Dmitry Orlov. Hilariante

The Future is Blivets

Dmitri Orlov

If you have been paying attention, you may have noticed that the global financial markets are currently in meltdown mode. Apparently, the world has hit diminishing returns on making stuff. There is simply too much of everything, be it oil wells, container ships, skyscrapers, cars or houses. Because of this, the world has also hit diminishing returns on borrowing money to build and sell more stuff, because the stuff we build doesn’t sell. And because it doesn’t sell, the price of stuff that’s already been made keeps going down, lowering its value as loan collateral and making the problem worse.One solution that’s been proposed is to convert from a products economy to a services economy. For instance, instead of making widgets, everybody gives each other backrubs. This works great in theory. The backrub industry doesn’t generate an ever-expanding inventory of backrubs that then have to be unloaded. But there are some problems with this plan. The first problem is that too few people have enough money saved up to spend on backrubs, so they would have to get the backrubs on credit. Another problem is that, unlike a widget, a backrub is not a productive asset, and doesn’t help you pay off the money you had to borrow to pay for the backrub. Lastly, a backrub, once you have received it, isn’t worth very much. You can’t auction it off, and you can’t use it as collateral for a loan.

These are big problems, and one proposed solution is to create good, well-paying jobs that put money in people’s pockets—money that they can then spent on backrubs. This is best done by investing in productivity improvements: send people to school, invest in high tech and so on. It’s an intuitively obvious idea: productive workers are easier to employ than unproductive workers, because the stuff they make ends up cheaper, and people can afford to buy more of it. Whether they do buy more of it is debatable, especially if there is more than enough of it already and nobody has any extra money saved. Still, the theory makes sense.

But this theory doesn’t seem to be working all that well: no matter how much money we put into automation—robotic assembly lines, internet-based virtualization, what have you—the number of unemployed workers isn’t going down at all. And it’s even worse with driverless cars. In theory, they are great: if the driver doesn’t have to do the driving, then she can spend the time giving her passengers backrubs. But no matter how much money we throw at driverless cars, the number of unemplyed drivers, or unemployed massage therapists, isn’t going down.

But even if we give up on trying to stimulate demand through job creation and just let everyone starve, we can still put our faith in rich people. There are people who are as rich as entire countries! Surely they can spend and consume on everyone else’s behalf, and make the economy boom. But it turns out that it’s very hard for just one person to consume as much as an entire country. To make that happen, it’s necessary to pay people to consume on one’s behalf. But if other people can spend your money just like you, then that defeats the purpose of being wealthier than everyone else, and all that hard work of swindling people and of gaming the markets would turn out to have been in vain.

* * *

But here is a solution that is so stunningly simple and elegant that somebody must have thought of it already. Alas, make a note: I am the first!

A Blivet

The solution is this: sell everything and go long blivets. Blivets are geometrically impossible objects: they can be drawn, but, by their nature, they cannot be manufactured. This solves a major problem with the futures markets, which is that people can actually take delivery of their futures contracts. This means that the stuff being speculated on actually has to exist. And this means that what some people have the audacity to call “the real economy” actually has to exist. What a nuisance!

For example, the gold futures market trades 300 times more gold than physically exists. [Update: the number just went up to 542.] This means that if just 0.3% [Update: 0.18%] of futures contracts resulted in deliveries, the vaults would be empty and there would be nothing to trade. The horrible thing is, unreasonable people, who take delivery of their gold, do exist: the Chinese, the Russians and various other nations with cash on hand or US Treasuries to liquidate keep doing this. Promoting “regime change” and looting various countries’ gold reserves helps a bit (Iraq, Libya and Ukraine have been looted already; Syria should have been looted by now if it weren’t for those pesky Russians!). But the eventual outcome of all this is force majeur: somebody wants to take delivery, but the vaults are empty.

Source: Zerohedge

A similar problem exists with the biggest futures market in the world: in crude oil. Here, traders have been having a merry old time taking advantage of a notional glut, driving the price of crude lower and lower. They could drive it as low as $1 a barrel, but then what? The problem is, nobody on earth can produce oil that cheaply, and so a day will come when somebody will demand delivery on their $1/bbl crude contract, and the only response will be an echo, as tumbleweeds blow across the abandoned oil fields.

