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The World Economy Is A Pyramid Scheme


The world economy is based on ever-increasing population, said Nobel laureate Steven Chu, a scheme that economists don’t talk about and that governments won’t face, a scheme that makes sustainability impossible and that is likely to eventually fail.

“The world needs a new model of how to generate a rising standard of living that’s not dependent on a pyramid scheme,” Chu said at the University of Chicago.

Chu didn’t specify what that new model would look like, but he offered a solution to the population growth the current one relies on.

“Increased economic prosperity and all economic models supported by governments and global competitors are based on having more young people, workers, than older people,” Chu said. “Two schemes come to mind. One is the pyramid scheme. The other is the Ponzi scheme. I’m not going to explain them both to you, you can look it up. But it’s based on growth, in various forms.”

For example, healthy young workers pay the health care costs for aging workers and retirees, the former energy secretary said, a scheme that requires increasing numbers of young workers. And economic growth requires more and more people to buy more and more stuff, with dire environmental  consequences.

There are at least two problems with that:

    1. “Depending on a pyramid scheme or a Ponzi scheme, there’s no such thing as sustainability,” Chu said.
  1. As standards of living increase, population growth declines. So if the economy succeeds in raising standards of living, it undermines itself.

“The economists know this, but they don’t really talk about it in the open, and there’s no real discussion in government,” Chu said. “Every government says you have to have an increase in population, whether you do it through immigrants or the home population. So, this is a problem.”

China has replaced its one-child policy with incentives for parents to have two children, Chu noted as an example, and France offers a prize, the Médaille de la Famille Française, to mothers of large families. Incentives like these will not help the world achieve sustainability, he said.

Chu, the man who solved the Gulf Oil spill with a doodle on a napkin, then offered two painless solutions to population growth:

“Education of women and wealth creation. Across all cultures. You go negative. You go negative birth.

“In many countries around the world, developed countries, Japan, Spain Italy, we’re talking about 1.3 (children per couple), 1.2 going below 1, where 2 is steady state.”

So Chu expects these effects of rising living standards to eventually offset the growth of human population. That will help the environment, he said, but it will also require a new kind of economy.

Chu’s visit to the University of Chicago was sponsored by the Energy Policy Institute of Chicago (for whom I sometimes host podcasts) and the Institute of Molecular Engineering.


14 Comments on "The World Economy Is A Pyramid Scheme"

  1. Davy on Fri, 5th Apr 2019 9:02 am 

    “US Still Cleanest Dirty Shirt Among Manufacturing Giants, Germany Drops to Debt Crisis Levels, Japan Contracts, China Counts on Government Bailout of Private Sector” wolf street

    “So in this snapshot of the four biggest manufacturing powerhouses in the world, German manufacturers are as gloomy as during the euro debt crisis and very nervous; Japanese manufacturers are worried by the ongoing slowdown; Chinese manufacturers are counting on the government to provide “a more relaxed financing environment” and “bail out the private sector”; and US manufacturers are in weakening growth mode – the slowest growth since 2016 – and for now, the cleanest dirty shirt that’s getting dirtier. But the US service sector, which is far larger than the manufacturing sector, is for now keeping overall economic growth afloat because there cannot be a recession without a pullback in services. Read… Finance & Insurance Hit it Out of the Ballpark, No Slowdown in the Huge Services Sector”

  2. Cloggie on Fri, 5th Apr 2019 9:24 am 

    “The World Economy Is A Pyramid Scheme”

    That’s good news, since in Egypt the pyramids still stand after thousands of years.

  3. Sissyfuss on Fri, 5th Apr 2019 9:35 am 

    The last stat I read was that it costs $250,000 to raise a child to the age of 18. If you remove the govt largesse that rewards the irresponsible breeding practices of the disenfranchised you could definitely slow down our trajectory of overshoot. Not that it would enable us to avoid the bottleneck approaching but we might enjoy the weekend a bit better.

