Our Economy: At The Jagged Edge

“Because of the metric system?” – Pulp Fiction

I saw a mountain covered in cows.  “Huh, that must be Mt. Heiferest.”

Systems work within certain limits.  Let’s take . . . the Earth.  The Earth is absolutely filled with life.  It’s nearly everywhere, and in abundance, unless a particular bit of life has secrets about the Clintons.  Let’s just look at a single variable of the system that supports life:  temperature.

All things being equal, if the Earth was as hot as Venus is, the zone where life could exist (if it was based on the need for water, of course) would be pretty small.  Likewise, Mars would have a smaller envelope – it’s too cold – and water would be frozen most of the time.  Sure, life is technically possible in both locations, but it will never thrive like it has for a huge chunk of the Earth’s history.

And that’s just one variable impacting a complex system.

There are many ways to configure an economy.  Most of the ones that work really well are decentralized for most things.  No one tells a farmer in Nebraska what or when to plant.  The farmer chooses, based on what he thinks he can sell.  No one tells PEZ® to make a Yosemite Sam™ PEZ© dispenser.  But why wouldn’t they make a Yosemite Sam® PEZ® dispenser?  Duh.

A day on Venus lasts 5,832.6 hours, so it’s just like a Monday on Earth with Biden in the White House.

Most of the time, this system is pretty closely coupled.  The world doesn’t have years of surplus of, say, food just sitting around – with billions of people, I know someone would eat the Ding Dongs® and Pop Tarts™ first and then there wouldn’t be any for me.  I mean, it certainly looks like Nic Cage could make an infinite amount of movies since the word, “no” isn’t in his vocabulary, but even he has limits to his Nic Cage-ness.

I think we’re close to the limits of the system that’s given us prosperity as we know it.  Yup, that’s a sobering thought.  Here are a few data points:

This one hit me fairly hard (from Vox Day’s place – there’s more at the LINK):

I own a small trucking company, and this is what the fuel crisis is doing to our country… Today I filled up my truck to deliver products that help keep our country fed. When I filled up my truck, it cost me $1,149.50. This is ONE truck, for ONE day of fuel. I own three. So for one day of operation, it’s costing me $3,448.50. (Yes, we use a full tank of fuel every single day, sometimes more than 1 tank per day).

My trucks generally run 5-6 days a week, so we’ll just estimate on the low side and say five. That’s $17,242.50. Last week was over $20k for ONE week, that I have to pay out of my pocket to try and keep not only my children fed, but those of my employees, and our country.

Mark my words, we are on a downhill slide to the worst recession our country has ever seen. Trucking companies are going under left and right. (Literally hundreds weekly.) If you’re not aware, what you’re wearing, what you’re eating, what you’re living in, what you’re driving, what you’re reading this on, was delivered by a truck.

That’s sobering.  All the beer comes on trucks, so it could be literally sobering.

We might need USB if the USA fails.

What else have we seen?

  • Baby Formula Shortages
  • Rising Violence, Well, Everywhere
  • Short Tempers
  • Shortages of Basic Repair Parts For Vehicles

These have some consequences.  Big ones.

People are pulling back on frills, in a hurry.  A very good restaurant in Modern Mayberry just shut down.  Forever.  The owners threw in the towel.  Rising prices led to fewer customers . . . customers feeling pinched can always cook their own food at home as a quick way to save a few bucks.  I opened my browser (which thinks I live hundreds of miles away from Modern Mayberry) and saw the same exact story a few hundred miles away on the same day our local hangout closed – another, distant, beloved local restaurant shutting down in a town I’ve never been to.

The Mrs. has a phobia so she stacks the plates in the cabinet by the year we bought them.  It’s a very rare dish order.

