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Half World's Fossil Fuel Assets Could Be Worthless by 2036

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Half World's Fossil Fuel Assets Could Be Worthless by 2036

Unread postby BrianC » Fri 05 Nov 2021, 15:25:33

Half World's Fossil Fuel Assets Could Become Worthless by 2036 in Net Zero Transition (theguardian.com) 7
Posted by msmash on Friday November 05, 2021 @02:46PM from the closer-look dept.
About half of the world's fossil fuel assets will be worthless by 2036 under a net zero transition, according to research. From a report:
Countries that are slow to decarbonise will suffer but early movers will profit; the study finds that renewables and freed-up investment will more than make up for the losses to the global economy. It highlights the risk of producing far more oil and gas than required for future demand, which is estimated to leave $11tn-$14tn in so-called stranded assets -- infrastructure, property and investments where the value has fallen so steeply they must be written off. The lead author, Jean-Francois Mercure of the University of Exeter, said the shift to clean energy would benefit the world economy overall, but it would need to be handled carefully to prevent regional pockets of misery and possible global instability. "In a worst-case scenario, people will keep investing in fossil fuels until suddenly the demand they expected does not materialise and they realise that what they own is worthless. Then we could see a financial crisis on the scale of 2008," he said, warning oil capitals such as Houston could suffer the same fate as Detroit after the decline of the US car industry unless the transition is carefully managed.
https://www.theguardian.com/environment ... transition
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Re: Half World's Fossil Fuel Assets Could Become Worthless b

Unread postby Pops » Fri 05 Nov 2021, 16:33:44

BrianC wrote: "In a worst-case scenario, people will keep investing in fossil fuels until suddenly the demand they expected does not materialise and they realise that what they own is worthless. Then we could see a financial crisis on the scale of 2008,"

Actually the worst case is people DO stop investing in fossils but governments like the US under the republicans plus Joe Coal Mansion don't go all out on renewables.

The depression we would fall into with a sudden drop in US shale of 5mm/bbls/day in ONE year plus a global decline of 6%-8% per year with zero fossil investment would make those stupid bets back in the oughts look like penny ante poker at the old folks home.

We're out on a limb. Fracking has never turned the profits it promised—or they wouldn't need to continuously borrow— the could simply re-invest a part of their profits. But LTO isn't profitable enough, it is dependent on US subsidizing the low interest rates and low returns everywhere else that causes institutions to throw good money after bad. It isn't necessarily low energy return on energy invested, who knows about that? But it is simple insufficient ROI in regular old dollars.

That tells us we are past the bubble. Our savior was a con-job. Sound familiar?

Generally Rs worry about energy cost more and Ds worry about warming more but 70% of all Americans are some or a lot worried about warming, the highest ever. The result will be more and more pressure to divest from carbon. But lots of people (like Coal Mansion and most elected Rs) are worried about their Sugar Daddy money. They will try to stop RE progress for the very reason posted above, money left on the table.

We need to ramp up diffuse energy collection at an even faster pace, much faster. Not just fast enough to outrun plain old decline, aka, the Red Queen, or to prevent the worst of warming but fast enough to outrun the failure to drill too.

A crazy thing to write

.
https://climatecommunication.yale.edu/p ... le-energy/
https://climatecommunication.yale.edu/p ... te-change/
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Re: Half World's Fossil Fuel Assets Could Become Worthless b

Unread postby jawagord » Fri 05 Nov 2021, 16:37:38

I suggest the worst-case scenario is when energy companies fail to invest in new supplies based upon the stranded assets fear, while world population growth continues to drive demand and prices up to record levels and throws the world into a new recession. Happy to own O&G stocks in Brandon's ESG world.

A lack of investment in new oil and gas supplies, amid a shift in focus to cleaner fuels, is likely to drive price volatility in the next decade as demand for traditional energy sources grows, senior industry executives said.

Global energy investment saw its biggest fall on record in 2020 when the COVID-19 pandemic hammered demand, while a push for energy transition to meet greener targets pulled more funds into renewable resources.

