Occupy This and That

Anyone thinking that there is no relationship between the horizontal axis and vertical axis data in the following charts would be correct. Visually the points appear as if completely randomly scattered on canvas, perhaps artistically stylish, but otherwise insignificant:

Vertical - Real GDP 2010, Horizontal - % of society thriving in 2009, markers represent world countries, correlation -0.1848.

Vertical - Real GDP 2010, horizontal - Happy Planet Index 2009, markers represent world countries, correlation 0.0228.

Vertical - Real GDP 2010, horizontal - Satisfaction with Life Index 2006, markers represent world countries, correlation -0.2049.

Insignificant, really? Let's scroll back and read the explanations below the charts. And then let's go to the links and read about the data behind the charts. Turns out that the data is significant in a funny kind of a way - it pulls the rug out from under the modern economics and politics.
How?
"Economic Growth", measured as a percentage change in the Gross Domestic Product (GDP) or Gross National Product (GNP), has become to be used as a mantra by politicians and economists, and it is now presented as the very basis of our existence. Without Economic Growth, supposedly all bad things will happen, starting with the world itself falling apart. Therefore the central job description for politicians has become securing a continuous Economic Growth, aided with advice from their economists. For the charts above, Real GDP was used as supposedly it, being adjusted for inflation or deflation, is more accurate in measuring Economic Growth.
People of all nations seek more happiness in their lives as that is the most basic and common urge for everyone. On the horizontal axis, various measures of nations' happiness is plotted such as a Percentage of Society Thriving, Happy Planet index, and Satisfaction with Life index.
We could say that while the vertical axis on all these charts presents the aims of the nations' rulers, the horizontal axis presents the aims of the people being ruled. And clearly, these two aims seem to be completely out of sync and completely uncorrelated!
If there is no relationship between Economic Growth and people's perception of  happiness, how come Economic Growth is still the main agenda of all the world rulers? Aren't we supposed to live in democratic world in which we choose our own leaders who are supposed to lead us towards more happiness?
Could it be because income taxes to sustain governments and leaders are levied on the proceeds arising from Economic Growth? Meaning the leaders are in no way motivated by leading their nations towards more happiness, but by collecting more tax revenues via a continuous process of Economic Growth instead?
Could it be that Occupy This and That protests are happening because of the fundamental disconnect between the leaders' aims, and of the people being led?

Alternatives to Gold?

Image taken from Wikipedia article about Maslow's hierarchy of needs

The phrase "gold bubble" returns over 41 million hits on Google. There are websites, blogs, articles, analyses, videos and whatever devoted to covering the big question whether Gold is in a bubble or not. If it is, when will this bubble pop, and if it is not then how high can its price possibly go? Clearly it is a topic of great importance to very many people and not what I'd like to write about here. This post is about the role Gold is playing and why do we really need it, or do we really need it?
Looking at Maslow's hierarchy of needs, arranged as a pyramid (above), it is obvious that Gold plays no role in satisfying any of our fundamental needs, whether the most basic ones or the higher aims. We can not breathe Gold, we can not eat it, and we can not drink it. Despite being perceived as sexy, Gold can not satisfy us sexually. It can not keep us warm, and it can not aid us in excretion. Nor can it provide us with any of the higher levels of needs such as Safety, Love and belonging, Esteem, or Self-actualization. All we can conclude from this is that Gold is completely useless in the context of satisfying our needs.
Or is it?
It's also clear that Gold, obviously behaving as medium of exchange and storage of wealth as of late again, gives us the opportunity to purchase any of these items; we can use Gold to satisfy our needs indirectly. When the world changes as it always does, Gold is supposed to maintain its value, enabling us to sustain ourselves in the future.
When changes around us are caused by scarcity of resources (Peak Oil, rare earths), weather patterns (Global Warming), or economy (credit bubble, unemployment), Gold, by maintaining its value, will help us overcome the difficult times.
But, again, what we really need is not Gold but the meeting of our needs as defined by Maslow's pyramid above. If there were other a ways to secure the resources to meeting our needs, Gold would have no particular value.
The alternatives to Gold, as can be concluded from this logic, are housing structures located away from harm's way such as flooding, and constructed to withstand adverse weather such as tornadoes. One of Gold's alternatives is also domestic, localized food production that would not rely on external factors such as fuel for transportation or cheap labor from Mexico. Another alternative to Gold would be durable clothing that does not wear quickly or shoes that last many years of usage.
There are many alternatives to Gold if we stop viewing it as a speculative commodity and start viewing it as a storage of wealth and medium of exchange. And when we start doing that we realize that the real alternatives to Gold are embedded into lower levels of Maslow's hierarchy of needs.