You should have guessed the moral of the story by now: if you are going to “ephemeralize” the entire economy—the workers/consumers along with their productive capacity—you better switch to trading in things that are ephemeral too, or you’ll risk a market implosion, deflation, deleveraging and financial collapse followed by poltitical, commercial, social and cultural collapse in four-part cacophony with many screaming refrains and a shrieking, tumultous coda. I am not kidding. I wrote the book on that.

Anúncios

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It’s All About the Cheese

Rats and humans have so much in common. It’s all about the rewards. Mother nature is spring-loaded too.

Life happened. If there were some awesome cognition in the universe, I’m sure it would consider life an amusing incident. But such a God, in order to think, would also have to be the product of such an amusing incident. So let’s just consider ourselves an incidence of replication, reproducing molecules that further elaborated themselves into reproducing cells and then into reproducing organisms. We are and forever will be unknown in the galaxy, occupying a thin watery layer of just the right mix of precursor molecules just the right distance from a star. Our ancestors have been thoughtlessly slaughtering and eating each other for several billions of years as a matter of course. It’s all seems as meaningless as the circulating currents in the seas and atmosphere, we’re like little spinning tops just throwing off heat on the way to our next meals. All of the evolution leads nowhere except, as I’ve tried to convey on this blog, to a different scale of the same thing – technological evolution, competition, degrading resources, throwing off heat and mutually assured destruction (MAD). And the destruction is most assuredly assured if we take just a few more steps down the path of technological competition.

So why take survival so seriously? Aren’t you just being a dupe in continuing the madness? Why not put an end to life, the competitive madness that leads nowhere but to more competitive madness, once and for all? Perhaps it’s because of the reward system. We don’t have time to think about what we’re doing and our concerns are focused upon getting the next rewards. We must or die. If there’s anything that gets the dopamine flowing it’s the chance at a big reward, an opioid brain cocktail, and that’s what we think about mostly (and the obstacles between ourselves and our happy destinies). Organisms rarely have time to consider what they’re doing, but must continuously have in mind their next reward lest some other greedy organism take the opportunity from them and win in the survival of the fittest. Generally speaking, the fittest are those that can acquire the most rewards vis-a-vis their competitors. Strangely, many of those that have been most successful at running the reward maze, have forgotten to procreate. Go figure.

At this point in human evolution, as we have been reduced in stature from free-living system to molecular operator in technological cells, one must wonder what continuance has to offer. Another iteration of Ipad or Iwatch or perhaps ICBM mark VI? Unfortunately the neurological adaptations allowing our technological conversion can not be seen as progress in the evolution of life, they rather have marked the departure of humans from the ecosystem, at least partially. Human technological development is a step backward, like when humans get cancer and it spreads all over their bodies and often causes such disruption as to kill the system. Imagine that. We took the fork in the road that leads to such rapid and toxic evolution and growth that massive extinction and alteration of the biosphere will be the result. Technology won’t replace the pyramid of life that concentrates biomass into bite-size chunks of food for us, but temporarily it can create irresistible rewards. We’re a package of cells moving relentlessly from one resource gradient to the next brandishing new tools on-the-fly to degrade everything we come in contact with, but building magnificent malignant cells and distribution systems along the way. Magnificent!

Apparently and in accordance with the Holy Book of Thermodynamics, there is no“reason” to live except to seek rewards and that is what we will do to the best of our technological and personal abilities until the very end. Humans can not be expected to not seek rewards, even though their self-satisfying behaviors in sum total are suicidal. Neither my writing nor any other writing will retard destiny in progress. Hope you get some of whatever you seek right up until the very end, before its too late – perhaps it’s already too late (see rat above).

Professor John Gabrieli (MIT) explains how humans lose the ability to consider bad news as they grow older. Also note that they are unlikely to seek new information. The entire video is worth watching but most interesting part begins at 40:35. Older people ignore bad news and have a relative positivity bias.