Why are dining customers feeling the pinch?  Let’s just talk a single variable:  fuel.  By my calculations, the rising cost of fuel is draining $2.3 billion dollars a day, every day from the economy.  That’s not quite a trillion dollars a year, but fuel is priced into everything.  Divide the rough annual cost of just the increase and I came up with almost $2,800.  Per person.  Multiplied by a family of four, and that’s about $11,000 a year per family.  If the average family makes $69,000 a year, just the increase in fuel prices is about 16% of their annual income.  Sure, lots of that isn’t direct to the family, but it gets priced into every single thing they buy.

That’s stark, especially because it’s only a single variable.  Increased interest rates will be hitting soon, along with all of the financial pressures that will bring.  And, of course, there will be more things as this crisis cascades.

I took a college elective on pollen creation.  I got a B.

Here’s another data point.  I pulled into McDonald’s® and asked for a McSausage McMuffin with McEgg®.  Don’t judge me!  They’re tasty!

“Sorry, we’re all out.  We do have sausage biscuits left.”

“Okay.  I’ll take one.”  Not my favorite, but, whatever.

“Okay, that’ll be $6.50.”  It was just as they put up their lunch menu, so I hadn’t seen the price.

Six fifty?  For a sausage patty, some not great scrambled eggs, a slice of cheese, and a biscuit?  And it wasn’t what I wanted in the first place?

I noped out of that.  First time I’ve canceled a drive-through order that I can recall, but I didn’t need the sandwich $6.50 worth.  I drove out of the line and off on my way.  Good thing it wasn’t an Amish McDonald’s® – I hear they don’t have outlets.

I hate to think about what happens when Joe runs out of his “good” ideas.

Our economic systems are certainly out of balance.  Badly.  We’re at the edge of a cliff, and I have the feeling that things will soon be changing, and quickly.  Be prepared for a change in temperature.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

54 thoughts on “Our Economy: At The Jagged Edge”

  1. “All things being equal, if the Earth was as hot as Venus is, the zone where life (if it was based on the need for water, of course) would be pretty small.” I think there is a verb missing here.

    1. It’s an overly complicated sentence, I’ll grant you. Stripping it of all of the frou-frou clauses yields a missing “could exist”. Thank you. Edited.

  2. It all comes down to energy costs. If you wanna see something even funnier than John’s memes, check out the official US Govt EIA short-term energy outlook at:
    https://www.eia.gov/outlooks/steo/report/us_oil.php#:~:text=Winter%20Fuels%20Outlooks-,U.S.%20Liquid%20Fuels,b%2Fd%20set%20in%202019.

    USA domestic production going up over a million barrels per day by 2023! Diesel’s gonna drop to “only” $4.14 in 2023! Gas is gonna drop to $3.16 cents a gallon in 2023!

    Inflation is transitory!

    Fine print: “U.S. refinery utilization averages 94% in 3Q22 in our forecast, as a result of high wholesale product margins. Despite our expectation that refinery utilization will be at or near the highest levels in the past five years, operable refinery capacity is about 900,000 b/d less than at the end of 2019, and as a result, we do not expect total refinery output of products to reach its highest level in the past five years…”

    Meanwhile, the guys that actually are making things run are saying we are on a course to shut down 15% of all trucking because Union Pacific Railroads is gonna cut back rail tank shipments of diesel exhaust fluid (DEF) by 50% to Pilot / Flying J truck stops. By EPA mandate, all trucks made since 2010 gotta have DEF to mix at a 3% ratio with their diesel fuel or they don’t run. One railcar of DEF is required to send 3000 trucks out to run 5 million freight miles. No railcars, no Walmart resupply runs.

    Check out 2:30 to 4:30 here, but the whole 8 minute video is worth watching:

    1. So just sell the truckers fuel without the additive.
      “Just say no” to big government. Stop feeding the beast with your passive compliance.