"It seems likely that rather than falling, global oil demand is set to continue to rise as new markets and consumers emerge," Ben Luckock, co-head of oil trading at Trafigura said at the annual APPEC 2021 conference.

"That raises the prospect of potential cycles of higher prices for traditional forms of energy.

"Whilst that might be beneficial to oil producers in the short term, it also means significant costs to the global economy which is in nobody's long-term interest," Luckock added.

https://www.reuters.com/business/energy ... 021-09-28/
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Re: Half World's Fossil Fuel Assets Could Become Worthless b

Unread postby Tanada » Fri 05 Nov 2021, 22:08:35

Pops wrote:
BrianC wrote: "In a worst-case scenario, people will keep investing in fossil fuels until suddenly the demand they expected does not materialise and they realise that what they own is worthless. Then we could see a financial crisis on the scale of 2008,"

Actually the worst case is people DO stop investing in fossils but governments like the US under the republicans plus Joe Coal Mansion don't go all out on renewables.

The depression we would fall into with a sudden drop in US shale of 5mm/bbls/day in ONE year plus a global decline of 6%-8% per year with zero fossil investment would make those stupid bets back in the oughts look like penny ante poker at the old folks home.

We're out on a limb. Fracking has never turned the profits it promised—or they wouldn't need to continuously borrow— the could simply re-invest a part of their profits. But LTO isn't profitable enough, it is dependent on US subsidizing the low interest rates and low returns everywhere else that causes institutions to throw good money after bad. It isn't necessarily low energy return on energy invested, who knows about that? But it is simple insufficient ROI in regular old dollars.

That tells us we are past the bubble. Our savior was a con-job. Sound familiar?

Generally Rs worry about energy cost more and Ds worry about warming more but 70% of all Americans are some or a lot worried about warming, the highest ever. The result will be more and more pressure to divest from carbon. But lots of people (like Coal Mansion and most elected Rs) are worried about their Sugar Daddy money. They will try to stop RE progress for the very reason posted above, money left on the table.

We need to ramp up diffuse energy collection at an even faster pace, much faster. Not just fast enough to outrun plain old decline, aka, the Red Queen, or to prevent the worst of warming but fast enough to outrun the failure to drill too.

A crazy thing to write

.
https://climatecommunication.yale.edu/p ... le-energy/
https://climatecommunication.yale.edu/p ... te-change/



I am not nearly the climate optimist you are Pops. For one thing, the USA or event the USA + EU are not the world by a very long distance. China and India are still investing a lot of cash into building new coal burning facilities and they are not limiting that to their own territory. East Africa has a major grid expansion boom going on right now financed largely by China. India is doing a lot of internal coal based construction projects as are several of the "Asian tigers" including Indonesia. In North America + Western Europe RE is a smoke screen for building many more natural gas burning facilities.

Western politicians give lots of lip service to climate change, but look at the record of what has actually been done. I don't think anyone can look at the real world data and claim we have made even the tiniest hint of progress since 1997.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby evilgenius » Sat 06 Nov 2021, 07:49:19

Any sort of depression that is indeed global, would open the door for the worst sort of world government options to compete alongside better options. All of us being in the same boat would provoke us to consider it, I think.

This is a tough one because it is a good idea to experiment. How do you determine which political ideas ought to be tabled?

There are impulses now being give the green light in this regard, that are bound to certain ideological centers. Those impulses were always considered restrained before, by what we call civilized society.

It may be that it is only this one man, Trump, that is at the center of everything? I'm not sure, however, that what isn't really going on is that people aren't discovering that they do need to think more these days, but that in their attempt to do so they have chosen the wrong sort of advisors. They are a lazy crowd, and they want to hear yes men.

When they do that, they can exist on vapor for a long time. They can exist on their version of the truth. They don't get too excited by truth, so it is no big deal to them. If they loved the truth, they would be able to see it when it was presented alongside all of those other competitors. It would stand out more for a greater number of people who are joining this bandwagon, I think.