Addendum:

Sensory organs and brain (ganglia) function in tandem to move mobile organisms towards positive stimuli and away from negative stimuli. In the evolutionary past this was accomplished subconsciously based upon hardwiring and limited learning. The human cerebral cortex is a neurological amplification of the simple environmental surveying and reward seeking circuits possessed by more simple animals. Instead of simple stimulus-response circuits, the environmental stimulus is mapped into a fluid neural representation of the world, or network, before appropriate movement or behavior, if any, is promoted. With an expanded prefrontal cortex, substantial planning of movement towards goals or rewards can be rehearsed before actual movement commences. During a work week a human may have to perform many preplanned movements to arrive at the reward at the end of the week. Waking up, taking a shower, getting the kids ready for school, filling the car with gas, driving to work, performing all of the variable movements at work, socially grooming the boss and co-workers and so on, just to arrive at a paycheck at the end of the week. The paycheck is not the ultimate reward, but rather what the paycheck can purchase is the reward. The cerebral cortex can be thought of as a massive elaboration of more simple circuits and ganglia, capable of maintaining a complex representation of the world into which environmental data is fed and processed prior to bodily movement.

Even though deficient in calculating probabilities, the human brain moves millions towards ticket outlets in search of mind-boggling lottery rewards or it can motivate a student to pursue good grades to achieve a degree and well-compensated employment. All movement requires energy and resources and ultimately, in sum total, all movement must be rewarded. Humans and other mobile organisms are on a tight leash to perform only those movements that are rewarding. If behavior and movement do not result in energy acquisition, then starvation and death occurs. Perhaps this is one reason we are so unconcerned with our impact upon the environment, our brains are preoccupied with producing movements that result in reward.

Megacancer

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Five Stages of Awareness (or is it six?)

I don’t know if I have met anyone who is not, at some level, in a state of denial, including the guy I see in the mirror. Call it an essential human ‘coping mechanism’

Reflecting on my own “evolution” (without any implication that I am ‘improving’ or ‘progressing’ forward), I am now of the impression that many of us follow these stages, or get stuck in one of them.
Stage one: Ignorance. We don’t know enough to realize that this civilization is headed toward an imminent collapse, taking a lot of non-human species down with it.

Stage two: Knowledge: We know enough to realize that this civilization is headed toward an imminent collapse etc.

Stage three: Activism: We know enough to realize that this civilization is headed toward an imminent collapse…etc. But we don’t know enough to realize that we can’t stop it, so we invest our time in blogging, preaching, demonstrating, rallying, and marching.

Stage four. Resignation and Commiseration: We know enough to realize that this civilization is headed toward an imminent collapse etc., and finally realize that activism (blogging, preachin’, demonstrating, rallying, and marching will not make a significant difference. We either call it a day and drop out, or we write endlessly about how we’re “f***ked, and spend years “trading turds” (as Kurt Dahl termed it) on list serves— until we get mad or frustrated and demand to be taken off the list.

Stage five. Displacement Behaviour or a Sense of Moral Obligation: Despite knowing that we are “f**ked, we persist with our activism, blogging, preachin’ , rallying, and marching because:

(a) we need to “do something” (displacement behaviour) to distract ourselves from any focus on our hopeless predicament. Like Richard Attenborough’s example of a bird who suddenly realizes that he is in striking distance of deadly snake and that neither fight or flight will save him, so instead he preens his feathers.

And/or
(b) we would feel morally remiss if we didn’t try to do “something”. At least re-arrange the deck chairs or leave our cabin room tidy. Case in point.  I saw a young woman in the middle of a frigid alpine lake (Moraine Lake in the Rockies) cry for help after her canoe capsized. The lake was like an echo chamber. We could hear her screams and words as if she was ten feet away. But she was in fact 500 feet away. We knew that even if we could immediately grab a boat, we couldn’t get there in time. But a couple of us tried to do it anyway because we felt we had to do “something”. It wasn’t even a case of wilful optimism. It was an attempt to deal with our anxiety and horror. Of course, as we expected, this poor, unfortunate woman disappeared long before anyone got to her.

Imagine, though, if someone on the shoreline, someone like Chris Clugston, using math and physics, quickly proved  what we at least subconsciously knew to be the case— that it would be impossible to save her? Suppose he handed us a sheet of paper that presented his iron-clad data.  That truth-teller would be greeted with anger or outright denial. “If you really belief it’s hopeless, why are you bothering to write about it?” or “If people believe your message, it will become a self-fulfilling prophecy….. We don’t need Cassandras, we need motivators, morale-boosters not truth-tellers….”