        1. DEF is simply injected into the exhaust stream directly into the converter at operating temperature. Very basically, the def introduces ammonia into the exhaust stream where, in the presence of the catalyst, it chemically acts to reduce oxides of nitrogen (nox) into essentially nitrogen and water. Basically, it is intended to reduce the emission of nox into the atmosphere mainly because it is a huge constituent part of photo-chemical smog. (Oxides of nitrogen are simply bi-products of the combustion process).
          The def system doesn’t affect the engine at all. Any effect such as de-rating or shut-down of the engine is a result of the way the system is programmed to react to a fault in the after-treatment system which the catalyst and def injection are part of… The programming could be changed via a fairly simple re-program at most repair shops equipped with that type of equipment. (The diesel exhaust particulate filter would be unaffected).
          Of course that is against epa standards. In case of a food or economic emergency though, it is certainly possible to relax these rules as a temporary measure…

    2. Very interesting … this is the same RR that is cutting the fertilizer shipments to farmers, which are also mostly urea. Go on, make your own “they must be pissed off” joke. And the RR and the urea factory is owned by the same majority investment holders (Blackwater et al). So, it must be Putin’s fault.

      1. Huh, had not heard that!

        https://www.michiganfarmnews.com/union-pacific-restricts-fertilizer-shipments-will-not-accept-new-orders

        So… cutbacks in urea for fertilizer, cutbacks in urea for making diesel trucks go, and it’s all because John blew the lid off of all of this with today’s post about the economy being on the jagged edge. Shame on you, John!

        At least Brandon is getting things under control with White House orders and upping the ethanol content of gasoline from 10% to 15%. Hey, we’re depleting the Strategic Petroleum Reserve by a million barrels a day attempting to buy votes for the midterms, why not also increase the burn rate of stored corn in silos by 50% while we’re at it! It’s not like there’s a food shortage coming or anything…

        https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/12/fact-sheet-using-homegrown-biofuels-to-address-putins-price-hike-at-the-pump-and-lower-costs-for-american-families/

        America burns up 5.375 billion bushels of corn as ethanol blended into E-10 gasoline. You’re gonna need an additional 5.375/2 = 2.68 billion bushels of corn to make E-15.

        https://ethanolproducer.com/articles/19260/2022-undefined23-corn-use-in-ethanol-forecast-at-5-375-billion-bushels

        Eight bushels of corn can feed a person for a year. Brandon pushing for E-15 is the same as burning enough additional corn to feed almost everybody in America for a year….

        https://www.resource-media.org/wp-content/uploads/2012/07/Food_or_Fuel.pdf

        Food-and-fuel in America is a very delicate balance. Sure, let’s just make these pop-up unilateral decisions about vast amounts of urea and corn. What could possibly go wrong, out here at the jagged edge of the economy?

  4. John, I think the most saddening thing to me is that so few people really seem to understand how integral energy – actual, usable energy to make our daily lives work – is to the modern society that is currently enjoyed. “What do I care about fuel prices? I can just shop at a grocery store closer to me and Amazon still delivers”.

    While I have not radically changed by car practices for example, I definitely do think about “do I really need to go?” and “How can I combine trips?” I only drive short distances, but still – it all adds up (also puts more mileage on cars that may not have parts for them).

    $6.50 for a McBreakfast ? I had no idea – but not surprised. Prepared food costs have skyrocketed and more and more, I am unwilling to pay for them.

    1. >I think the most saddening thing to me is that so few people really seem to understand how integral energy – actual, usable energy to make our daily lives work – is to the modern society that is currently enjoyed. “What do I care about fuel prices? I can just shop at a grocery store closer to me and Amazon still delivers”.

      What is far more saddening, and the reason for the lack of understanding above, is the flaw built in to humanity. One hundred IQ points is too low to figure this out and reason through it yourself. A 100-IQ individual can be walked through it, and can grasp it if someone explains it to them in pieces, but even basic macro-economic theory is beyond their comprehension.

      And a 100-IQ is no longer the average here in the U.S. We’ve drifted down to 94 or 95.

      In order to start figuring these things out yourself, you need to be rocking intellectual horsepower in the 115-120 range. To start seeing the bigger economic picture, to predict economic events accurately, you need to be hitting around 130 and have a lot of study and experience under your belt. Most people do not and simply never will have the ability, the training, or the experience to be able to do so.

