Sovereign Finance

Rob’s comments below are in italics.Derek’s comments below are in normal font.

The UK budget was announced on 26th November 2025, which we broadly regard as a PR exercise for the powers that ought not to be. The budget isn’t really a budget because they don’t break down where the money comes from and where it’s going. Could you elaborate on that Derek?

A good starting point would be this post that you forwarded to me from someone you’re acquainted with on Facebook. He’s apparently been an engineer and gone into property development, and is quite wealthy. He’s got his own perspective and his own views. The core of his perception is really along the lines of something that John Kenneth Galbraith put in his 1958 book, The Affluent Society. What Galbraith said is that the proportion of people in society doing anything really tangibly useful and productive is very small. The rest of the population, one way or another, is being carried by them.

Your friend had some numbers in his post that are worth chewing over. He started by saying that the non-working-age population in Britain was 27 million. What he means by non-working age is under-16s and pensioners. Out of a population of 70 million, the working-age population is 43 million. Then he goes on to say that every working-age person must support just over half of a non-working-age person. But actually, that’s sadly wrong.

He goes on to break down the working-age group into several categories. He says there are 9 million who simply choose not to work, and that fewer than 2 million people are seeking work.

Then he goes on to say there are six million people in the public sector. Although he isn’t claiming they don’t do anything useful, I’d agree with his implied point that we don’t get much value for money from the public sector as a whole. I’d hate to offend anybody who’s a civil servant or a local government official or something. Obviously, there is quite a bit that the government does which is worthwhile. We could certainly do with more people filling the potholes in the roads. Also, a lot of the people doing the most valuable work, such as nursing, emergency services, or teaching.

But his point is that they’re all paid from taxation. So the people who are actually generating wealth are those in the private sector. Of course, if we wanted to be brutal about it, there are a great many people in the private sector whose work isn’t necessarily generating value.

So where is the value being generated? Well, the people who are actually working on the farms, the people who are actually working in factories and workshops. This is a small proportion. I’d say that even people who are cooking or serving tables in a restaurant are providing something of value to their customers. It’s obviously transient value, but we’d all agree that at least some of the time, going and having a meal that we haven’t had to cook or clear up is something we’d like to do. The people doing it are at least producing value.

Gainfully employed, I’d argue.

Yes. So, anyway, summarising all that, what he said is that of the 43 million of working age, there are 28 million private sector workers that generate profits to pay for the rest of the population via taxation. In other words, every private-sector worker must generate income to pay taxes that cover 2.5 other people.

This is one of the reasons why the money you’re managing to bring in for your own efforts doesn’t produce nearly as much effort from other people when you pay it out. That’s the way it looks to me. Would you agree with that, Rob?

I’d agree with that, yeah.

However, a few things are missing from this picture. One of them is that a very tiny proportion of the population are clearly coining it on a grand scale. That seems to be an increasingly large amount going to an increasingly small number of people.

Millionaires are becoming billionaires, billionaires are becoming trillionaires. To paraphrase Caitlin Johnstone, we’re feeding the world’s ecosystem to the wood chipper in the process.

Yeah. Of course, another thing that is particularly relevant at the moment is the purchase of weaponry by governments. We really need to have some analysis of this, particularly when we’ve got situations like the war in Ukraine. I’d really like to know how much equipment, ammunition and material that we, the British people, have sent there. How long does it actually last before it’s destroyed?

There are tanks, artillery pieces, and armoured personnel carriers that are destroyed sometimes within days of arriving. There are explosives and ammunition, which if they actually reach the battlefield, are instantly auto-destroyed and cause a great deal of damage in the process. But there’s a great deal of ammunition that is destroyed before it even reaches the battlefield. Clearly, these are objects which have been built, manufactured, and created; however the energy put into them produces no useful benefit to anybody.

It seems to me that they talked about the First World War being the war to end all wars, which logically ought to have been.