First of all, they would be looking for it, and not for the fulfillment of their own story. They would stop talking about what they would like to do to all Liberals, or whatever group they hate, and begin to wonder if what they had to say sounded like a good idea or not, for one thing. It wouldn't be necessary for them to adopt every Liberal idea, only to function in their natural role, as some kind of arbiter that makes us take a look and be skeptical. In the proper frame, they make good skeptics. Run amok, they make poor masters.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby Pops » Sat 06 Nov 2021, 09:46:46

evilgenius wrote:Any sort of depression that is indeed global, would open the door for the worst sort of world government options .

I don't think I'm necessarily an optimist on warming, but I am certainly more of a pessimist that we can come together enough and in time. Really it is the conjunction of the two, warming and energy decline, the need to fuel transition before Murphy's Energy Trap kicks in. My first post here in 2005 said exactly that, "how much time to prepare before preparing is too expensive." I was thinking individually at that instant because I feared society at large would not be able to come together, and the societal situation is even worse now.

The energy trap is the idea that transition will cost a lot of energy making already expensive energy even more so, causing public opinion to turn against transition.

It isn't trump, he's just echoing the trailer park consensus; toilets that don't flush, windmill cancer, blah, blah. Conservative folks as a group simply worry relatively more about how much unleaded costs than about warming. Not a put-down, just the fact. Ds are the opposite. Most people worry about both to some extent; 70% now in fact, but can that overcome the great realty divide continuously reinforced by politicians paid not to agree? I don't think it can, certainly not proactively. When Mansion says wind is already being rolled out so why give it money, that is the republican view to a T, don't worry so much about the environment, protect jobs and investors (like Mansion) first and foremost and oh by the way keep pump prices down. But as my republican friends like to say, this is a republic, not a democracy, we hire people like mansion to represent us because they are so much wiser than us mere citizens.

There will be no preemptive sacrifice, Bush said it at the Rio Conference in 1992: "The American lifestyle is non-negotiable."

So I'm pretty pessimistic overall, not just that we won't limit warming but that we won't transition either. Tree huggers and coal rollers are not going to come together, we can't even agree to protect each other and ourselves from a virus, many preferring to pose on FB as great rebels, right up till they get sick. How are we going to fund a massive project of conservation and transition and ambient energy collection requiring actual sacrifice?
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Re: Half World's Fossil Fuel Assets Could Become Worthless b

Unread postby Plantagenet » Sun 07 Nov 2021, 02:31:05

Pops wrote:Actually the worst case is people DO stop investing in fossils but governments like the US under the republicans plus Joe Coal Mansion don't go all out on renewables.


Thats not the worst case.

The worst case is what we have right now.......Biden and the democrats betraying the American people and the entire planet by pretending that they want to stop using fossil fuel, while they secretly entreat the Saudis and OPEC to pump more oil so the US can continue BAU and continue the use of fossil fuels.

Biden secretly begs OPEC to pump more oil

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Re: Half World's Fossil Fuel Assets Could Become Worthless b

Unread postby Outcast_Searcher » Sun 07 Nov 2021, 16:11:01

Plantagenet wrote:
Pops wrote:Actually the worst case is people DO stop investing in fossils but governments like the US under the republicans plus Joe Coal Mansion don't go all out on renewables.


Thats not the worst case.

The worst case is what we have right now.......Biden and the democrats betraying the American people and the entire planet by pretending that they want to stop using fossil fuel, while they secretly entreat the Saudis and OPEC to pump more oil so the US can continue BAU and continue the use of fossil fuels.

Biden secretly begs OPEC to pump more oil

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SHEEESH!

Or, the usual mouth breathing, science denying GOP types saying anything they can to try to buy votes. Even as they make things worse.

Like, say, that BEV's cause cancer. :roll: :lol:

But your ilk would know NOTHING about that, right? :idea:
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Half World's Fossil Fuel Assets Could Become Worthless b

Unread postby Plantagenet » Sun 07 Nov 2021, 21:08:26

I'm very skeptical of any prediction or forecast that pretends to know what will be happening 10 or 20 years out into the future.

The prediction that half the world's fossil fuel assets will by worthless by 2036 assumes that all the world's governments will take steps to ban the use of fossil fuels to combat climate change.

But thats not what we see happening now......