      It is why, time after time, when you see a society turn away from ideals and virtues that keep them centered on the Ten Commandments (should really be called Civilization 101), it always, always, ALWAYS falls apart beyond where it can be recovered. That society needs to be rebuilt instead. The people as a mass will always lack the ability and foresight to see the inevitable consequences of their actions and the actions of their “rulers,” in whatever form those rules may take.

      1. Very interesting theory, if not fact. I’ve always been interested in understanding what drives the cycles that appear to be dictated by “human nature”, the seemingly infinite variables within the finite biological and physical limitations… I hadn’t considered how big a driver IQ might be. If nothing else, the human condition is fascinating.

    2. It wasn’t even a McBreakfast, just a single McSandwich!

      I got into my hot tub and then into my air conditioned house today. Doing that by hand?

      Wow.

  5. All of these things, related to the supply system and the vagaries of abundance-at-a-distance, are explained in a book called Overshoot, by William R Catton (Univ Ill Press, 1982). Note that this was first published 40 years ago. The principles within are relevant today on a vast scale.
    Nothing here is new; it was merely hidden and uninteresting.
    I suspect that the issue here might be that so many people are only getting the memo now, and as the realization dawns regarding how few the remaining opportunities are and how short the time, it is easy to see how panic could develop in the otherwise uninitiated…
    With such a steep learning curve, especially when it comes to overcoming cognitive dissonance and normalcy bias, it takes time to get one’s head wrapped around these things such that rational, effective, and timely decisions can be taken.
    It would seem that we are now at the end of those chances.
    God Bless America, the last best hope of mankind.

    1. Mike, thanks. Overshoot is an underlying principle that is there in my posts.

      Systems lead to results, good or bad.

  6. $6.50 for a McD’s sausage biscuit is over the line. Would’ve been a big fat nope for me as well. Oddly enough, a McMuffin’s nutritional stats aren’t all that bad. It’s the one thing I’d eat there. So I doubt I’d have even ordered the biscuit.

    Since I’ve been more diligent about my diet, I pretty much avoid fast food anyhow, but the benefit to it was always it was cheap. Not so much anymore. BTW, a meal at my favorite mexican place is probably 30% more. Used to get out of there, two people, with a few drinks for $50 or so. I paid about $80 with tip last weekend. It’s a great place, not top notch gourmet mexican (like papasitos) but not industrial level either (like on the border).

    Speaking of supply chain issues, I had a gut scoping the other day. The nurse anesthetist said they had no (or wouldn’t be using on me) lanacain so I’d feel some burning as he hit me with the knockout juice.

    How TF does a medical shop not have all the pain meds they need.

    And yes, it burned like a blowtorch for the 10 seconds it took me to go lights out.

    1. I rarely do, too. And almost always it’s the sausage McMuffin. Oddly, the less you eat, the more “bad food” doesn’t taste good.

      I have a line to some medical providers. No saline bags for a month. I can still get great Mexican for about $12 a plate.

  7. John – – The only thing in the entire country that Xao BuyDem has succeeded in getting the price lowered is for:

    FENTANYL !!

    Can’t say he is no longer inept and ineffective with this supreme success !!

    1. Easily, EASILY the worst president in my lifetime. And in his lifetime, which includes FDR.

  8. John, tried to fill up my Cayenne diesel last week, and the pump stopped at $125.00. Yesterday, filled up the Tundra…$100.63. And this is in SC, which has the lowest fuel prices in the country. Oh, one final note on the Tundra fill up; it was with non-ethanol 87 octane that was 20¢ less than 87 ethanol.

    1. Getting worse . . . daily. And, wow, the non-ethanol was lower? Are you sure you didn’t fill up in Heaven?

      1. Heaven? I don’t think the Shell at Exit 65 on I-77 qualifies.

  9. All of this is intentional. I could excuse incompetence to an extent but this? There is no excuse and the only proper response is something I can’t post online.