Jack Alpert has experienced this reaction. People see his video on “How much De-growth do we need”, but they simply dismiss his assessment of our scale of overshoot, even though they can’t challenge his math. Why? They want to believe, they need to believe, that the planet can carry many more people than he estimates because they think that they can’t “sell” their population reduction diet program if it calls for that amount of sacrifice. Better to cling to Eco-Footprinting Analysis. Better to focus on bio-capacity and ignore diminishing non-renewable resource stocks. Better to shop the WWF’s Living Planet report because it says we only need another 4 planets to carry on BAU, not get down to Alpert’s population level of 50 million.  The message, after all, must be “marketable”. And like so many salesmen, they—to use Stephen Law’s words—come to “believe their own bullshit.” Bottom line, Cassandras are either dismissed or reviled, even if their conclusions are evidence-based.

That, my friends, is the position that people like Chris Clugston are in. People don’t want to hear the raw, brutal and complete truth.  They want hope. They can only take a limited, even if heavy dose of reality. That’s why readers and publishers want manuscripts and books to end on a note of hope, however absurd. They want a happy Hollywood ending, even if it runs counter to all the evidence and arguments that lead up it.  A non sequitur. A conclusion that doesn’t follow from the premises. Just like the way McKibben, Suzuki, et al argue. Like bible-punching preachers, they tell us that we’re going to hell, that things are very, very bad, but wait….there’s hope yet! The window is quickly closing but it’s not too late! There is still time to repent! So keep your love money rollin’ in , because my NGO (church) needs to pay the bills and pay its staff–I need you fund my crusade.”

 Curiously, one notices that 20 years ago, many of these preachers said that the window would soon close way back then, the same way Oral Roberts used to do—in Suzuki’s case, before the decade was out (the 90’s are the “Turn-around Decade”). But apparently the apocalypse got another stay of execution because they are still talking about a closing window. The goal posts keep getting pushed further back. Ah yes, hope. “We must give them hope….”

BTW I went through all of these stages, and it took me damn near three decades to do so. I am currently stuck at Stage 5, but “hopefully”, I will eventually  revert to Stage 4, chill out, and try to enjoy the downslope, maybe play another hand of poker before the ship goes down, or join the orchestra at the stern….Nah, I think I will just keep on fightin’ and writin’ (uselessly). It’s in my nature. As William of Orange put it: “It is not necessary to hope in order to undertake, nor to succeed in order to persevere.”

But hey wait…maybe there is yet another Stage. As Chris Clugston asks,

“Can there be Stage 6 – something like “Acceptance” (like reaching Nirvana?!) – which would be different than Stage 4? Where you realize, “hey, no hard feelings; nothing personal; nothing to get hung about…” Just go and enjoy Strawberry Fields Forever – for however long that turns out to be… But I mean really LET GO, and not keep reverting to either stage 5 or 4? “

OK Chris, so here it is:

Stage 6:  Acceptance and just LETTING GO.

Tim Murray, September 26, 2014, Wit’s End

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David Bowie, Starman (1947-2016)

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David Price – Energy and Human Evolution (1995)

Energy and Human Evolution

David Price

From Population and Environment: A Journal of Interdisciplinary Studies
Volume 16, Number 4, March 1995, pp. 301-19, 1995 Human Sciences Press, Inc.

Life on Earth is driven by energy. Autotrophs take it from solar radiation and heterotrophs take it from autotrophs. Energy captured slowly by photosynthesis is stored up, and as denser reservoirs of energy have come into being over the course of Earth’s history, heterotrophs that could use more energy evolved to exploit them, Homo sapiens is such a heterotroph; indeed, the ability to use energy extrasomatically (outside the body) enables human beings to use far more energy than any other heterotroph that has ever evolved. The control of fire and the exploitation of fossil fuels have made it possible for Homo sapiens to release, in a short time, vast amounts of energy that accumulated long before the species appeared.

By using extrasomatic energy to modify more and more of its environment to suit human needs, the human population effectively expanded its resource base so that for long periods it has exceeded contemporary requirements. This allowed an expansion of population similar to that of species introduced into extremely, propitious new habitats, such as rabbits in Australia or Japanese beetles in the United States. The world’s present population of over 5.5 billion is sustained and continues to grow through the use of extrasomatic energy.

But the exhaustion of fossil fuels, which supply three quarters of this energy, is not far off, and no other energy source is abundant and cheap enough to take their place. A collapse of the earth’s human population cannot be more than a few years away. If there are survivors, they will not be able to carry on the cultural traditions of civilization, which require abundant, cheap energy. It is unlikely, however, that the species itself can long persist without the energy whose exploitation is so much a part of its modus vivendi.

