gonzalo Escribano Francés, and Enrique San Martín González. "Energy security and renewable energy deployment in the EU: Liaisons Dangereuses or Virtuous Circle?." Renewable and Sustainable Energy Reviews 62 (2016): 1032-1046.

[7] Strambo, Claudia, Måns Nilsson, and André Månsson. "Coherent or inconsistent? Assessing energy security and climate policy interaction within the European Union." Energy Research & Social Science 8 (2015): 1-12.

[8] CEER Benchmarking Report 6.1 on the Continuity of Electricity and Gas Supply. Data update 2015/2016. Ref: C18-EQS-86-03. 26-July-2018. Council of European Energy Regulators.

[9] Average frequency and duration of electric distribution outages vary by states. U.S. Energy Information Administration (EIA). April 5, 2018.

[10] Röpke, Luise. "The development of renewable energies and supply security: a trade-off analysis." Energy policy 61 (2013): 1011-1021.

[11] "Evolutions in energy conservation policies in the time of renewables", Nicola Lablanca, Isabella Maschio, Paolo Bertoldi, ECEEE 2015 Summer Study -- First Fuel Now.

[12] “How not to run a modern society on solar and wind power alone”, Kris De Decker, Low-tech Magazine, September 2017.

[13] Nedic, Dusko, et al. Security assessment of future UK electricity scenarios. Tyndall Centre for Climate Change Research, 2005.

[14] Zhou, P., R. Y. Jin, and L. W. Fan. "Reliability and economic evaluation of power system with renewables: A review." Renewable and Sustainable Energy Reviews 58 (2016): 537-547.

[15] Smil, Vaclav. Power density: a key to understanding energy sources and uses. MIT Press, 2015.

[16] Landeira, Cristina Cabo, Ángeles López-Agüera, and Fernando Núñez Sánchez. "Loss of Load Probability method applicability limits as function of consumption types and climate conditions in stand-alone PV systems." (2018).

[17] Singh, S. Sanajaoba, and Eugene Fernandez. "Method for evaluating battery size based on loss of load probability concept for a remote PV system." Power India International Conference (PIICON), 2014 6th IEEE. IEEE, 2014.

[18] How sustainanle is stored sunlight? Kris De Decker, Low-tech Magazine.

[19] Chapman, R. N. "Sizing Handbook for Stand-Alone Photovoltaic." Storage Systems, Sandia Report, SAND87-1087, Albuquerque (1987).

[20] Posadillo, R., and R. López Luque. "A sizing method for stand-alone PV installations with variable demand." Renewable Energy33.5 (2008): 1049-1055.

[21] Khatib, Tamer, Ibrahim A. Ibrahim, and Azah Mohamed. "A review on sizing methodologies of photovoltaic array and storage battery in a standalone photovoltaic system." Energy Conversion and Management 120 (2016): 430-448.

[22] Vannini, Phillip, and Jonathan Taggart. Off the grid: re-assembling domestic life. Routledge, 2014.

[23] "Materialising energy and water resources in everyday practices: insights for securing supply systems", Yolande Strengers, Cecily Maller, in "Global Environmental Change 22 (2012), pp. 754-763.

[24] Pillai, N. "Loss of Load Probability of a Power System." (2008).

[25] Al-Rubaye, Mohannad Jabbar Mnati, and Alex Van den Bossche. "Decades without a real grid: a living experience in Iraq." International Conference on Sustainable Energy and Environment Sensing (SEES 2018). 2018.

[26] Telson, Michael L. "The economics of alternative levels of reliability for electric power generation systems." The Bell Journal of Economics (1975): 679-694.

[27] Schröder, Thomas, and Wilhelm Kuckshinrichs. "Value of lost load: an efficient economic indicator for power supply security? A literature review." Frontiers in energy research 3 (2015): 55.

[28] Ratha, Anubhav, Emil Iggland, and Goran Andersson. "Value of Lost Load: How much is supply security worth?." Power and Energy Society General Meeting (PES), 2013 IEEE. IEEE, 2013.

[29] De Nooij, Michiel, Carl Koopmans, and Carlijn Bijvoet. "The value of supply security: The costs of power interruptions: Economic input for damage reduction and investment in networks." Energy Economics 29.2 (2007): 277-295.

[30] Coutard, Olivier, and Elizabeth Shove. "Infrastructures, practices and the dynamics of demand." Infrastructures in Practice. Routledge, 2018. 10-22.

[31] Demand Dictionary of Phrase and Fable, seventeenth edition. Jenny Rinkinen, Elizabeth Shove, Greg Marsden, The Demand Centre, 2018.


The Debt Whirlpool

SUBHEAD: Visualizing the status of the whirlpooling increase of world government debt to GDP.

By Jeff Desjardins on 21 January 2019 for Visual Capitalist -
Image above: Click to enlarge. Swirling around the drain-hole of history are the national economies in red with between 50% and over100% of government debt to Gross Domestic Product (GDP). From (

Over the last five years, markets have pushed concerns about debt under the rug.