Are Jobs Inevitable?

Cartoon from http://www.glasbergen.com/job-interview-cartoons/

Listening to politicians, it sounds like job creation is the number one priority. Both in the USA as well as in the EU. The logic goes that everyone should have jobs and earn income so that they can spend the money in economy and collectively make economies grow again. Growing economies then allow banks to recapitalize, bad loans become good ones, uncertainties and insecurities will vanish, everything becomes as before again.
But let's stop and think about it a bit. Despite politicians thinking that people need jobs - do people actually need jobs?
In a Capitalistic society, via specialization, different people have different roles to fill. Some work in manufacturing, some in service business, some in the government. Supposedly they all contribute with something and by selling the products of their labor, they benefit from the productivity of others while giving them the excess productivity of their own labor. As a result, everyone supposedly wins, and the society as a whole becomes a busy ant-hill, everyone busy laboring with no time to stop and think about it all.
In such an ant-hill, specialization and exchange of production is facilitated by the usage of money. Product or service is exchanged for money, another product or service can be purchased for the money, person's labor gets compensated with money, and person can buy everything necessary to sustain themselves for that money.
But what is it that we really need to sustain ourselves? Definitely it is not money as money is just the medium of exchange for which we buy the sustenance. So money is not what we need but we need food, shelter, clothing, energy, furniture etc. And once the major items such as a home or furniture have been acquired, what remains is mostly food and energy.
Let's repeat this again: we need jobs to buy food and energy to sustain ourselves. And for other things if we want those other things. So what if there was a way to secure food without having to go to work to earn money? So that we would not need to go to the stores in order to buy food? Food that is shipped to us from big factory farms half way across the world?
What if there was local food readily available, in our own backyards?
If that was possible, the traditional pyramid structure in food production and society's setup would be eliminated. People would not need jobs to live, and to live well, perhaps much better than when having jobs that require commuting 10 hours a day and meeting their families only at bedtime? A huge layer of dead weight would be cut out of the picture. A huge amount of scarce energy resources would no longer be needed. People would have all that time available to think about their lives, and to actually enjoy their lives.
Or, in other words, we need backyard food production in order to not need the jobs that are not available anyway, as the ever-expanding economic model clearly can no longer be sustained anyway. We need backyard food production so that we could actually enjoy our lives and exit the misery of having the jobs that are being sold to us as a number one priority.

The Next Boom

Having written about impossibility of endless growth within limited space, it's time to turn our attention to the next boom. No, we will not break the external limits to growth nor will we advocate suicide  by encouraging more consumption in the traditional sense. Instead, we'll look into morphing the current growth model, which is clearly hitting the walls of our test tube, into something sustainable, at least for a while longer.

As we saw, whereas the currently ending boom has been all about consuming more and more energy and other resources in order to make our daily lives ever more rewarding and comfortable, the accelerating consumption aspect is the part which can not continue for very much longer. Obviously Oil has become a scarce resource, we have started to run out of fresh water supplies, and financially, after the future weights of various iterations of TARPs, EFSFs and whatnots have been laid on our shoulders, we are being sucked dry of any remaining productive means. The signs of "no more" are limiting our prospects in every direction we look while our status quo has become to be defined by ever-accelerating growth in consumption. So how do you grow and evolve in a situation where the fundamental aspect defining the process - ever-increasing consumption of resources - is becoming impossible to continue? Where are we required to go in order to continue the process of growth and evolution without hitting the walls?

Our current model of operation across different fields of life has been mostly defined by a pyramid-like hierarchy, a vertically structured model. Something like this:

In a pyramid model, few at the top coordinate the many at the bottom. Information is passed from bottom to the top while orders (directives, laws, regulations, policies, etc.) are passed from top down.

This structure applies to most traditional organizations such as societies, governments, businesses, entire countries, and even families, at least the ones with clearly defined "heads". Similarly, the same structure, in different forms, usually applies to various processes such as agriculture, retailing, education, etc.

