Our Economy

The folks who are really in control keep telling us the economy is strong, but now with the tanking of the housing market they are saying, “We might be going into a recession…”

Folks, we’ve been in a recession for the last six years at least. Giving everyone a $500 tax rebate is going to do exactly nothing positive for the country, just like it did exactly nothing positive when George Bush Sr did it. I can tell you what we can and must do to restore our economic well being.

Let’s examine what happens in an economy. X amount of goods and services are produced and ultimately distributed to X amount of people using X amount of money as an exchange medium. One’s personal wealth, lifestyle, is determined by whether or not adequate goods and services are available and how much time and effort has to be expended to create those goods and services, and what negative impacts their production has on one’s environment, both in the larger global sense, and in the personal microcosm sense.

Adding more money into the system devalues that money, it doesn’t increase the amount of goods and services produced or available. If there isn’t enough food to go around, more money injected into the economy won’t magically make more food. If there isn’t enough gasoline, more money injected into the economy won’t magically make more gasoline.

The distribution of goods and services is another matter, right now we’ve got a situation where the top 1% receive about 50% of the wealth produced in this country, the bottom 80% receive less than 10%. The incoming growth in the last three years of the top 1% exceeded the total income of the bottom 80%. In the last three years, only the top 1% had an increase in income, the rest of us all had a decrease in our income. We are and have been in a recession for some time, unless you’re one of the top 1%.

I’d rather make the cake bigger than fight over the pieces, so let’s look at what makes the cake what it is. We have finite material resources and finite human resources with which to produce all of the goods and services we want and need. There are many factors that determine the efficiency with which we can produce goods and services from those material and human resources.

If we take a substantial portion of those human resources and send them to make war against Iraq, they are no longer available here to contribute to the production of goods and services. One of two things must then happen, since there are less goods and services represented by the dollars in our economy, either we all must receive fewer dollars so that we can consume less goods and services, or the value of the dollars we receive will be worth less because they can’t buy as much goods and services as they formerly did. That is to say, we have a reduction in our income or we have inflation. We’ve had both and both issues are seriously understated by our government.

The people that remain in the United States producing goods and services, a portion of their efforts have been diverted to producing supplies for war. None of that labor or material resources produce anything useful to society. So that’s another reduction in human and material resources available to produce useful and needed goods and services. Yet, we have to supply these people, and the people that went to Iraq, goods and services that those of us remaining and not involved in producing war materials, with what they need to survive.

That is big drain number one on our economy and a big drain that needs to be eliminated by ending the war and bringing our people home and getting them out of the business of empire building and into the business of contributing to our economy in ways that are beneficial to society.

Human resource issues can be addressed in part by bringing these people home and getting them into productive roles. They can be addressed further by increased automation of production. However, this requires energy.

Energy drives every aspect of our economy, the production of goods and services, the delivery of goods and services, and creating a livable environment, heating and cooling our homes, pumping fresh water, treating sewage, every aspect of our economic functioning requires energy.

In the 1970s we ran into real energy shortages. We had mile long lines to service stations, which, if they didn’t run out of gasoline before you got to the pump, would allow you to buy five gallons at ridiculously inflated prices, every other day.

President Carter, seeing that this was a bad thing; pushed many energy independence agendas that, had they been fully pursued, would have prevented the dismal situation we are in today; but unfortunately Reagan and The Bushes gutted most of what he put in place. As a result, today we are even more dependent upon foreign oil than we were in the 1970s. However, one misperception many people have is that we are highly reliant upon middle eastern oil. A much larger share comes from our neighbors, Canada and Mexico. It is absolutely accurate to say we are highly dependent upon foreign oil and we should not be.

We have all of the resources necessary to solve our energy needs domestically, we lack only the will to do so. Major oil companies and the banks that finance them would prefer that we do not.

My own personal view is that we should get away from burning fossil fuels entirely for environmental and sustainability reasons. But even restricted to fossil fuels, we have much larger resources in the United States than we are told; and we have the ability to make those resources go much further without suffering a reduction in our standard of living, while in fact improving it.

We are often told that the US holds only 3% of the worlds petroleum resources. This is true if and only if we consider sweet light crude exclusively and ignore several recent large discoveries. It is also a mistake to think in terms of only oil. Gasoline, diesel, and other petroleum distillates can also be made from coal and natural gas, both of which are fairly abundant although the recent migration of electric power generation to natural gas is outstripping the ability of suppliers to mine and transport it.