  4. Dildos to Dollars on Fri, 5th Apr 2019 10:14 am 

    I’m investing 100% in dildos since Hambone Littletail keeps saying we’re so fucked.

  5. Theedrich on Fri, 5th Apr 2019 6:10 pm 

    For a penetrating look into the coming disaster, read Nomi Prins, Collusion: How Central Bankers Rigged the World (Amazon).  As she writes in the conclusion to her Author’s Note, “[W]e are headed for another epic fall.  The question is not if, but when.”

  6. Davy on Fri, 5th Apr 2019 6:55 pm 

    “[W]e are headed for another epic fall. The question is not if, but when.”

    Who know thee, this is uncharted waters. Anyone that thinks they know what is coming is full of shit is what I see. This has been proven out by years of people acting like they know what is going on from both sides of doom/gloom and cornucopians. I read this shit every day and rarely find someone’s read that is exceptional.

  7. Cloggie on Sat, 6th Apr 2019 3:18 am 

    Tory party in Britain facing collapse over Brexit:

    Peter Oborne summing up all the reasons why the EU will probably refuse PM May another Brexit-article 50 extension:

    “Why the PM ruled out No Deal: May backed soft Brexiters out of ‘patriotic duty’ to keep Britain together, reveals PETER OBORNE”

    Britain is playing with a losing set of cards. Britain is bluffing with the “Global Britain” idea, an outright nightmare for the British commoner, a new form of Manchester capitalism. This time it is not poor little Oliver Twist, crawling through chimney pipes, this time Global Britain represents the idea to flood Britain with English speaking coloreds from all corners of the globe, as long as they can contribute to the Holy Economy and the NHS.

    Theresa May. You have to admire her for her tenacity, holding ground in the Westmonster snake pit. In fact she IS rare common sense in this House of Cards 1.0 and is genuinely trying to prevent economic and geopolitical disaster for Britain. She will probably fail, thanks to the Tories, the one and oly true original template for that British, highly successful TV-series House of Cards from 1990, the only television program I can remember, I made an appointment in my agenda to watch together with my fellow libtard friends. The original was much better than the American aped version with Frank hands-off Underwood. 1990, the days I was still a pro-Anglo, libtard leftie, rather than the reactionary, anti-Anglo=anti-globalist PBM white nationalist monster I am

  8. Cloggie on Sat, 6th Apr 2019 3:44 am

    “Why the PM ruled out No Deal: May backed soft Brexiters out of ‘patriotic duty’ to keep Britain together, reveals PETER OBORNE”

    The details. Oborne and the DailyMail back Theresa May and her deal.

    For most of her premiership, Theresa May refused to rule out a hard Brexit. ‘No deal is better than a bad deal’ was her mantra, endlessly repeated. It made her the heroine of the Tory party’s hard Brexiteers.

    That was tactics and slight political power opportunism and appeasement of the ERG. In her heart she is a Remainer, but she understands the mood in the country that feels Britain is “special” and doesn’t belong to continental Europe. In reality she is committed to a soft-Brexit, always has been.

    But even more importantly, nor does she want to be the last Prime Minister of the United Kingdom.

    Exactly. The Scottish independence referendum of 18 September 2014 was defeated 55-45. Two years later the Brexit referendum that succeeded narrowly 52-48 offers a new lease to life for the dream of an independent Scotland, a country of Bravehearts…

    …that WAS independent since the days of the Roman empire until the 18th century…

    …when the Scottish elite screwed up financially and was bailed out by the English:

    Scottish identity is VERY real, much more so than Catalonia, and fought over for centuries and began with successful resistance against the Romans. It is one of the most ancient countries in entire Europe.

    Theresa May realizes that a no deal Brexit could create the pretext for a no deal Scexit (from London, mind you), unilaterally declared by the Scottish government, possible even without a referendum, as a emergency measure against economic catastrophe as a result of no deal Brexit.

