Percentages, low bases, apples with apples, and a crystal ball

So we are ‘coming out of recession. The US is ‘coming out of recession’. She’s all good, full steam ahead. We’ve learned?

Diddly-squat.

And the US is apparently doing it on cars and houses. So we’ve learned less that diddly-squat.

But the biggest failure – as old Albert Bartlett so eloquently expounded – is that of the human race to grasp the Exponential Function. Growth – of anything – is expressed in terms of ‘ Doubling Time’.

1,2,4,8,16.32,64,128,…..     that’s doubling. The last doubling possible kills the process.

Take a 100-square block of chocolate. Double you nibbles. 1 square, 2, 4,8,16,32. So far so good, doubling has continued uninterrupted. Those looking backwards (to the Great Depression, for instance) say it’s all good. Those looking forward, note that we’ve already eaten 63 squares, leaving 37. The problem is that our next ‘doubling craves 64.

Improtant to note that you can stretch the next round to more than 32 – depending on what it is. (Not extracting oil from the tail-end of the Hubbert Curve, that’s for sure). You could theoretically do 37, and still fool yourself that it will happen again. Nup. The next round would have a bare cupboard.

Growth to crash in one move. No warning. Inevitably, nobody (as John Bongard recently said) saw it coming. Yeah, right.

We can assume the price of choccy will rise, them pop. And repeat. If it is irreplaceable, your growth just stopped – something economists don’t get. They are trained (?) to expect alternatives, and growth to continue,

That only works on an infinite planet, which would have to be an infinite  flat plane.

Economics as taugh, then, is a flat-earth construct.

The other thing to note is relativity – if you sink percentage-wise enough, of course you can always ‘grow’ from the low base. Just remember that we are now at an energy plateau. It may last until 2014, but that is at ‘current rates of supply’. That doesn’t do ‘growth’.

Question: can fiscal systems morph into a non-growth mode, and stay intact?  How do you underwrite profit from the last round?

Have a good growth time. Me, I’m staying debt-free, and watching the price of oil. You need no more barometer – but you need Boolian Algebra. Think about it – It’s the blood that keeps the body going and growing. Curtail the supply-rate, stagger the growing, kill the price, repeat….    So at the point of ultimate max-out of an irreplaceable resource (energy) the price will not just go up and up. Look for wild volatility.

And don’t forget to compare real numbers, not just accrued (ac rude?) percentages.