So in short; we can address both the human and material resource issues we face. Let me elaborate on what I think we should be doing now. First, we should bring our military home. Our large military isn’t really needed in todays world, we are the most aggressive nation on the planet, civilization has taken hold in most of the world and it’s time to move on to a better brighter future. Get our people back here where they can start contributing to our economy in productive and socially beneficial ways.

On the human side of things; we need to put a greater emphasis on education and re-education. Our rapidly evolving and shifting economy requires constant learning to be able to be an effective participant. It is in all of our best interests that each of us acquire the level of knowledge necessary. We need to stop and reverse the dumbing down of America. The 15 second sound byte needs to be eliminated from the news media as does predigested pablum. Remember when we used to have actual investigators? When they used to go out in the field and actually report what was happening there instead of just repeating something a wire service made up? We need that again. We need to eliminate media that keep calling themselves “Fair and Balanced” but are anything but. We need to reward the bottom 99% for their efforts and allow them an equitable share in the wealth they produce.

On the material resources side, the most important right now is energy; it drives everything else. In the 1970s we didn’t have a lot of good alternatives, but today we do. Bush and the oil companies keep pushing alternative technologies such as hydrogen and ethanol that are very limited in their practicality.

Hydrogen is difficult to store and transport. Methanol produced from non-cellulistic biostocks such as corn, requires almost as much energy to produce, ferment, distill, and process as it provides. A larger dependence upon methanol from non-cellulstic sources only serves to compete with food production, driving up the cost of food, depletes soil more rapidly, but produces no real increase in net energy availability nor does it reduce CO2 production because although the corn took the CO2 that will be produced by the burning of methanol out of the air while it was growing, an equivalent amount of CO2 was released in producing it in terms of farm equipment, heat for distillation, etc.

This doesn’t mean however that there is no role for biofuels. There are several routes that are much more efficient. First, instead of fermenting corn or other bio-stocks into methanol, they can be fermented into butynol. Second, instead of using starch or sugar parts of plants, they can be made from cellulostic material such as corn stocks, switch grass, or hemp.

Butynol is a 4-carbon alcohol that has an energy content nearly equal to gasoline, a road octane of 94, lower volatility, and it is not hydroscopic. These characteristics make it possible to transport in pipelines unlike ethanol, and unlike ethanol it can be burnt directly in unmodified gasoline engines and generally provides performance superior to gasoline. Even though it’s energy content is slightly lower, 115,000 BTU per gallon as opposed to 125,000 BTU per gallon for gasoline, it usually gets better fuel mileage because the uniformity of molecular size results in more efficient combustion and the higher octane is also beneficial. Normally engines are run richer than stoichiometric mix to keep combustion temperatures down, but butynol burns at a lower temperature at a stoichiometric ratio making that unnecessary. In a gasoline engine, it tends to reduce carbon monoxide emissions to almost undetectable levels and hydrocarbons are reduced by approximately 97%. Oxides of nitrogen are also reduced owing to lower combustion temperatures.

Even when derived from corn, butanol is a win because it contains approximately 35% more energy per gallon than ethanol yet as much butanol can be obtained per bushel as methanol and in addition, hydrogen is produced in one process that can provide additional energy, so butanol from corn does provide significantly more energy than it took to produce where ethanol does not.

The really big win though comes if we make butanol from cellulistic bio-stocks such as corn stalks, switch grass, or hemp. There are several processes that can do this, involving either multiple fermentations steps with different organisms or the use of artificially produced enzymes. This is much better because you are using waste material, corn stacks, the grass part of other grass food crops, rice, wheat, etc, or in the case of growing hemp or switch grass, you have a crop that provides much more energy per acre with less soil erosion and requiring fewer chemical fertilizers.

Butanol can also be produced from sunlight, carbon dioxide, and water. Two methods exist, a device exists that is a kind of a reverse fuel cell, using a catalyst along with electricity to convert CO2 and water into butanol. A second method uses a solar furnace to break down carbon dioxide into carbon monoxide and oxygen, the carbon monoxide is then mixed with steam and reacted to produce butanol or other liquid fuels. A wide range of hydrocarbons can be produced this way.

There are a number of interesting biological agents that can help us with the task of producing the energy we need. A fast growing algae has been produced that produces almost 40% oils by weight and does a much more efficient job of turning sunlight into fuel than do land based plants.