  10. Trump was elected because people were mad. I think they’re more angry now, and the anger will not be restrained by politeness. Unfortunately, those that live in large cities will have a harder time, but maybe some good will come from it. Survival is a strong instinct, and with an armed populace, those willing to be criminals have a harder time plying their trade. May the criminals find capital punishment is their fate.

  11. I’m the stay at home dad, and do all the shopping. I’m willing to trade time to save money, and I’m pretty good at it. I’ve also been prepping for years, stacking up what we normally use, including stuff to fix things.

    I’ve always combined trips as much as possible, but now I do the math to see the dollar cost too, and decide if the trip is necessary, if it can be delayed and combined later, or if the savings are worth the fuel cost.

    I always try to buy on sale, and make wise choices for WHAT to buy, but now I’m putting stuff back on the shelf that I just picked up. I have changed what I’m buying and putting in the cart. I have cancelled trips around town, or opted for the seller to ship rather than drive and get it myself. Shipping can still be cheaper than driving for two hours to get a item but that is unlikely to continue.

    I’ve had plenty of shopping trips lately where I just didn’t buy any meat, because prices were too high, I’ve got meat in the freezer, and I know that (at least in my stores) there will be lower priced options later. There have also been trips where I bought stuff that wasn’t on sale, that I would normally wait to buy on sale, because it hadn’t been in stock and I was glad to get it at any reasonable price.

    In other words, I’m cutting back. I’m shifting my spending and changing my spending decision making, all to adjust to this new situation.

    The people that don’t, that just try to continue on as they have, will be in a world of hurt later.

    Surviving and daring to thrive during what is coming will take vigilance, awareness, some measure of ruthlessness, and a sort of PRESENCE that most people don’t or won’t be willing to do.

    n

    (by presence I mean a sort of active participation, being “present” in the way a yoga teacher means it. No more rote, no more sleepwalking, and constant evaluation of habits.)

    1. nick, chhicken quarters on sale here 59 cents lb in 10 pound bag flocks are being culled efore the fke psitive flu teasters get to the farms so getit while you can also herds have been culled–no feed et cetera so if it is on sale get it buy an all american canner and start canning it stew chicken and debone [make and can bone broth] and can the meat can or dehydrate everything possible as we are told by biden that he will be cutting off electricity here and there and your freezer wont stay cold
      think of other inconveniences and miseries and how to lessen them by actions you take now
      buy enough vaseline while it is available to grease edge of canner between uses

      1. That is interesting. I figured that was why pork was so cheap right now, reduce the herd.

        I’ve got solar backup for my freezers, and I’m thinking demand might take down the Texas grid, but short of black helicopters or a commie stealing the Governorship, Texas will keep the grid up as long as possible. After all, we’re not connected and dependent on the rest of the country’s grid (and oh how they howled about that, but I don’t think it will change.)

        Chest freezers don’t have a big current draw, so everyone should look into some solar backup. Dometic and others make some good offgrid solutions if propane stays available. If not, a big tank lasts a good long while just running the freezer.. It’ll give you time to get something else in place.

        Canning is a skillset I’ll have to just add to the list of things to get to soon. Not being facetious, I’ve got a huge list of stuff to do. Canning has always been in the “like to get to it” pile.

        n

        1. Just got back from the “small” chain grocery store in our neighborhood. (Only small vs the bigger version in the better ‘hood.)

          Lot of weird gaps in the shelves, and a couple of places where they just stocked something from another department on the shelf to hide a gap. They were doing better than that last week.

          Chicken thighs were $1.40. Chicken legs, $1.09. Pork tenderloin in the bulk vac pack was only $1.27/ pound though, so I bought 20 pounds. It was limit two with $10 additional purchase, so ‘loss leader’. I cut them into roasts and chops, season, vac seal and freeze.