While economic growth and record-low interest rates have made it easy to service existing government debt, it’s also created a situation where government debt has grown in to over $63 trillion in absolute terms.

The global economic tide can change fast, and in the event of a recession or rapidly rising interest rates, debt levels could come back into the spotlight very quickly.

The Debt Snowball
Today’s visualization comes to us from and it rolls the world’s countries into a “snowball” of government debt, colored and arranged by debt-to-GDP ratios. The data itself comes from the IMF’s most recent October 2018 update.

The structure of the visualization is apt, because debt can accumulate in an unsustainable way if governments are not proactive. This situation can create a vicious cycle, where mounting debt can start hampering growth, making the debt ultimately harder to pay off.

Here are the countries with the most debt on the books:

RankCountryDebt-to-GDP Ratio (2017)
#8United States105.2%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Cabo Verde and Barbados
Japan and Greece are the most indebted countries in the world, with debt-to-GDP ratios of 237.6% and 181.8% respectively. Meanwhile, the United States sits in the #8 spot with a 105.2% ratio, and recent Treasury estimates putting the national debt at $22 trillion.

 Light Snow
On the opposite spectrum, here are the 10 jurisdictions that have incurred less debt relative to the size of their economies:
RankCountryDebt-to-GDP Ratio (2017)
#1Macao (SAR)0.0%
#2Hong Kong (SAR)0.1%
#8Saudi Arabia17.2%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Timor-Leste and Solomon Islands

Macao and Hong Kong – both special administrative regions (SARs) in China – have virtually zero debt on the books, while the official country with the lowest debt is Brunei (2.8%).


American Indian influence on R&R

SUBHEAD: Native musicians played an oversize role in shaping American popular music.

By Charles R. Cross on 18 January 2019 for Yes Magazine -

Image above: Photo portrait of Link Ray - Native American R&R hero. From (

It’s a guitar riff that’s only 30 seconds long and simple enough that Link Wray came up with it while playing at a sock hop. He repeated the riff several times when he recorded the 1958 single “Rumble.”

That two minutes and twenty-five seconds of guitar nastiness inspired countless guitarists who followed and helped shift rock away from sock-hop chastity toward an edginess of danger.

One of the many parts of the history of “Rumble” forgotten is that the song was banned from the airwaves for a time because it was feared this instrumental—with no words!—might incite youth violence.

Steven Van Zandt, of the E Street Band, called “Rumble” “the theme song of juvenile delinquency.”

“Rumble” contains one of the killer riffs in all of rock ’n’ roll and essentially marks the invention of the power chord, but one of the secrets of the song’s history is that Link Wray was Native American.

His ethnicity, like that of many Natives who made contributions to music, was left out of almost all his press. The documentary Rumble: The Indians That Rocked the World, which airs on PBS starting January 21, addresses the larger contribution Natives made to music.

It’s an important story with many layers that involves both the human and cultural genocide that came with European conquest.

The film showcases a lot of musical talent, though the legendary Wray is arguably only the fourth greatest Native guitar player—after Jesse Ed Davis (who played with Taj Mahal, Jackson Browne, and John Lennon), Robbie Robertson, and Jimi Hendrix.

I’m a biographer of Hendrix, and he was proud of his Native background. Wray’s “Rumble” was one of the first songs Hendrix learned to play.
He almost certainly had no idea of Wray’s background, just as most casual fans didn’t know about Hendrix’s genealogy, which included Native roots on both sides of his family tree as well as his African American ancestry (and many Hendrix fans didn’t know that his song “Cherokee Mist” was in part a homage to his grandmother).

Wray’s history also surprised Robbie Robertson. “‘Rumble’ made an indelible mark on the whole evolution of where rock ’n’ roll was going to go,” Robertson observes in the film. “And then I found out [Wray] was an Indian!”

It could be argued that Robertson, a Mohawk, is one of the most important rock musicians of all time.

Backing Bob Dylan with the Band when Dylan went electric, Robertson played an essential role in shifting popular music from folk to rock, but even his ethnic background was almost never talked about in the press.

Cultural appropriation is the central theme of Rumble, which pairs short bios of a dozen Native musicians with commentators who explain why so much of this story has never been told. “Our peoples were part of the origin story of blues, jazz, and rock of American music, but we’re left out of the story consistently from the beginning,” says Native musician Joy Harjo.

Within colonialism, and within the slave trade, music was seen as a threat, which is why plantation owners banned slaves from owning drums, a prohibition that often was also applied to Natives, as well.

Rumble does an excellent job of explaining how the histories of African slaves and Natives were intertwined, as slave traders bred male slaves with female Natives from tribes they conquered.

This is one of the most horrific chapters in the history of the United States (and part of the reason Hendrix had Native blood, as do many African Americans).