The human species may be seen as having evolved in the service of entropy, and it cannot be expected to outlast the dense accumulations of energy that have helped define its niche. Human beings like to believe they are in control of their destiny, but when the history of life on Earth is seen in perspective, the evolution of Homo sapiens is merely a transient episode that acts to redress the planet’s energy balance.

Ever since Malthus, at least, it has been clear that means of subsistence do not grow as fast as population. No one has ever liked the idea that famine, plague, and war are nature’s way of redressing the imbalance — Malthus himself suggested that the operation of “preventive checks,” which serve to reduce the birth rate, might help prolong the interval between such events (1986, vol. 2, p. 10 [1826, vol. 1, p. 7]). 1 And in the two hundred years since Malthus sat down to pen his essay, there has been no worldwide cataclysm. But in the same two centuries world population has grown exponentially while irreplaceable resources were used up. Some kind of adjustment is inevitable.

Today, many people who are concerned about overpopulation and environmental degradation believe that human actions can avert catastrophe. The prevailing view holds that a stable population that does not tax the environment’s “carrying capacity” would be sustainable indefinitely, and that this state of equilibrium can be achieved through a combination of birth control, conservation, and reliance on “renewable” resources. Unfortunately, worldwide implementation of a rigorous program of birth control is politically impossible. Conservation is futile as long as population continues to rise. And no resources are truly renewable. 2

The environment, moreover, is under no obligation to carry a constant population of any species for an indefinite period of time. If all of nature were in perfect balance, every species would have a constant population, sustained indefinitely at carrying capacity. But the history of life involves competition among species, with new species evolving and old ones dying out. In this context, one would expect populations to fluctuate, and for species that have been studied, they generally do (ecology texts such as Odum, 1971 and Ricklefs, 1979 give examples).

The notion of balance in nature is an integral part of traditional western cosmology. But science has found no such balance. According to the Second Law of Thermodynamics, energy flows from areas of greater concentration to areas of lesser concentration, and local processes run down. Living organisms may accumulate energy temporarily but in the fullness of time entropy prevails. While the tissue of life that coats the planet Earth has been storing up energy for over three billion years, it cannot do so indefinitely. Sooner or later, energy that accumulates must be released. This is the bioenergetic context in which Homo sapiens evolved, and it accounts for both the wild growth of human population and its imminent collapse.

ENERGY IN EVOLUTION

We are caught up, as organic beings, in the natural process through which the earth accepts energy from the sun and then releases it. There has been life on Earth for at least three and a half billion years, and over this time there has been a clear and constant evolution in the way energy is used. The first living things may have obtained energy from organic molecules that had accumulated in their environment, but photosynthetic autotrophs, able to capture energy from sunlight, soon evolved, making it possible for life to escape this limited niche. The existence of autotrophs made a place for heterotrophs, which use energy that has already been captured by autotrophs.

It is not clear how photosynthesis got started, although it is a combination of two systems that can be found singly in some life forms that still exist. But blue-green algae, which are among the earliest organisms documented in the fossil record, already employed the two-stage process that was eventually handed down to green plants. This is a complex sequence of events that has a simple outcome. Carbon dioxide (of which there was an abundance in the earth’s early atmosphere) reacts with water through energy from light, fixing carbon and releasing oxygen, and a portion of the energy remains captive as long as the carbon and the oxygen remain apart. Plants release this energy when and where necessary to conduct their metabolic business (Starr & Taggart, 1987).

As time passed, the sheer bulk of life increased, so that more and more energy was, at any given time, stored in living matter. Additional energy was stored when carbon from once-living matter was buried, in ever-so-tiny increments, under the surface of the earth-in deposits that became coal, petroleum, and natural gas as well as in sedimentary rocks containing calcium and magnesium carbonates derived from shells. Of all the carbon that has played a part in the life process, very little was separated out and held apart in this way, but over the course of millions and millions of years, it has mounted up. More and more carbon wound up under the ground, with a greater and greater amount of oxygen in the earth’s atmosphere. This separation of carbon and oxygen from a primeval atmosphere in which carbon dioxide and water were abundant represents a vast accumulation of solar energy from the past.