The United States has huge tar sand deposits, and if those are included in our oil reserves, we then have the largest oil reserves in the world not the smallest. Nay sayers say it’s too expensive to extract oil from tar sands, but Canada is extracting, decoking, and cracking tar sands to produce a synthetic sweet light crude and they are able to do so for about $15/barrel. Production is rapidly increasing in Canada and as it does, so have the estimates of reserves.

The downside to the methods the Canadians are using is that it’s an environmental disaster. Whole forests are cleared so that the tar sands can be strip mined, and then a solvent along with tremendous amounts of energy is used to extract the oil from the sand, and then the trailings now laced with solvent are returned.

You have several environmental problems that result, initially the destruction of overlying forests. Then the contribution of CO2 to the air to heat the oil and reduce it’s viscosity to make it amiable to further treatment, and for the decoking and cracking operations. Presently, natural gas is being used to supply the necessary energy but there is talk of building a nuclear reactor for this purpose. Lastly, you have the trailings which now are laced with solvent. The tar sands, the bitumen they contained, was too heavy and viscous to leach into the water table and pollute rivers and streams, not so for the solvent. In the US, they’ve experimented with starting underground fires to heat the bitumen and cause it to flow, em, yum. I really want to live near one of those operations.

But there are some new alternatives; one alternative is steam injection, but that takes large amounts of energy. Another is to use a genetically engineered bacteria that is capable of breaking the heavy hydrocarbons down into methane, in short, converting the bitumen deposits into natural gas. That natural gas can then either be used directly as a fuel or it can be made into liquid fuels using the Fischer-Troppe process.

In three states alone we have enough potential wind power to provide for all of our nations electrical needs. Wind has become the least expensive method of generating electricity. The difficulty being that wind does not blow at all locations at levels sufficient for power production at all times. However, this problem can be eliminated by geological diversity combined with overbuilding. If there were no use for surplus electricity, overbuilding would destroy the economics that make wind power attractive, however, if we can use that surplus electricity to make liquid fuels, and we can through a variety of different methods; then the economics become much more favorable.

If we had spent the money we spent on the first year of the Iraq war instead on wind power generation, we would have displaced the energy equivalent of all the oil Iraq produced before the war, indefinitely. If we had spent the money we spent on the war in Iraq to date; on renewable energy, we could be totally energy independent today.

Politicians that set goals to reduce foreign oil dependence by 20% 40 years down the road are doing nothing, they are just taking money from the oil companies and stalling so the oil companies can continue to rape us and the planet. The same oil companies that have owned the congress for the last eight years are now purchasing democratic congressman so switching from Republican to Democrats is not, in and of itself, going to solve this problem. This is a good time to write your senators and representatives and inform them that $500 isn’t going to buy your vote.

We put a man on the moon in seven years and we can certainly obtain energy dependence in that time frame if we have the will to do so. Furthermore, we can do so in a manner that is sustainable indefinitely and infinitely more environmentally friendly that current energy sources. I will post more on this in the future because these energy options I’m telling you about here, they’re only a drop in the bucket with respect to what is available to us.

2 thoughts on “Our Economy

  1. I think it goes without saying that companies going under are part of an economy tanking.

    There are a variety of reasons jobs are outsourced, if labor is cheaper overseas, then that’s where the jobs will go.

    Many of these problems stem from the dollar being artificially propped up.

    This is in big oils interest because it allows the extract foreign oil on the cheap and then sell the refined products at a high price.

    But it made our products expensive overseas costing jobs here.

    It made overseas products and services cheap here, again costing jobs here at home.

    It discouraged the development of domestic energy resources, ultimately rising the cost of manufacturing, and costing jobs here at home.

    Right now the dollar has plummeted relative to foreign currency and although this is painful in terms of making oil and it’s refined products expensive, ultimately it will be good for our economy because it will spur the development of domestic alternatives taking control away from Open.

    It will create more domestic jobs as our products and services become more competitive overseas.

    It will move jobs back to the US that were outsourced, as the weaker dollar makes it more expensive to outsource.

    It will reduce the value of the national debt and the individual debt many people have.

    It’s bad for people on a fixed income, but overall it’s an adjustment that is, in the long run, necessary, and would not have been so painful if the dollar had not been artificially proped
    up for so long.

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