Music has always been central to Indigenous culture in North America, but it was often taken away by a U.S. government seeking to control. “[Music] was seen as dangerous,” says historian John Troutman. “Singers and dancers were incarcerated for performing this music.”

The film asserts that the Wounded Knee massacre of 1890 began with the killing of Ghost Dancers.

“It was cultural genocide,” observed the now-deceased Native activist and musician John Trudell.

The career of Buffy Sainte-Marie, born on the Piapot Plains Cree First Nation Reserve in Canada, shows how both Natives and women struggled to be respected as musical artists.

Sainte-Marie tells how she succeeded when she started off with folk music, but as soon as her songs became overtly political, and anti-Vietnam War, she was banned from radio.

Even White male superstars like Johnny Cash found that they lost their platform when they spoke or sang about the plight of Natives.

 Cash’s 1964 album Bitter Tears: Ballads of the American Indian was boycotted by radio. Cash responded by taking out ads in music trade papers shaming radio (lore has it he was later adopted by the Seneca Nation to honor his activism).

Cash’s now-iconic album came out long before the age of social media, which now quickly serves to draw attention to many incidents of overt racism.

When headdresses became fashionable at music festivals in the last decade, a few festivals responded by banning them.

Powerful deterrents have been shame hashtags and social media infamy. Musician Pharrell Williams sparked a Twitter firestorm after he wore a headdress on the cover of Elle U.K. in 2014.

He defended it saying he had Native background, but that didn’t calm critics like Indian Country Media Network, which argued that “having an American Indian ancestor or relative isn’t a license to use that relative’s culture spontaneously and without context.” (Williams later apologized.)

Rumble addresses these topics and more, and despite the importance of the story, the documentary falls short in places.

While most of the commentators are Native, a number are not, and the contrast is confusing as it leaves a viewer wondering whether their tribal affiliation was mistakenly left off the title card. For example, Martin Scorsese is not who you would expect to see in this documentary.

His comments lack the insight that activists like Sainte-Marie bring, but clearly he was brought in simply because he directed The Last Waltz, which is hardly a qualification on the level of the ethnomusicologists included, many of whom are Native.

And when it comes to Jimi Hendrix, his adopted step-sister Janie Hendrix, quoted extensively—saying things like Native background is “part of who you are, and what you want to respect and represent”—is not blood-related to Jimi, which the film implies.

There are plenty of Native Hendrixes who could have spoken instead, and this appropriation is exactly what Rumble rails against.

Nonetheless, Rumble centers on an important lost part of history, a history rooted in a different, less socially aware America. The times, we hope, have changed since Wray started, though we’ll really know there has been a shift when Wray finally gets into the Rock and Roll Hall of Fame.

Rumble is ultimately about the power of music to transcend. When the Native band Redbone perform their hit “Come and Get Your Love” wearing headdresses, in a song that uses Native rhythms and puts them into a context that is appropriate and not exploitative, it’s powerful.

Redbone scored a top-five hit with the song, which includes a tribal beat and a classic guitar riff.

Their moment onstage, in traditional dress, feels like triumph.

“Come and Get Your Love” is also, like the rest of the music honored by Rumble, just plain great rock ’n’ roll.

Video above: Link Ray plays "Rumble" from record album "Slinky! The Epic Sessions '58-'61".  From (

Video above: Keith Secola & His Wild Band of Indians perform on stage live in 2008.  From ( and (

[IB Publisher's note: My first direct experience with American Indian rock & roll was with Keith Secola ans his Wilds Band of Indians at a Blue Heron Festival in Chautauqua County, NY in the late 1990s on a July 4th weekend. I was recording sound and captured much of the band's live performance. It was much like the performance in the video above. I made a CD of the recording and have shared it with many people. These guys were a lot of fun to hang out with.]


More native shrubs are essential

SUBHEAD: Shrubs grow much faster than trees and are powerful carbon sequestration engines in their own right.

By Adrian Fisher on 27 December 2018 for Ecological Gardening

Image above: Sand prairie merging into shrubland in southeast Wisconsin. From The Prairie Botanist
“Shrubbiness is such a remarkable adaptive design that one may wonder why more plants have not adopted it.” (H. C. Stutz, 1989)
In light of the newest IPCC and US climate change reports, coupled with reports of the ongoing declines of wild species—birds, insects—you name them, just so long as they aren’t human, I have turned to thinking about shrubs.

It is precisely their adaptive characteristics that give shrubs their potential to be powerful players in soil carbon sequestration and ecosystem regeneration in certain parts of the world, such as the Midwest.

Although alarming, the reports are not surprising to anyone who’s been keeping track. The IPCC report says human global society has 12 years to reduce carbon emissions to 45% below 2010 levels if there is to be any hope of holding overall average global temperature rise to 1.5 degrees C (2.7 degrees F).

The US report, searchable by region, adds fairly detailed, equally dire scenarios for this country. No place on earth will be immune to the destructive consequences of our failure to act.