Life evolves to exploit every possible niche, and as autotrophs developed better ways to capture and store the sun’s energy, heterotrophs developed better ways to steal it. Independent locomotion was adaptive in the search for nutrients, although it took a little more energy than being buffeted about by the elements. Cold-blooded fish and amphibians were followed by warm-blooded species, which reap the benefits of remaining active at lower temperatures, while using yet more energy in the process. The development of predation opened access to a supply of high-energy food with a further energy investment in procuring it. Throughout the history of life, as increasingly dense reservoirs of energy became available, species that made use of increasing amounts of energy evolved (see Simpson, 1949, pp. 256-57). This is the natural context of Homo sapiens, the most energy-using species the world has ever known.

THE HUMAN ANIMAL

The extent of human energy use is a consequence of the human capacity for extrasomatic adaptation. This capacity makes it possible for human beings to adjust to a wide variety of novel circumstances without having to wait many generations for evolution to change their bodies. A comparison of somatic and extrasomatic adaptation will show just how remarkable an ability this is: If longer, sharper teeth are adaptive for a predator, animals with teeth that are slightly longer and sharper than those of their fellows will have a slight reproductive advantage, so that genes for longer and sharper teeth will have a slightly greater likelihood of being passed on, and so, over the course of time, the teeth of average members of the population will come to be, little by little, longer and sharper. In contrast, a human hunter can imagine a longer, sharper arrowhead; he can fashion it with nimble hands; and if it is really more efficient than the short, blunt arrowheads that everybody else has been using, his peers will soon adopt the new invention. The chief difference between the two means of adaptation is speed: Humans can adapt, relatively speaking, in a flash.

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2016: Oil Limits and the End of the Debt Supercycle

Posted on January 7, 2016 by Gail Tverberg

 

What is ahead for 2016? Most people don’t realize how tightly the following are linked:

1. Growth in debt
2. Growth in the economy
3. Growth in cheap-to-extract energy supplies
4. Inflation in the cost of producing commodities
5. Growth in asset prices, such as the price of shares of stock and of farmland
6. Growth in wages of non-elite workers
7. Population growth

It looks to me as though this linkage is about to cause a very substantial disruption to the economy, as oil limits, as well as other energy limits, cause a rapid shift from the benevolent version of the economic supercycle to the portion of the economic supercycle reflecting contraction. Many people have talked about Peak Oil, the Limits to Growth, and the Debt Supercycle without realizing that the underlying problem is really the same–the fact the we are reaching the limits of a finite world.

There are actually a number of different kinds of limits to a finite world, all leading toward the rising cost of commodity production. I will discuss these in more detail later. In the past, the contraction phase of the supercycle seems to have been caused primarily by too high population relative to resources. This time, depleting fossil fuels–particularly oil–plays a major role. Other limits contributing to the end of the current debt supercycle include rising pollution and depletion of resources other than fossil fuels.

The problem of reaching limits in a finite world manifests itself in an unexpected way: slowing wage growth for non-elite workers. Lower wages mean that these workers become less able to afford the output of the system. These problems first lead to commodity oversupply and very low commodity prices. Eventually these problems lead to falling asset prices and widespread debt defaults. These problems are the opposite of what many expect, namely oil shortages and high prices. This strange situation exists because the economy is a networked system. Feedback loops in a networked system don’t necessarily work in the way people expect.

I expect that the particular problem we are likely to reach in 2016 is limits to oil storage. This may happen at different times for crude oil and the various types of refined products. As storage fills, prices can be expected to drop to a very low level–less than $10 per barrel for crude oil, and correspondingly low prices for the various types of oil products, such as gasoline, diesel, and asphalt. We can then expect to face a problem with debt defaults, failing banks, and failing governments (especially of oil exporters).

The idea of a bounce back to new higher oil prices seems exceedingly unlikely, in part because of the huge overhang of supply in storage, which owners will want to sell, keeping supply high for a long time. Furthermore, the underlying cause of the problem is the failure of wages of non-elite workers to rise rapidly enough to keep up with the rising cost of commodity production, particularly oil production. Because of falling inflation-adjusted wages, non-elite workers are becoming increasingly unable to afford the output of the economic system. As non-elite workers cut back on their purchases of goods, the economy tends to contract rather than expand. Efficiencies of scale are lost, and debt becomes increasingly difficult to repay with interest.  The whole system tends to collapse.

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