While this kind of structure has been serving us well while the limits to growth could be ignored, the dead weight of the pyramid structure is becoming increasingly apparent when walls of resource limitations are being hit. Perhaps we don't need so many middlemen in so many areas of life to "serve us" in the era of communications and technology? Perhaps there are simpler, leaner, more efficient ways to do things?

I will not go into specific areas in this post - these are topics for later writings. Here I'd simply like to introduce a different model that would allow a much leaner operation:

When information is organized to be always easily accessible, external rigid structures are not necessary to "manage" it for us; information management is done by the best experts at that - computers and technology. 

The leaner mode will allow us to avoid hitting the walls of our test-tube very hard in the immediate future by allowing us to eliminate waste of resources. And by this it will help to extend the growth phase within the limited resources available to us. By becoming leaner and more efficient, we will be buying more time for ourselves. It will not be a final solution to the eternal growing process, but we should have more time available to eventually break out of the test tube, when we are ready for that. Until breaking out of the limits, the leaner mode of operation will simply allow us to fit more of us into our test tube. Our test tube will not become bigger, but it will be populated more densely, comfortably.
So how does the leaner mode of operation apply to the "Next Boom" topic? Here's how - the next boom is all about increasing efficiency, integration of different systems, direct contact and communications leaving out complex bureaucracies, direct computerized voting systems for decision-making processes, etc. Contrary to the concept of economic growth, evolution towards the leaner mode will not necessarily mean increased GDP (market value of all final goods and services produced within a country in a given period). Rather, it means decreasing GDP while every unit of resources will go further. Sounds like deflation, the process dreaded by the current crop of politicians and economists, but within the concept of leaner operation, deflation via becoming more efficient has to become a rule. At least per capita basis.
Looking around us, this leaner mode of operation is clearly replacing the pyramid structures already, everywhere. Some examples are the latest trends in publishing - from large publishing houses towards self-publishing, from mass-manufacturing to 3D printing, from centralized to localized energy production using solar, wind, and other renewable resources efficiently, from industrial agriculture to local food production and marketing, from Central Banking to BitCoin-like monetary system disposing of central administrators, and many more.
Pyramids fight back, of course, as they do not want to loose their status quo's. Transformation process is never smooth. In order to build something new, old structure taking up its space is required to be disposed of. And all that is clearly happening everywhere around us already. More on these topics will be covered in this blog in near future.

Netting Problem

It is August in a small town on the South Coast of France. Holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt.
Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a €100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.
The hotel owner takes the banknote in a hurry and rushes to his meat supplier to whom he owes €100.
The butcher takes the money and races to his supplier to pay his debt.
The wholesaler rushes to the farmer to pay €100 for pigs he purchased some time ago.
The farmer triumphantly gives the €100 note to a local prostitute who gave him her services on credit.
The prostitute goes quickly to the hotel, as she owed the hotel for her hourly room use to entertain clients. She places the €100 note on the reception counter.
At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his €100 back and departs.
There was neither income nor profit. But everyone no longer has any debt and the small townspeople look optimistically towards their future.

- story borrowed from http://emilie.hermit.net/content/recirculation-funds

The reasoning behind the ocean of derivatives and other financial obligations floating around in the world is that they mostly cancel each other out. That's the excuse because otherwise their amount (arguably some 20 times the total world economy) wouldn't make any sense. It's like adding up all €100 debts from the story above, and arriving at €400 in total debt, all canceled out by one ring of €100 transactions:

1. Hotel Owner's debt to Meat Supplier: €100
2. Meat Supplier's debt to Farmer: €100
3. Farmer's debt to Prostitute: €100
4. Prostitute's debt to Hotel Owner: €100

When €400 becomes €0 after canceling out all transactions, this is called netting. Everything is fine and supposedly there's nothing to worry about. A situation which can be illustrated like this:

Obligations cancel each other out thanks to netting, everyone involved is supposed to win by having their risks managed via a multitude of financial instruments as insurance.