Since the world has already warmed approximately 1 degree C, even if we are able to keeping warming to 1.5 degrees—an almost insanely optimistic proposal, given the array of forces, from active malice to blind inertia, all backed by money, power and influence poised against success—there will still be massive, destabilized weather patterns and disruptive, destructive weather events similar to and worse than what we are already experiencing.

The resultant ecological destruction and human misery will only increase with each half a degree beyond 1 degree until large parts of the earth are literally uninhabitable by humans. We are, right now, on track to warm roughly 3.3 degrees by century’s end.

Despite the official reports’ newly grim tone, there are no new solutions. As we’ve known for decades, staving off disaster requires both cutting greenhouse gas emissions and helping earth’s biological systems regenerate, pull massive amounts of carbon from the air, and store it in biomass and soils.

For an overview of how all of this can be achieved, the book and companion website “Drawdown” remains an excellent compendium of strategies and tactics.

The IPCC report offers four scenarios by which rapid decarbonization and carbon sequestration could be achieved. Three of them rely heavily on so far non-existent or extremely small-scale technological carbon capture and sequestration methods.

Possibly the worst of these from an ecological point of view is BECCS (bioenergy with carbon capture and storage), a technique involving growing and burning massive amounts of trees, shrubs and grasses while “magically” capturing and sequestering the resultant carbon emissions.

Relying on salvation by means of a fix we don’t actually have the ability, money or time to accomplish is a distracting, destructive form of magical thinking. Practiced at scale, BECCS would require appropriating farmland, destroying forests and wrecking ecosystems.

An analogous illustration of its potential for upending ecosystems and ways of life would be the destruction palm oil plantations have wrought in Borneo, devastation turbo-charged in part by an American law meant to get us off dependence on fossil fuels and well documented in the New York Times Magazine.)

Natural carbon solutions offer the most realistic way forward
The IPCC scenario that best comports with current reality and a genuinely sustainable, resilient future describes what carbon farmers, holistic managers, scientists, environmentalists and many others have been touting and practicing for 50 years.

That is, while we ramp up renewables, increase energy efficiency, and decarbonize our life styles, we should also do everything possible to enable worldwide carbon sequestration through biological processes.

We should restore and vastly augment our forests, grasslands and wetlands and overhaul agricultural practices along agroecological lines. Here in the US, the recently published paper “Natural Carbon Solutions for the United States” quantifies how much carbon can be sequestered through improved landscape and coastal wetlands management practices.

The authors calculate potential sequestration to be about 21% of total US emissions, or enough to equal taking all cars and trucks in the US off the road.

Unlike purely mechanical carbon sequestration methods, or schemes such as BECCS, natural carbon solutions would simultaneously help get global temperature rise under control while improving and enriching ecosystems’ functioning—thus helping ease the crisis of ecological destruction now sweeping the planet.

While nearly everyone has a pretty good idea of how to cut emissions, fewer are aware of how they themselves could implement natural carbon solutions beyond planting a tree or two. But simply plopping some trees in a lawn or along a parkway is not enough.

As I’ve written previously, serious natural carbon sequestration, at whatever scale, requires regenerative landscape management practices such as putting in a biodiverse palette of native trees, flowers and grasses and stopping the use of pesticides and synthetic fertilizer.

Shrubs can be crucial to this kind of planting, especially in terms of the other ecological benefits they offer. Wherever there is a lawn, a tree and possibly a small garden, or even a tiny strip along the foundations of a building, there should be a native shrub or two, or possibly more.

Large properties and farms have nearly unlimited possibilities in the form of hedgerows, shelterbelts or even reconstituted shrub prairies.

Shrubs are a necessary part of landscaping for carbon sequestration
From a landscaping perspective, shrubs are sort of like the middle children in a very large family: necessarily adaptable, but little thought of or noticed.

This is true even scientifically. “Natural Carbon Solutions” explicitly omits shrublands from the calculations, and a 2016 review of scientific literature in “Why Be a Shrub” states that the least studied landscape types are shrublands, while the least studied plants are shrubs.

Yet shrubs flourish virtually everywhere and shrublands are increasing across the globe, possibly due in part to climate change.

In the American West the new severity of wildfires makes it difficult for forests to regenerate. The replacement is shrubland, or, to use an old term, “barrens.” Is the lack of notice and study because shrubs are so common and ubiquitous, but lack the majesty of trees and the show-offy beauty of flowering annuals and perennials?

This lack of notice carries through in our designed landscapes. The default for parks and private property alike is often faux open woodland or savanna, with widely spaced trees and plenty of grass—and few shrubs.

Farms are faux prairies where shrubs that formerly would have flourished wild and later in hedgerows and fencerows and along waterways have been largely extirpated.

What shrubs there are might be a few non-native ornamentals ranged in a row along a building foundation, kept as a low hedge along a sidewalk, or grouped in a small island of mulch.