We've got a UN climate change meeting happening right now in Glasgow, Scotland, and there's a proposal to ban the use of coal.

But the USA under Joe Biden joined with China, India, Russia and other big coal-consuming countries to say no to this idea.....thus ensuring the continued value of Coal Assets.

U.S.-Japan-China-Russia-and-India-missing-from-COP26-coal-pledge

Basically countries that don't use much coal pledged to not use coal, while countries who use coal wouldn't agree to stop using coal.

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If a progressive D leader like Joe Biden is unwilling to sign on to phasing out the use of coal now, and instead aligns the USA with China, India and Russia to support continuing to use coal, then how exactly will coal and other fossil fuel assets become worthless when huge amounts of coal consumption are now on track to continue into the future?

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Re: Half World's Fossil Fuel Assets Could Become Worthless b

Unread postby JuanP » Sun 07 Nov 2021, 22:13:24

Plantagenet wrote:I'm very skeptical of any prediction or forecast that pretends to know what will be happening 10 or 20 years out into the future.

The prediction that half the world's fossil fuel assets will by worthless by 2036 assumes that all the world's governments will take steps to ban the use of fossil fuels to combat climate change.

But thats not what we see happening now......

We've got a UN climate change meeting happening right now in Glasgow, Scotland, and there's a proposal to ban the use of coal.

But the USA under Joe Biden joined with China, India, Russia and other big coal-consuming countries to say no to this idea.....thus ensuring the continued value of Coal Assets.

U.S.-Japan-China-Russia-and-India-missing-from-COP26-coal-pledge

Basically countries that don't use much coal pledged to not use coal, while countries who use coal wouldn't agree to stop using coal.

If a progressive D leader like Joe Biden is unwilling to sign on to phasing out the use of coal now, and instead aligns the USA with China, India and Russia to support continuing to use coal, then how exactly will coal and other fossil fuel assets become worthless when huge amounts of coal consumption are now on track to continue into the future?

Cheers!


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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby evilgenius » Fri 19 Nov 2021, 07:29:31

I know that as oil prices come back from the low 80's, I am gradually building a position in RIG. I can see oil going over a hundred and ten dollars a barrel as inflation gets going. I am not investing heavily in conventional energy, but I am using this as a hedge against gas prices blowing up and harming my portfolio that much.

RIG is in the low 3's right now. If gas prices blow up, it could go to 7-8. If they fall, it could go to the low 2's. It looks like a good place to use leverage to protect myself from one type of bad story.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby gollum » Fri 19 Nov 2021, 11:25:26

Until there's something that can replace oil and coal at a lower cost than what we pay for them now they will still be a valuable asset. The politics might go back and forth as far as using them but at the end of the day people will always elect someone that promises to make sure it's cheap to heat their house and drive to work.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby theluckycountry » Fri 19 Nov 2021, 22:33:31

At some point in the future it will be the optimum time to buy several bafang electric bike conversion kits and an equal number of high capacity LiPO battery packs for them. After that point they may not even be available. The same would apply to decent solar panels, or any of the technologies promised to replace out dependence on fossil fuels but cannot be manufactured and distributed without tons of them.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby Pops » Sat 20 Nov 2021, 10:01:27

gollum wrote:Until there's something that can replace oil and coal at a lower cost

That isn't the problem, PV and wind are both already cheaper full cycle, and storage is catching up.

The problem isn't just 1.4 BILLION ICE vehicles and only .7% penetration of EVs.

The problem is a huge built infrastructure based on fossils—including every part of any city built in the last 100 years—from homes to factories (to be precise, the lack thereof as most factories are in China), offices, store, roads, down to electric grid too small to carry enough juice to charge batteries.
The problem is that every facet of "modern life" revolves around massive transportation. Everything—EVERYTHING— is made somewhere else. We don't even make a living near home, the average commute was almost half an hour in 2019. The problem is a 9-5 lifestyle designed by middle managers to conform that creates the duck curve rather than following the insolation curve

That is not going to change in a dozen years.

We can't simply swap out fossils for renewables. Anyone who has ever looked into installing renewables knows the first thing they were told was to audit their use and find places to conserve, transitioning an entire civilization is no different.