          There are still bargains out there, if you’re looking. Take advantage while you can.

          nick

          1. And I thought it worth mentioning…

            Remember that “a chicken in every pot” was a promise of prosperity, because only RICH people ATE their chickens, everyone else kept them alive as egg factories. Chicken was a luxury food.

            It’s the modern factory farm that made chicken meat cheap and allowed millions of kids to grow up big and strong by eating enough protein. And smart because they got enough fat in their diets.

            For that matter, in a discussion of heritage breed pigs it was noted that the pig was more valuable for the useful fat it provided the family than its meat, and heritage breeds therefore have a lot more fat on them than modern pigs.

            n

          2. pork cheap because chinese bought many f our pork farms even smithfield ham in va!!! who knows wha t they are feeding the pigs!

        2. there aresme smalla ffrdable dehydrators got one at aldis good for veg, friut and eggs

  12. “We’re at the edge of a cliff, and I have the feeling that things will soon be changing, and quickly.”

    How did we get here? Gradually, then suddenly.
    Some things are timeless.

    1. I wrote about this with my father around 2000. It was, and is, as predictable as the tides and the phases of the moon.

  13. Doomsayers are a dime a dozen on the internet. Being the Cassandra is easy and fun!

    I always take predictions of any sort with a huge salt block. It’s just a smart way to go, and it can attract tasty ungulates if things really go south.

    But somehow these times seem… different. Not sure I can quite put my finger on it. It’s like…like…

    Oh, Yeah! It’s exactly as if this was all intended and planned to further a transformation of life as we know it: The wholesale destruction of Western Civilization and the elimination of a large percentage of useless eaters, followed by the dawn of a new egalitarian Age of Communism! Yay! Comrades!

    If this continues (and I see no way for it to stop quickly), America as it exists, is doomed.

    Interesting times.

    1. Steve, I agree. It is just so . . . very . . . broken now. I for one still look for our new land. Let us go and find her.

  14. A below average summer so far regarding temp, with a light hoodie jacket for the morning.
    Gas is $5.50 at the four corners of stations, a bag of oranges is almost 9$ after tax.
    There is some debate about the Goebbels Big Lie quote but the comrades don’t care about shielding the hive from the results of the Bridge Too Far fortified democracy corn studded turd.
    They are out to burn it all down by any means necessary and the West South Africa Fundamental Transformation will proceed.
    Don’t let the Law of the Jungle scare you as there will be some vengeance.

  15. This morning DH and I had a serious talk about modifying our spending behavior. While we do have a relatively comfortable retirement, price increases have definitely gotten our attention. After 60 years of eating my own cooking (which is pretty good, but repetitive), for the past year or two, esp due to Covid, we have been using carry-out a couple times a week for things that Im just not so good at cooking – Chinese, some Mexican, KFC, really great pizza, and occasionally fancy burgers. We cut out drinks and desserts a long time ago.

    Our typical Chinese order (2 meals with some left-overs) is now around $90. KFC medium bucket is well over $40. The Tex-Mex restaurants that we loved have all gone out of business. Medium sized Pizza, from the best pizza joint in town, is $40+ with 3 toppings. We’ve decided to go cold turkey and cut out all fast food restaurants, unless and until “Cravings” for some particular item raises its ugly head. That is usually my department, so basically, I just have to control myself and suck it up, Buttercup.

    A lot of people in our smallish ruralish town depended heavily on the two food banks (at local churches) before the Covid catastrophe shut everything down. I have no idea how they are going to survive the price increases in groceries and gas. May God save us all from what’s surely to come.

    1. You can learn to cook the pizza at home pretty easily and w/out a lot of expense. Decent pizza stone is it. Once you get the hang of it, the only reason to buy take out is convenience

      Chinese… Depends. Recipes like General Tso’s that require battering and frying first…

      Deep fry stuff … I do not know how people make that w/out wasting so much flour and oil. Fortunately, the family does not really like it.

    3. florence lin author of excellent chinese cook book out of print probsably then lay in essentialls

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