Humans love these savanna-ish landscapes that now cover millions of acres. For us, they are comfortable and attractive. They look very green on Google Earth and from the air to migrating birds.

But for birds and other animals, they function as “death traps,” as a US Fish and Wildlife employee once told me. Birds looking for habitat in such a place find it inhospitable. There is neither ground-level shelter, nor, for some kinds of shrub-dependent birds, good nesting habitat.

Nor is there much in the way of flowers for pollinators or host plants for insect herbivores or caterpillars, which means few of the native insects and berries that birds forage for in massive quantities for their own needs and to feed their young.

Finally, what should be a complex underground web of fungal species and soil dwelling microbes is, instead, simplified and depauperate.

Because they are missing shrubby layers, what seem to humans like well structured environments are, in fact, missing the complex structure that creates the capacity for higher order ecological relationships—that is, the relationships among three or more species (including plants, animals, fungi and bacteria) that tie an ecosystem together and enable carbon sequestration.

The adaptive characteristics of shrubs
Shrubs are the woody plants with multiple stems that branch close to the ground and may be erect but might sprawl. Usually they are less than 15 feet in height; anything taller than that is usually, but not always considered a tree. In general, deciduous shrubs are spring (sometimes fall) flowering and yield small fruits such as berries, drupes or nuts.

Crucially for wild landscapes of all types, their adaptability means they can re-sprout easily after fires or other disturbances, grow to mature size much faster than trees, and have self-spreading habits such as suckering or rooting where branches touch the ground.

It’s often hard to kill a shrub without digging out the roots. Their many leaves and stems make them efficient photosynthesis factories, pulling carbon out of the air, and their roots hook up with the underground biome as contributing partners.

They share nutrients and information with other plants, engage in the carbon-sugars-for-nutrients trade with fungi, shelter microbes in return for nitrogen and other nutrients, and thus contribute to a healthy, biodiverse, carbon-sequestering soil system. Some kinds of shrubs even act as nurse species, so that young trees grow better in their company.

The Midwest was once a very shrubby place
It’s hard to visualize what the landscape in the Midwest looked like prior to the European invasion down through the first half of the 19th century.

There were, of course, towns and trade routes, especially along the rivers, but it was a land with few fences or readily marked boundaries in the sense that we know them.

A broad area of the country around the western Great Lakes and running south to Texas functioned as the transition zone between the Eastern forest and the Western prairies. It was a landscape of great diversity, an intricate mosaic of landscape types, all of them highly dependent on fire to maintain their distinctive characteristics.

Overall, the land ranged along a continuum from mostly treeless open prairie to shrub prairie to savanna to woodland to, rarely, closed-canopy forest. The native peoples used fire as a management tool and maintaining and shaping the diversity.

Yet this management was holistic, non-linear, intuitive, spiritual, and tended to enhance biodiversity, unlike most of the control-prioritizing methods we employ today.

Surveyors’ notes from the early 19th century often include mentions of shrubs such as American hazelnut. A typical comment might read, “scattering timber, principally burr and white oak, hazel and hickory undergrowth.”

That is, they were traveling through shrub prairies and savannas where shrubs intermingled with trees and prairie plants.

Other noted shrub species included New Jersey tea, four species of dogwood, wild crabapple, wild plum, sumac species, roses, prairie willow and prickly ash.

Species prevalence depended on soil type and moisture availability, but all—more than thirty species— were adapted to fire, with the shrubby adaptive ability to easily spread vegetatively and to rapidly regenerate post-fire.

In areas of very frequent fires where shrub barrens developed, even some species of oak took on a shrubby form. The vanishingly few modern examples of shrub prairie also demonstrate their value as wildlife habitat.

These remaining landscapes tend to be on moist, sandy soil and include not only some of the species listed above, but also chokeberries, huckleberries, blueberries, grasses such as big bluestem, and flowers such as prairie violet. They are home to shrub-dependent birds, pollinators and wildlife such as herptiles, amphibians and mammals, including some rare or endangered species.

Disappearing native shrubs
Our cultural landscape amnesia is so great that, during the time much of this landscape was being physically erased by farms and towns, memories of it were concurrently erased, or if spoken of, were disputed or even disbelieved.

Unless we learn otherwise, we tend to think that the current landscape is how it should be. I’ve talked with farming people who have lost their history, can’t call native shrubs and prairie plants by their names and think of them as weeds to be mown down. Conventional farming policy and practice exacerbates this tendency.

 Only very old people, mostly long dead now, have told me of hedgerows full of shrubs in bloom, and remembered homemade wild plum preserves, gooseberry pies and elderberry wine.

Today, as a result, wild native shrubs are in decline in the Midwest. To the knowledgeable eye it is odd, even jarring to see farmhouses landscaped with nursery standardized non-native barberries and privets in one of the great shrub producing regions of the world.