Clearly everything is fine when all people involved have jobs, all loan payments are made on-time, sky is blue and grass is green, and this model is humming along as smoothly any well-oiled machinery. So let's introduce a Devil's Advocate and see what happens. Will the model continue working when the sky is no longer blue or grass is no longer green?
Let's see what happens with the above story when the Meat Supplier decides to take a trip to Greece instead of paying off his debt to the Farmer. Turns out that only €100 in debt gets canceled, leaving €300 still lurking around. And with no way to pay as the income was taken out of the netting universe.
In the world of modern finance, this is precisely the problem that the world is experiencing - failed institutions, failed countries, failed promises, and failed ways to fulfill the promises. Something like this:

Disappearance of a few participants in our formerly ideal circle makes collateral disappear and enormously increases the stress on the rest of the market participants. As the collateral disappears, remaining participants become suspect of not being able to meet their obligations.

So what do you do when the world-as-we-knew-it no longer seems to work? Will you tax the rest of the society to pay off Meat Supplier's debt to the Farmer? I guess in a truly altruistic or kleptocratic society this is possible, and if people decide that they want to subsidize Meat Supplier's vacation time or steal from others to subsidize that, they can do it.
But clearly things are very different when the same happens to the world of financial derivatives. Will the world's taxpayers be altruistic enough to pay off debts that could be measured on the scale of the World's GDP? Or if it's stolen from them forcefully via corruption, would it still be possible? Isn't it completely foolish to even think in that direction?
Or, the same question in other words: what should be the size of EFSF to make it work? 10% of the world's GDP? 20%? 50%? Is it even possible to know the answer to this question???

Thinking Outsourced

In the old times, people used to get stressed out when forced to think too much. In modern times, thinking has been outsourced, leaving people free to just enjoy living.

In a modern economy, specialization allows ever greater efficiencies, growth, and more and more happiness for everyone involved. This is because people who are good at one thing perform that one thing, and people who are good at something else perform that something else. Everyone does what they know best, and everyone collectively wins. This is the concept at the heart of Capitalism.
Shoemaker outsources shoe-selling to a seller, and expects the seller to sell the shoes efficiently and at good profit margins. Shoe seller has in turn outsourced shoe-making to shoemakers and expects them to make good shoes to sell. Both rely on each-other's work, and at the end both win. Whether the concept of specialization for overall efficiency always universally applies is really a topic for another time. Today let's think about thinking.
Modern Democracy has clearly arisen from this very same Capitalist concept of outsourcing certain activities to be more efficient in some other activities. In a modern Democracy, voters outsource their thinking to elected officials - politicians - who are contracted to do people's thinking for them.Voters have to do only a little bit of thinking to choose who is it who is going to be responsible for thinking for the voter, after which the voters can delegate their thinking to this person - via a procedure called "Elections" - and turn their own brains off. Now it's up to the person to whom thinking has been outsourced to to perform the client's thinking for the client.
Evolution via specialization and outsourcing of thinking has evolved over the years rapidly. People not required to think have been evolving from dumb to dumber, and have had the luxury to engage themselves in more entertaining distractions such as watching TV, gossiping, and simply having fun. No more stress due to too much thinking!

Possible Future Scenarios

Image from http://www.get-real.dk/tak/godt-nytar

Maybe I will write a post about the Red Queen's Race at some point in the future to explain where we  "run" with our world at this time, but then again there are similar posts all over the Internet (like this one about economy). To my credit, I put together the post about unsustainability of continuous growth in a finite world. So here's, without much more fanfare, a post about where we may be headed after our Red Queen's Race.
With my friend Carl, we have spent altogether many days talking, and weeks and months thinking about the future scenarios. Considering all the research that has been done on the topic, it looks like the possible futures can be broadly divided into the following four categories:

1. Anarchy, chaos

As resources run out, the resources to maintain orderly societies also run out. Roads and bridges fall apart, police, firemen and ambulances no longer show up when needed, streetlights go dark, etc. Unfortunately, all this can already be witnessed happening in different Western countries.
Perhaps one lucky aspect about this scenario in its pure form is that hopefully also military will have no resources left to try anything crazy. However, usually military is in the position to grab more for themselves than is their share simply because they have the power to do so. So perhaps this is too much to hope for.
In the state of anarchy, people take things into their own hands, and will grab resources as needed from someplace where they are available. As recent social unrest breakouts around the world (including highly developed Western countries such as UK or Germany) indicate, people in position of nothing to loose are completely willing to forget about laws that do not seem to do any good for them.
Anarchy and chaos will probably result in a primitive, uncoordinated tribal world. Perhaps something like a combination of Mad Max and Lord of the Flies - everyone for themselves in order to grab the last drop of livelihood, and as much power within tribes as possible to make sure small-scale kleptocracy is successful.