It's not that the required change is physically impossible or even beyond our technical ability, the problem is we as a civilization are simply too self-involved and self-congratulating to make the sacrifice. Without reading I'm sure that planagent's post blames democrats, even though the worst 4 years for conservation is just past and we've not recovered yet. That's because one party in the US is four square behind fossils because that's where the money is. The other too involved with placating every possible identity group to pay attention to existential threats and even when they try, they know it must be at zero cost to the economy and no sweat off any voter's brow or they won't get to play next time.

In the US congress a "centrist" is someone who owns a coal company

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Last edited by Pops on Sat 20 Nov 2021, 10:24:18, edited 1 time in total.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby evilgenius » Sat 20 Nov 2021, 10:20:30

You don't get anywhere by being Achilles. Participation means owning. I am so naturally a socialist. It took me a long time to admit that to myself.

That's why I think the world of robots has to come with at least some fundamental changes to what we consider comprises a corporation. I think we are missing at least one class of stock, which would be the one that the people who used to work would own, and that approximated their old position in the game.

They could sell it, but it could not be taken from them. The dividends are what they would live from. There would have to be rules about not being able to own more than so many otherwise normal shares in corporations, common or preferred, if a person also owned this type.

You want people to be able to invest as individuals, but you don't want the bosses getting that close to the heart of those people. I say this because workers quite naturally have a differing view of risk than management. Workers are workers because they don't want the risk of working for themselves, so to speak. They, therefore, require a deal like this rather than a cold slap in the face. And everybody must be dealt with.

Otherwise, yes, you would think the naturally lower, but more appealing to those who are that risk averse, return would tend to help classify what type of person owned this type of stock.

It's a different approach than UBI. Some sort of UBI might be necessary, but to participate one must own. It simply means that the entire structure must, then, acknowledge you. That other way, of the UBI, doesn't work on that level. It is for beggars.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby Outcast_Searcher » Sat 20 Nov 2021, 16:08:28

evilgenius wrote:That's why I think the world of robots has to come with at least some fundamental changes to what we consider comprises a corporation. I think we are missing at least one class of stock, which would be the one that the people who used to work would own, and that approximated their old position in the game.

They could sell it, but it could not be taken from them. The dividends are what they would live from. There would have to be rules about not being able to own more than so many otherwise normal shares in corporations, common or preferred, if a person also owned this type.

You want people to be able to invest as individuals, but you don't want the bosses getting that close to the heart of those people. I say this because workers quite naturally have a differing view of risk than management. Workers are workers because they don't want the risk of working for themselves, so to speak. They, therefore, require a deal like this rather than a cold slap in the face. And everybody must be dealt with.

Otherwise, yes, you would think the naturally lower, but more appealing to those who are that risk averse, return would tend to help classify what type of person owned this type of stock.

It's a different approach than UBI. Some sort of UBI might be necessary, but to participate one must own. It simply means that the entire structure must, then, acknowledge you. That other way, of the UBI, doesn't work on that level. It is for beggars.

That's an interesting and perhaps very appropriate idea for the transitional phase (re the "employment credit" stock, for want of a more precise name), while robots are taking lots of human jobs, and new jobs for people with fairly low skills aren't sufficient to take their place -- in the early decades. For example, one scary thing (to me, in my 60's) is how so very fast things change massively these days, where a good education can rather rapidly become mostly obsolete, which IMO is very scary, and not the fault of someone who earned the education in something with good prospects at the time they were in school.

HOWEVER, once robots are doing so many jobs that MANY people are just caught in a structural unemployment vice from birth, that's insufficient. For the people able to learn what's needed for very highly skilled jobs and highly creative jobs, they're set. Such jobs pay well and they can invest, etc.

But for everyone else, either robots will be doing the jobs they could do at MUCH lower cost, or their wages will be unlivable. Either way, it's not like such people will be building up much working credit or afford to be able to invest in stock of any kind -- without some sort of UBI (say, that only goes to the unemployed), or similar. If things are like that for people who are leaving school, they never get a chance.