It is sad to realize that shrubs with scant to no ecological value are favored over the Midwest species that could be such a boon to wildlife, soil health and to the farmers themselves.

And our cities, suburbs and towns are no better for many native shrubs, which don't easily conform to the constraints imposed by extremely manicured landscapes. Luckily, this has been slowly changing as cultivars have been selected and developed.

Viburnums and hydrangeas have long been of value and these days, many residential street have their serviceberries, chokeberries, dogwoods and oak leaf hydrangeas.

Even in natural areas, often created in less desirable, less farmable land than the great open prairies, fire suppression ensured that what were shrub prairies and savannas rapidly became woodlands and sometimes forests.

Only in the late 20th century were these last two landscapes rediscovered as entities in and of themselves.

A former savanna can often be recognized by the presence of old bur oaks with the characteristically wide-spreading shape they develop when open-grown, surrounded by younger, straighter, narrower trees. In modern restoration, savannas have often been prioritized.

Conversely, shrub species such as gray dogwood, though native, have frequently been put on lists of less desirable plants in need of control. Only in this century have wild native shrubs’ value been reconsidered as necessary understory species and as major landscape components in and of themselves.

Wild native shrubs for carbon sequestration
In the Midwest (and possibly other regions in the world), reforestation and afforestation as a major carbon sequestering and ecological resilience strategy does not mean recreating the deep forests of the Eastern and Southeastern US.

What is required is figuring out how lessons from the old patchwork-mosaic, fire-dependent landscape can be relearned and applied in new ways.

Existing natural landscapes should be examined for their carbon-sequestering, water management and ecological resilience functions and the data used as inspiration for how best to conduct the necessary rewilding, recomplexifying efforts in the landscapes where humans live, work and farm.

We need to expand the army of ecologists, restorationists, landscape managers, farmers, and public and private landowners already at work and create new, potent alliances of land managers.

I believe it will be found that recreating a diversity of landscapes along the prairie to forest continuum, including shrub prairies and wetlands, in accordance with given soil types and water availability, will best make use of conditions here--even as the climate changes.

The possibilities are manifold.
  • Where can gray dogwood and other spreading, suckering shrubs be encouraged in their proclivities?
  • Where can huge wetland restorations be undertaken, where swamp roses and black chokeberries, buttonbush and swamp dogwood are allowed to run riot?
  • Where will wild plums be allowed to form their dense, thorny thickets, or hazelnuts and bladdernuts be encouraged to grow among the oaks, their rightful companions?
  • Who can persuade farmers that allowing these species back on their less productive land will improve the resilience of their farms—and the health of themselves and their children?
  • How can park district and municipal officials and other urban/suburban land owners and managers learn to see native shrubs as worthwhile companions to trees?
And, though some of the needed work is ongoing even now, much more needs to be done, faster.

All of this should be possible and will be necessary as the indisputable benefits of nurturing species complexity in the service of biological diversity and soil carbon sequestration become more widely acknowledged during our climate emergency.

Shrubs grow much faster than trees and are powerful carbon sequestration engines in their own right.

They could play a huge part of the Midwest’s potential carbon sequestration and resilience strategy. It’s time for these middle children of the plant world to come into their own.


The Scenarios of the Collapse

SUBHEAD: It would be wise to start making contingency plans. Something ‘biblical’ is approaching.

By Tuomas Malinen on 11 January 2019 for GNS Economics  -

Image above: Painting of  "Noah's Ark" (1846) by American painter Edward Hicks. From (

2019 has started more calmly after a very volatile year-end in the markets. Focus has been on the trade deal between China and the US and the words of the central bankers, most notably those of Jay Powell. However, this is all just a distraction, a side-show.

The market volatility was only the first sign of an approaching global economic crisis, as we warned in December 2017.

As the recent PMI figures across the globe show, a global downturn has started and the world is utterly unprepared for it. The global imbalances that have been growing for years cannot lead to anything else than a global crisis . However, there are different paths the crisis could take.

Here, we present three scenarios that the global economy is likely to follow, when the global downturn morphs into something much more sinister. We’ll start with the most likely scenario: Global Depression.

Scenario I: Global Depression

In a depression, everything that has been driven the economic expansion goes into reverse. Asset markets experience severe contraction (in excess of 50 percent), credit becomes restricted, corporations and households de-lever fiercely, and global trade flows stall (for more details see Q-review 2/2018). Gross Domestic Production (GDP) falls dramatically, between 10 to 25 percent.

Unemployment skyrockets. The standard means of stimulus by central banks (CBs) and governments are exhausted without any notable improvement in the economic environment.

The implosion of the current asset bubble will start a relentless unwinding of leverage and risk in the global financial system. Because major CBs are still “all-in” with rates pinned at or near historic lows, and balance sheets bloated to extreme levels, their ability to respond will be highly restricted.