2. War, planned or unplanned

The realization that infinite growth within limited means is impossible first came in the '60s and '70's. Since then, there have been military plans in place to deal with the problem should the need arise. The plans are not inter-disciplinary ones carefully allocating a piece of blue sky and green grass for everyone; the plans are military and aim to deal with the problem via elimination of the problem - the excess population. 

War, of course, can also start in an unplanned manner. Our first, the Anarchy, scenario can easily turn into the second one if the resources to sustain military powers do not fade away, or if the military is capable of grabbing or retaining enough to start a war.
What is unfortunate is the fact that so far, only military seems to have a clear action plan what to do when there will be too many people around to share the limited resources available to all of us. Keeping eyes and ears open today, almost no-one in politics, business, or media seems to have any idea that thinking about these things is even necessary.
For politicians laboring in our democratic world, thinking too far ahead, further than the next election, is something completely undesirable as the politics works based on tomorrow's promises. For businessmen, the prevailing business model of late seems to be increasingly "what's behind my teeth is mine", so thinking further than that is counter-productive as there will always be competition perfectly willing to think and act shorter-term. And media only trumpets scandals as these sell best. Our World hitting its limits to growth has not become scandalous enough.

3. Deus Ex Machina

This is the scenario that most likely will not happen. Well, at least if a person does not belong to one of the following groups of believers. In which case it still most likely will not happen despite how strongly one feels about it. In a few words, this is the scenario where help is expected from the outside and the person does not need to do anything. Indeed - it is very unlikely to happen.

Throughout history, there have been people who don't care about facts and logic because they have their own, "better" idea about the world. Some late politicians come to mind as perfect examples of this kind of thinking. Hence our first group within this category - The Total Denialists. For these people, everything is just fine and there are no problems anywhere.  For these people, high Oil and food prices, increasing global temperatures, social unrest or worldwide banking crises do not exist. There's just some temporary problems that can be explained away and fixed easily. Facts pointing at warming temperatures, melting polar ice, or oil production still at the level of five years ago with increasing demand are easily brushed away as unimportant that do not register in their minds not a bit.

The second group, The Hopeful, are capable of perceiving the problems, but rely on someone else, most likely the Government, to take care of them. They agree that, yes, there may indeed be a banking crisis or melting glaciers, but Government will pass this or that act and everything will be just fine. Again, the individual person does not really need to do anything, definitely not change their own thinking - it will all be taken care for them by someone else. The King or the President has the job to do all of the population's thinking for everyone, isn't it so?
And then there is The Crazy Bunch, the most imaginative, although probably the least useful in any constructive way. Their strong belief is that, again, nothing needs to be done now by anyone, not even the Government, because some magic solution from somewhere else will appear. Be it Cold Fusion, Christ re-appearing to save us all, or space aliens riding on comets.

4. The Intelligent Way Out

If there are any actual plans to deal with our current problems from any other fields besides military, we are not aware of them. In this case, please, enlighten us. 

A major worldwide and coordinated plan to deal with our current and fast-approaching crisis' is badly needed. This plan can not be put together by politicians or bankers who are only capable of "saving" the world economy by pushing it into a much more horrible chaos. Neither can this plan assume "growing out" of the problem as the post about bacteria in the test tube should explain, and that should be intuitively obvious.
The solution we are talking about here has to be devised carefully by scientists to consider all the knowledge and resources currently available. There has to be a clear plan what to do with our remaining resources to make sure that either the resource-limits are not met, or that we can somehow grow out of the limiting factors by changing the rules of the game, to be discussed in a later post.

The above four categories seem to cover all broad possibilities. Of course there may  happen any combination of these, or different scenarios may play out in different geographic areas, but still it looks like all that can happen will probably fall within these outlines.

Credits

If this blog is to continue instead of disappearing after a few posts like most of them do, I feel this is the time to give some credit for what is going to be written about in here. Disclaimer: Not even attempting to get this list complete at this time, it will be updated as necessary.