    Brussels has openly hinted at that possibility as well. It could be tempted to initiate a no deal Brexit itself next week as a demonstration of its growing power of the very new political entity (1993), namely that it can blow up a large country with a simple administrative measure of no article 50 extension and set an example for other countries or populist parties rather, that are flirting with Euro-skepticism. A new independent Scotland, yearning to reunite with the EU and an England in tatters, would mean an enormous growth in prestige for the EU.

  9. Cloggie on Sat, 6th Apr 2019 5:01 am 

    Brexit not yet a fact, but the first British passports without “European Union” on it are already produced:

  10. I AM THE MOB on Sat, 6th Apr 2019 5:11 am 


    Ray Dalio is extremely worried there’s about to be an uprising in America.

    Writing in a new essay on LinkedIn, the founder of the world’s largest hedge fund says that while capitalism has worked out exceedingly well for him, he’s also “seen capitalism evolve in a way that it is not working well for the majority of Americans because it’s producing self-reinforcing spirals up for the haves and down for the have-nots.” In turn, that’s created “widening income/wealth/opportunity gaps that pose existential threats to the United States because these gaps are bringing about damaging domestic and international conflicts and weakening America’s condition.

    You can run but you can’t hide..

  11. Cloggie on Sat, 6th Apr 2019 3:24 pm 

    Now that the US-Russia collusion has been debunked, it is time to address the real collusion: Israel-US

  12. Cloggie on Sun, 7th Apr 2019 12:39 pm 

    Don the peace president?

    DJT hasn’t so far started a war, which makes him unique.

    Now he proposes a nuclear deal between Russia and China!

  13. Go Speed Racer on Mon, 8th Apr 2019 1:53 am 

    Clogster !!!
    WTF ! Are you telling me,
    that the pyramids,
    are a pyramid scheme ??

    LOL i didn’t hear that before.
    maybe it’s true.

  14. Cloggie on Mon, 8th Apr 2019 12:17 pm

    May-Corbyn talks apparently going nowhere. Macron is the loudest in advocating refusing Britain an extension.

    Meanwhile it looks like France is now really beyond the “Entente Cordiale” of 100 years, a British invention to set up an alliance with France and Russia against Germany, causing all the misery in Europe in the 20th century.

    Barnier revealed this week that Frage had told him that after Brexit the EU no longer will exist:


    For me that wishful thinking is not really a surprise, since that attitude has been the British attitude over the last 500 years. The British wet dream is to see the continent destroyed.

    Interesting detail: for the first time in history we are able to return the favor. British attitude has been to prevent European unity or that one party would become the strongest in Europe. That strategy has now reached end of life since the rise of the EU, not to mention a Russia that is impatient to join. Britain doesn’t have any other strategy, which perfectly explains the enormous confusion over the last three years over Brexit. Their first instinct was: “get out”. But now that the Brexit prank actually unexpectedly succeeded, against the will of “regular Westminster” (Cameron/Blair/May/Heseltine, that would have preferred to stay in and see it sabotaged from within and only then leave), it becomes apparent that the strategic outlook for Britain is bleak, to say the least. Inevitably they will become totally dependent on the US.

    The EU now has exactly the right enemy it needs to ascend to full super power status, and since we have two times as many whites as the US and three times as many if we include the Slavic world, that should be a piece of cake.

    The first thing we will do, right after the British have left, is start a revisionist internet campaign, using the growing hostility to finally get rid of all the WW1 and WW2 lies. Because they only serve our new enemy. And Vladimir Putin has all the paperwork to get the job done irrevocably. When he was on good terms with both France and Germany during the Iraq periode (PBM refused to participate), Russia already began lifting the veil over WW2:

    This was clearly intended against the US and to win favors with Germany. I think that if a real alliance EU-Russia will emerge, Russia will be willing to drop the holohoax. That will come as an enormous global shock.

    The next step will be that the EU, Russia and China will announce their withdrawal from all global institutions and set up new ones in Eurasia, with the US cordially invited. Turkey and Iran will support that, India probably as well. The use of the dollar will be criminalized in Eurasia.

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