Governments are also highly-indebted, and when interest rates rise, some sovereigns are likely to default, aggravating the global banking crisis, which will probably be in motion already. Combined with the zombified global business sector and a hard landing in China, these factors will lead the world economy into a depression.

However, a possibility of something even more ominous is lurking in the background.

Scenario II: Systemic Meltdown

Systemic crisis would mean that the global financial melts down due to an existential deficit of trust between counterparties within the system. Before 2008, a systemic meltdown was mostly a theoretical construct.

However, in mid-October in 2008, global leaders were faced with the possibility that banks would not open on Monday. The inter-bank markets had frozen, because no one knew the amount of the losses banks carried on their books.

The global financial system was grinding to a halt. Politicians and central bankers saved the day by guaranteeing bank deposits and by providing capital and extraordinary guarantees to keep the important financial institutions standing and credit flowing.

Now the problem is that many of these measures are already in play and when the next crisis hits, the solvency of governments and CBs will also be in question.

This creates a perilous situation because, for example, the shares of the Global Systemically Important Banks have been falling since the beginning of last year, which was also the time when the balance sheet normalization (QT) program of the Fed kicked into full gear.

This is no coincidence and it implies that troubles are, once again, brewing in the banking sector.

Because a crash in the asset values would affect the collateral of banks and because global depression would lead to a massive increase in loan losses, the already-impaired banking sector could, again, face collapse.

However, this time around, there is very little authorities can do to stem the panic. These factors make the systemic meltdown an ominously-likely scenario.

Systemic meltdown would mean that all banking actions, distribution of money, loans, swaps, banking services, etc., through the banking sector would stop. Credit cards would cease to function, ATMs would not give out money and loans could not be originated or rolled-over.

Following the likely collapse of global trade, the world economy would also collapse. This would imply that the global GDP would experience a harrowing fall of 20 to 40 percent. Modern societies would cease to exist in their current form.

Scenario III: The Fairy Tale

Could this all be averted somehow? We’ve been pondering this for two years now, and our resounding answer is no. The leverage in the system usually results in a crash at some point, and asset bubbles very rarely deflate in a controlled manner.

However, CBs can probably still postpone the inevitable, if they could re-start Quantitative Easing (QE) programs or find some other way to push artificial central bank liquidity into the financial markets.

To soften the eventual blow, and as an extremely desperate measure, central banks could, at least in theory, engage in a “QE-squared”. In it, major central banks would buy a hefty chunk of global risk assets, estimated to total $400 trillion.

This would mean that the balance sheet of major Central Banks would need to expand at least five-fold from the current level of approximately $20 trillion.

To cover the crippling losses to their collective balance sheets that these purchases would be likely to inflict, they would need to use their money-printing ability to paper them over.

CBs earn seigniorage-revenue from all the money they create. This is the difference between the nominal value and the production costs of the money.

Because production costs of digital entries are very close to zero, the seigniorage revenue CBs receive from each entry is close to 1-to-1. Still, this would mean that they would need to create new money in the range of tens of trillions of US dollars.

By comparison, in 2017, the global nominal GDP of the world was approximately $75 trillion.

To distribute such incomprehensible sums of new money, CBs would need to give it directly to consumers and governments.

Even in normal circumstances, the production side of the economy would be unlikely to be able to respond to such a massive increase in (artificially created) demand, and this time there would have been wide-spread corporate bankruptcies driven by global depression.

A hyper-inflation would be likely to follow.

There’s also the alternative that CBs would make a complete U-turn and continue to backstop market losses.

This would be the “way of Japan”, where the BoJ already owns over 40% of the sovereign bond universe. It would eventually mean the effective nationalization of capital markets which would continue to function in name only.

We have no historical experience with what the expropriation of modern capital markets would cause.

However, it would be unlikely to be anything good as capital markets have been around for several centuries, and they are extremely important in allocating financial capital efficiently. If CBs take a permanent active role in the capital markets, it would lead to financial market socialism.

 It would be likely to bring similar horrors as regular socialism in the form of lost incentives (breaking down of the risk-reward relationship) and inflated asset values.

It is unlikely that global central bankers would be willing, or that they would be allowed, to do so.

The Endgame Nears

The global balance sheet of CBs turned in August 2018. This marks the start of global QT and thus the end of the most reckless monetary policy experiment in history.

When this is combined with the slow-down in China, the engine of the world economy since 2008,  we have finally entered the endgame of at the current business cycle.

The desperate measures of central bankers and China enacted after the financial crisis have pushed the global debt and financial alchemy to never-seen heights.

The global financial system has become rigged with leverage, moral hazard and regulatory failures to a point where a “purge” has become all-but-impossible to avoid. This is the end.

Still, every company, household and government should start to make contingency plans. Something ‘biblical’ is approaching.


Farewell to Bargain Shopping

SUBHEAD: Perhaps Generations X, Y & Z will recognize an opportunity to go into business.