My friend Carl

A human being with a mind and heart that have no limits. Having been through thick and thin in life, he has experienced it from so many facets that his knowledge and experience seem almost infinite. Capable of  navigating between different disciplines fluently, he is also extremely skilled at finding and incorporating information on topics completely new to him. Discussions with Carl have led to a significant amount of what is going to be written about on this blog.

Mike Shedlock

One of the world's most read economic bloggers, he has led me to Austrian school of economics, on top of which he himself has made some very serious contributions. I met Mike briefly a few months ago, but clearly there was not enough time and too much to talk. I truly hope that his 12 points will be taken seriously as soon as possible by people in power both in the US as well as in Europe and elsewhere.

Michael C. Ruppert

I have never met Mike Ruppert, but feel like I almost know him personally, having followed his doings over ten years. His latest and greatest, the Collapse movie, is a must-see. To be honest, Mike is frequently way too pessimistic for my tastes but, unfortunately, he's been largely correct.

Ludwig von Mises Institute

Not all is gold that shines, but the Institute's website is a tremendous resource on Austrian school of economics. With my background from engineering, it has been tough to completely accept Keynesianism and its Elastic Measurement System, Mises' teachings just make much more sense scientifically.

Robert Rapier

An invaluable source for fundamental energy-related understanding and ideas, Robert helps greatly to put things in perspective - what is important and what not, what causes what and how, why something should be done and how.

Bill Bonner

An excellent thinker, writer, communicator, and a "big picture" seer.

Vasistha's Yoga

If a person reads just one book in their the entire life, this should be the book to read. But unlike all regular books, this one should be read no more than one page a day to really digest it.

Infinite Growth Within Finite World?

"I'd like to share a revelation that I've had during my time here. It came to me when I tried to classify your species and I realized that you're not actually mammals. Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment but you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is? A virus. Human beings are a disease, a cancer of this planet."

--Agent Smith (The Matrix)

The Rosy Picture
From the "On-line Textbook of Bacteriology" we learn that in a closed system such as a test tube, and a favorable environment, bacteria will grow happily. Initially, in the lag phase, it spends some time to adjust itself to its newfound environment. Then the cells start dividing regularly, and the bacteria will start doubling its population at regular intervals, exponentially. Something like this:

Exponential growth - the increase in the end result continuously accelerates

Looking at this chart, fairy tales and the words "... and they lived happily ever after" come to mind. Nice if it only was so simple!
However, this is precisely how we have come to see our world today. Towards more and more growth, more consumption, more resources, more this and that. Even increasingly more and more money in our pockets as inflation causes it's purchasing power to evaporate, requiring us to carry more and more around with us.
So if everything is so rosy as officially presented, why does it feel like something's a bit fishy with this picture? Why are there austerity measures and strikes against them? Why are there debts that can not be paid? Why are the food and fuel prices high and getting higher every year?
Conventional media does not seem to have the answers as more and more of the same is fed to us on a continuous basis. Perhaps we need to turn back to our bacteriology book and apply the high science of biology to the human world. Because aren't humans part of the biology of this world? So let's go to the chapter about "The Growth of Bacterial Populations", page 3.

Not So Rosy Picture
What we learn from the book is that in a closed system such as our test tube from above, brakes to growth will be applied eventually as the resources for growth are being depleted. And isn't it obvious? A test tube is, after all, just a test tube and not an infinitely expanding balloon! The guys living in there will obviously run out of real estate sooner or later! Bingo!
Having learned this fact, applying brakes to our "Happily ever after" chart makes it look quite a bit uglier:

Growth and collapse of bacteria population in a closed system

Turns out that after the initial growth comes a stationary period during which the limits to the "happily ever after" model are being tested and applied. What follows is the death period, clearly the exact opposite of the initially suggested happy ending. Apparently when limits have been hit but normalcy has been defined by a continuous growth and the growth processes still want to carry on, the population will actually decrease when growth suddenly becomes impossible. Death phase also takes place exponentially in a continuously accelerating manner.

Thoughts

The point to take home from here is simple - do not live so that your livelihood is dependent on exponential growth within limited resources, because that is the formula to death. For growth to continue indefinitely, it's important to make sure that there are no limits to growth. Perhaps there is an exit door, but we'll look at that at another time.