Obviously society could focus on education and lifelong learning, but then you have the fact that a large proportion of people simply aren't WIRED to be, say, strong STEM employees. And how large will the market for, say, artists be in a world without endless funds the government doesn't need?

I still think that a tax on the robots is the way to go to provide that sort of income when the time comes (call it UBI light, until a better way is found), but when I suggest that I get lots of hate from various folks, though thus far, not much in the way of realistic, much less better ideas for solutions, IMO. :idea:

I'm a capitalist. But just letting the masses starve or live in hovels like peasants is unacceptable, IMO, if the unemployment overall makes finding and keeping good jobs something the masses have little ability to do. (Vs. people unwilling to work, etc).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby Pops » Sat 20 Nov 2021, 17:04:00

Eventually a capitalist world made by robots and AI will grind to a halt. What would be the purpose of producing with no consumers aside from armies and lawyers? Come to think on it, why wouldn't armies and lawyers be AI too? The .1% spend huge sums to avoid taxes of any kind, they aren't going to roll over for the taxing them to turn around and give it out as UBI or universal babysitting—if they were that generous they would have been paying good wages and their taxes all along.

Consider how much of the big economies are post industrial now. I think 20% of the US economy is just commission: finance, insurance, and real estate, just churn. A growing amount is "health" and some now want the government to provide babysitters so moms (or dads) can afford to go to their menial jobs—while pumping out babies to become the next generation of consumers... that won't be able to earrn a wage to consume anything.

I'm more socialist all the time too. I still like private ownership, I like the market to the extent it is efficient. I like deciding what it is I do for a living, But end-stge capitalism is no longer efficient. Not when corporations can buy congressmen, operate defacto monopolies, absorb competitors, hide profit offshore... The global minimum tax is a good step if it is ever implemented—but half the US congress is already going crazy over funding our tax own collection system, refer back to buying congressmen.

I just have a hard time wrapping my mind around what comes next, especially in the archaic US republic. The idea was originally that we would elect wise leaders to govern but this aint that. Now a vanishing minority of primary voters elect fringe candidates who are affirmed in elections rigged by gerrymandering.

Oh, and peak fossils and global warming

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Re: Half World's Fossil Fuel Assets Could Be Worthless by 20

Unread postby evilgenius » Sun 21 Nov 2021, 09:31:56

I like the idea of governments capitalizing their citizens, very much like banks do, but without restriction. The program could work something like this: when you first become of age, you are eligible to borrow for a purpose. The purpose would be to borrow toward something for which the money you borrowed was actually capital.

I think of the example at that age as being able to borrow enough to buy up the stock for the high school concession stand. Then you sell those things, and pay off the loan. Your credit goes up. If you borrow and fail, or borrow and don't pay the loan back, you go into a period where you don't have credit with the system. You credit keeps going up, as you keep showing that you can operate this way. If you emerge from a period of no credit, society will figure out the rules of starting over. They could be fair.

If you need more, which most people who are serious about going into business might, then you might use a bank. If you were concerned about yourself in an AI world, you might use it to buy the worker's position type of stock, that had a poor return, in terms of capital gain, but paid you fairly well now, with dividends. There would be all sorts of arbitrage advantages and disadvantages that took place over time, as not only the market for the class of stock that represented the worker's old position underwent market based fluctuations, but also as anything that touched upon it did. Other people, who might not see themselves as such "sticks in the mud," might not want to ordinarily participate, but, just like the Yen carry trade, there will be times when they won't be able to resist it.

I think, to have the best world, you have to recognize human nature, the nature of true self-referencing consciousness, and run with it. It doesn't make any sense to deny it, only to give it the best places to run. Real management is about empowerment. If we look upon the government as our managers, we should be asking for, at the very least, this sort of thing, when we do face what AI is going to do, in only a few years.

UBI is almost only for animals, for cattle. This is for men. I'm not actually saying that there should be no payment of the sort that goes on with UBI. I'm saying that there is absolutely no need to call it universal. We can keep that for the weakest of us. That way, we don't steal something from them by accident, something about what their actual plight should say to the rest of us. You know, something to do with their dignity.
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