By James Kunstler on 7 January 2019 for -

Image above: Photo image of K-Mart closing announcement by James Kunstler from original article.

[IB Publisher's note. Mr. Kunstler nailed it today! His humor is that of the grave, but it still amuses as it stings. Our little island of Kauai The Macy's is barely hanging on at the Kukui Grove Mall but our only mall has lost its Sears and K-Mart as well as Border's Books, Sports Authority, and a host of other national chains.The Walmart has hung on in Lihue but is quickly morphing intoi a competitor to Costco with an ever larger percentage of grocery floor space - Besides economy of size Costco seems to be aiming for the connoisseurs, restaurateurs and foodies - while Walmart is trolling for everyone else, including elderly, handicapped, and bottom feeders.We do much of our shopping through Azazon and are just waiting for CEO Jeff Bezos to buy the US Postal Service to stay in business.  Fortunately we still have a Home Depot to keep our homes intact, but that will likely disappear when new home building grinds to a halt. All those stores are a 30 minute (if your lucky) drive from here in Hanapepe. Thank god we still hava a Napa Auto Supply and Ace Hardware with walking distance. Hunker down folks. We have visited Jim Kunster's town outside of Albany, NY. and found it much like our former home in Panama, NY where you coulkd noit buy a can of soup or quart of milk without half an hour in a car.]

France has its Yellow Vests. Here in USA, we have a few poor shlubs hoisting the “Going Out of Business” signs on the highway in front of the K-Mart.

The store in my little flyover town in upstate New York announced that it would shutter in March, and the sign-hoisting shlubs appeared out on Route 29 the first Saturday in January, an apt kick-off to a nervous new year.

K-Mart’s parent company, Sears, is moving into liquidation, meaning anything that’s not nailed down must be converted into cash to pay off its creditors.

The store’s closing is viewed as both an injury and an insult to the town.

There just isn’t anywhere else to buy a long list of ordinary goods, from dish-towels to tennis balls without a 17-mile journey west, which means an hour behind the wheel coming-and-going, plus whatever time you spend picking stuff up inside.

And, of course, many people in town feel that this is just another way of Wall Street saying “…you deplorable, pathetic, tapped-out, drug-addled, tattoo-bedizened yokels are not worthy of a K-Mart….”

The K-Mart occupied the better part of a small strip mall at the edge of town, which also boasts a Dollar Store, which appears to sell stuff that fell off a truck.

There’s another, newer strip mall beyond it with a supermarket, a drug store, and a Tractor Supply outlet that probably stole a lot of K-Mart’s business after opening a few years ago.

There’s much speculation about what’ll go into Kmart’s soon-to-be vacant space, about 80,000 square feet of crappy tilt-up construction not far from the end of its design life, with a flat roof that has groaned under heavy snow loads for four decades. Nobody I talked to has a clue.

Probably not Neiman Marcus, for starters. I’m thinking: maybe an evangelical roller rink. It’s too big for a wig shop, or a motorcycle thug-wear boutique, the usual bottom-feeders in the declension of commercial collapse.

More likely, nothing will replace it. The national chain retail model has fallen apart, along with new car sales. Something is up in this foundering land, despite all the heraldic trumpet blasts on cable news about the “booming economy.”

What’s up is the international implosion of the bad debt, and the fading illusion that it doesn’t matter. It has any number of ways to express itself, from store closings, to dissolving pensions, to stock market instability, to divorce, homelessness, and war.

It’s what you get from a hyper-financialized economy that doesn’t really produce wealth but only steals it from somewhere else. It’s not the fault of “capitalism,” which, in theory just stands for the management of a society’s savings. America doesn’t save, it borrows.

Zero interest rates made savings a mug’s game, and zero interest rates were necessary to extend the borrowing far beyond the credible boundaries of repayment. Debt isn’t capital, it just pretends to be for a period of time. Wall Street made its trillions off the time-value of that pretense and now time is up.

Even in the hardship economy we’re sailing into, people will need to buy and sell things and it is very hard to see how that fundamental process of exchange might be reorganized going forward.

Back in the 1990s I attended many a town meeting (in many towns) where chain stores applied for permits to set-up operations. It was often contentious. There was always a contingent of locals — organized by the chains themselves — waving placards that said “We Want Bargain Shopping.”

And there were the short-sighted town officials drooling over the real estate tax “ratables” that chain stores represented. Their adversaries feared that their locally-owned Main Street businesses would be killed, and that was exactly what happened, in very short order.

You could see it coming from a thousand miles away. Now the Big Boxes are going down. Boo Hoo….

What will emerge out of the current disorder? Perhaps Generations X-Y-and-Z will recognize an opportunity to go into business — as an alternative to purchasing a degree in gender studies for $200,000 (at 6 percent interest).

There will be lots of opportunities, even in a world with generally less shopping.

 But it may require a deeper collapse to sweep away the impediments, both practical and mental, before that awareness turns to action.