Open Source Money

Everyone has probably heard about Open Source software, and thinks that they understand how it differs from "regular" software that you buy with your hard-earned money. Many seem to be of opinion that Open Source means that it costs nothing and is worth precisely as much as it costs. Perhaps current economy will open many eyes regarding Open Source software, but let's stop the discussing by mentioning just a few Open Source software projects:

1. Linux Operating System, not only providing a very serious competition to Apple OSX and Microsoft Windows, but perhaps more importantly supplying both Apple and Microsoft with innovative ideas that they can incorporate into their own projects
2. Apache Web Server, responsible for running majority of the world's websites and most frequently running on Linux Operating System
3. Firefox web browser, running in most of the world's computers to access the www content

To reiterate the above points - in one way or another, whether they acknowledge it or not, most of the people currently living in our world and using computers daily are daily users of Open Source software.

But Open Source approach is not limited to only software. From Wikipedia:

The term open source describes practices in production and development that promote access to the end product's source materials.

Apparently anything can qualify as Open Source and there are many examples of Open Source projects available, ranging from the GEK gasifier, a small wood-gas-production system, to Open Cola, a soft drink recipe.

But that is not what I intended to write about here. My intention was to write about a significant sneaky feature of openness whereby potential enemies are turned into collaborators.

Closed Source

In the Closed-Source world, products are developed by a small group of developers and then protected with secrets, patents, or armies. However powerful, the group of developers and the protection schemes can only be limited. Microsoft and Apple are well capitalized to hire plenty of people to develop and protect, but are they well capitalized to pay off all the would-be hackers in the world? Most likely not.

Closed Source model - limited number of insiders (developers, green area) protects against unlimited number of outsiders (attackers, red dots).

And this is where the major weakness of Closed Source lies - it is financially impossible to protect against all potential threats. And this is not some theoretical weakness; it is a mathematical fact. Microsoft can double all its products' prices and double the amount of developers, but will that suffice against potential threats directed against its products from the rest of the world's population, currently numbered at 6.9 billion? Clearly not. 

Open Source

In the Open Source world, everything about the "thing" is open to the world. There are no patent protections, secret formulas, or compiled and unreadable software code. Every aspect is available to everyone in the world, 6.9 billion people, 24/7. Compared to Closed Source, what are the chances that bugs go unseen, only to be discovered by potential attackers? Probably much lower.

Open Source model - everyone, including the potential attackers, gets a chance to contribute.

Would-be hackers in the Closed Source world are very likely regular users of the products in the Open Source world. Instead of amusing themselves by attacking and abusing vulnerabilities, they are more likely to be hard at work in making sure that the Open-Source product can not be attacked by hackers such as themselves. Enemies become friends and collaborators via the open model.

Money
What is money, its role and desirable features, are extensively discussed elsewhere. Here I'd only like to look at money from the Closed Source / Open Source perspective.
Money is an invention that benefits the whole world population by virtue of being the medium of exchange in various transactions between these people. Money functions very much like Mozilla/Apache/Linux software combination providing a very basic service and providing it so well that users don't really need to bother themselves with the fine details.
Because of its scope, Open Source-based ideology seems to be much more applicable to money than Closed-Source-based reality today.
Today, Central Banks, the guardians of money, like to present themselves like small groups of developers trying to maintain a product that is under attack by everything around them.
In reality, it is actually worse than that. Money should function as something that holds equal value in the hands of any person. Whether in the hands of a millionaire banker or a bum, money should have the same purchasing power. That is how it should be.
In reality, via targeted inflation, or in other words via a continuous, purposeful debasement of currencies, money can not function equally in the hands of everyone. By the time it trickles down through the society and reaches the bum, it has lost some of its original value. The bum becomes even poorer simply by being further away from the source of money - the Central Bank.
The conflicts of interest that arise when the universally used commodity (money) is under the control of a very small group of people is enormous and obvious, and this post is not the place to discuss it. Here, I'd only like to make the point that in order to eliminate the basis for such conflicts of interest and their abuses, perhaps the Open Source ideology is the way to go.

