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Awareness of boundary issues and scope of analysis is essential in critical thinking. Let’s take a look at energy. We tend to bucket energy sources in buckets like renewable, fossil fuels and nuclear, but what does that really mean? On the face of it fossil fuels and energy sources like solar, wind and hydro have nothing in common and are seem contradictory.   Solar energy obviously is energy captured from the sun and as wind is also a phenomena caused by solar heat it too is a solar derivative.   With respect to hydro, the sun heats water which, with the help of wind evaporates, forms clouds and then rains down in mountains where we can use the water to run turbines and capture kinetic energy. Therefore hydro is also a solar derivative. Fossil fuels are the product of organic remnants of primarily plants which lived a long time ago, died and were transformed under heat and pressure into various forms of fuels like coal, oil and natural gas. Those source plants however wer

The only way to have a chance at implementing the inflation mandate is to have complete control over either one side or both the demand and supply side of currency. Although the Fed as agent of the department of treasury and in theory is the issuer of currency in the US and therefore should have a supply side monopoly on currency creation, there is a fly in the currency creation ointment. As per MMTs horizontal and vertical currency concept the Fed does not appear have material control, or chooses not to materially control the fractional reserve lending system, let alone the shadow banking system. Government can try to regulate the minimum reserve requirements (although they can be, and are circumvented through a number of pathways) but the government (yet) cannot impose maximum reserve ratios (force banks to lend a certain minimum amount visa viz their reserves). Whether commercial banks use a fractional reserve of 10% of 12% has a very significant impact on the actual number of cur

I’m going to post a short series on The Federal Reserve, its mandates and some of the consequences. The stated mandates of the Federal Reserve, an institution which is neither federal nor has reserves, are laid out in section 2A of the Federal Reserve Act (as amended) the triple (not dual as so often is stated) goals are : " to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates ”. With regard to stable prices note that on February 25 th , 2012 Dr. Bernanke announced that the Fed’s inflation target was 2% because it was best aligned with the mandated goals of full employment and price stability. The first observation is that Dr. Bernanke appears to be doing congress’s job by changing the mandate of stable prices without any apparent instruction to do so from congress.   An inflation target other than zero by definition means that prices are not stable. If balance in your Certificate of Deposit went down by 2% per

Energy Return On Energy Invested and its variations is a metric frequently used to look at our efficiency in harvesting energy with respect to the energy input. As an aside, regarding fossil fuels in day to day use we talk about energy production when strictly speaking we don’t produce coal/oil/gas but extract it and sometimes convert it.   Strictly technically speaking fossil fuels as well as renewables are solar energy; one is previously accumulated stock and the other is flow. Think balance sheet versus income statement. EROEI is an attractive concept but has a number of issues which can reduce its utility significantly.   The main issue with EROEI is that it suffers from boundary issues along a number of vectors. 1.        The first boundary issue is that although it is relatively easy to measure the energy produced it is significantly more difficult to determine the energy consumed in producing the energy. Should only direct energy inputs be counted (for example the ene