Open Source Money
In the Open Source world, if money was a Open Source product, all its users would want it to maintain its value uniformly. No developer responsible for key decisions would want it to have weaknesses that could potentially lower its purchasing power and thus impoverish the developer. No-one would want to leave any back-doors open or bugs not taken care of.
Such money would be inspected by thousands and perhaps millions of eyes and it would be tough for any bugs to go unnoticed. All users would be collaborators intent on making sure their money maintains its value at all times.

Bitcoin
Bitcoin is (to the best of my knowledge) the first attempt to develop Open-Source money. Bitcoin is not functioning under the control of any single person or a group. It's architecture is distributed across many computers in the world, across many countries and jurisdictions. Transactions need to be verified by the network and all communications are encrypted.
Is it THE next major step forward in world economics? Towards solving the problems arising from excess credit bubbles? Perhaps so. But perhaps more work on solutions are needed as recently Bitcoin has experienced its first major problems.
But Bitcoin is definitely a step in the right direction towards protecting personal property against groups of hackers busy targeting inflation at their will.

Elastic Measuring System

The Persistence of Memory by Salvador Dalí, 1931

Engineers and scientists are miserly perfectionists. They have absolutely no idea how dull and empty are their boring lives, filled with the eternal quest for perfectionism. They don’t know how much fun it would be to let loose and forget the rules, just like politicians and economists do. Let me explain.

Problem
Engineers and scientists think that a meter must always remain one meter long. They think that what was set up to be a meter in 1791 must have the same length today. In the future, they think, a meter must remain precisely one meter long. They want to build bridges and buildings using the same boring fixed measure, want to compare each other’s research results, and want to re-measure things again and again for time series’ analysis.
Engineers and scientists also think that minutes and seconds are to be measured at a constant duration so that all clocks work in sync. They think it is weird when a child is older than the parents, or when a week lasts longer than a century. They think that all hours, days and years have to have the same lengths throughout history, and that any changes to these are somehow improper.
They also want to measure temperature in degrees that are constant. They think it would not be polite if water boiled at a temperature below its freezing point, or if the snowy and windy winter days were somehow sweatier than midsummer heat with the Sun in zenith.
Engineers and scientists also want to measure mass so that little babies are not heavier than their mothers, or so that a gram of Gold today equals a gram of Gold tomorrow or the day after.
It is unfortunate that perfectionists have conspired to apply their pompous and utterly boring mindset to everything surrounding us. Now we all suffer having to adhere to these, alien to us, perfectionist ideals, living our lives by something fixed and unchangeable.
The perfectionists have probably never heard that everything in life does not need to be so hard and difficult. They probably never imagined that life could be much more fun, that they could look at things with open mind and heart, and not have to worry so much about things being always constant. They should take the example of economists and politicians who have mastered the magic of fluently changing yardsticks. Economists and politicians have fun living and interpreting the universe around them with an elastic yardstick so that it fits the mood of the moment, never trying neither for accuracy nor completeness.

Proposal
To conclude the above discussion, my modest proposal to the world is to introduce elastic yardsticks everywhere. Just like the politicians and economists have done with the field of economy. Life should not be dull and full of limits, people should be free to choose for themselves. There should not be fixed units of length or time or temperature or anything.
If a woman wants to be 20 years old, she should have the freedom to be 20 years old, and not only as a polite compliment, otherwise known as a lie. She must have the right to have her desired age, 20 years, to be stamped right into her passport! With elastic yardstick for measuring time, this will be a piece of cake to accomplish and will become a truth, not a lie.
If an athlete wants to run a marathon without exhausting himself, he or she should have every right to that. Because why should marathons be so long as to torture the participants? 42.195 kilometers could be custom-fitted to each participant if the meter was as elastic as money supply. Everyone could participate and everyone would win!
And think about all the implications to science and technology itself where all the fixed, perfectionist ideas originate from. Want to build a Perpetuum Mobile and rid yourself from the rest of your worries and troubles for the rest of your life? With an elastic measuring system, with all its units of measurement tune-able to satisfy the moment’s need, that insurmountable task would have been accomplished long time ago!
Please listen to me now, all scientists and engineers, politicians and economists! Elastic Measuring System will effectively solve all the world’s problems once and for all! Nirvana, Enlightenment, Heaven on Earth, whatever you want to call it, all will be achieved instantly with the introduction of the Elastic Measuring System! People all over the world need it and want it! Let’s introduce it now!