The war to start all wars is actually what happened!

But I wonder whether, if we survive this era we’re going through at the moment, we’ll see that the Ukraine war really was the war that indicated the sheer futility of it. Whatever you put into the battlefield, something is so asymmetric.

Now that drones have become so ubiquitous on the battlefield, some of them are little more than £50 or £100 hobby drones that people play around with. Those can be arranged to drop a hand grenade. You know, even the more exotic and sophisticated ones that we’ve got out there now are still in the range of a few hundred pounds up to a few thousand pounds. Each of those can do multi-million-pound worth of destruction to enemy equipment.

At this rate, it must soon reach the point that even within the internal logic of people who are not morally horrified by the whole nature of warfare, it must increasingly begin to look like a futile exercise.

So there again, he made some predictions. This letter was penned just before the budget. He suggested that we would see numerous small tax rises across many areas. In many cases, they would not actually produce much more income to the government, but would upset a lot of people.

He didn’t expect there to be any significant government spending reductions. As we know, there never is. There’d be more tax rates on the private sector. I don’t know how those have worked out. We’ll see how this is spun in the media. We’ll see how things work out in the future.

Against this, what I’d be inclined to say myself is that the structures within which patterns of work and patterns of taxation have been set up are really from years gone by. With the technological developments we’ve seen over the last 50 years, there is no longer any need to expect that everybody works a 40-hour or longer workweek.

The total amount of work that actually requires a human interaction to deliver the things that we really want delivered in society, once we’ve cut out the unnecessary burden of having to replace your washing machine and your refrigerator every five or ten years, when there’s no reason why it couldn’t have been built to last a lifetime.

But even within that, once we get rid of all of the unnecessary make-work which is merely done to justify people collecting a paycheque and just concentrated on what was necessary to provide us with the material basis for living our lives, the amount of work that was required to be done would, as I say, be maybe ten hours a week, maybe five hours a week on average.

Most people would be quite capable of doing that. There’d be a lot less resistance to it. There’d be no actual unemployed people. If they were paid a commensurate proportion of what they’re generating in doing that work, it would be enough to provide them with the exchange wherewithal to purchase what they wanted in return.

Of course, people who wanted to acquire more, or live a more extravagant lifestyle, could actually work more than that. They could actually create more. It’s entirely possible, but it requires a complete change of mindset to achieve it.

What we’re looking at here is not something that could be fixed by making minor tweaks to the way the present situation works. It’s something that will necessitate our stepping back from the entire thing, taking a look at it and totally redesigning the way that human society works. That will only be possible if there is a radical reorientation of our philosophical and, indeed, spiritual outlook and approach.

This is as we shift from the totally individualistic mindset we’ve been steeped in, particularly over the last few hundred years, to one that’s truly universal. But certainly a far more widespread understanding that we are all part of one and the same global cosmic system and part of the web of life, which actually supports our existence. Not something aloof from it. So this is a much bigger issue.

Our education system turns out workers. It sets in stone this mindset that you should be working half eight to half five, five days a week, with 20 days of holiday a year. That’s normal.

Yeah. Doing things that you’re not particularly interested in and not particularly keen on.

For me growing up in the North, there was this unspoken narrative that jobs are scarce. You’re lucky to have a job. You have to do things you don’t want to do. Keep your head down. Don’t complain. Work hard. Whereas we need people who are more creative, who understand themselves better, who ask more questions, who maybe do things differently. Who collaborate with like-minded people. We will see that eventually, but there are major problems with the education system. We need to encourage more people to actually understand themselves. We need to teach things like finance, which we don’t do at the moment. There are glaring holes in the project of producing sovereign humans, but the goal of the system is not to produce sovereign humans, it’s to produce dependent humans.

It’s quite the reverse, yeah

I also think it’s natural for people to have fallow periods as well as productive ones. I don’t think we’re meant to just work constantly until a set age. Retirement’s dying anyway, as a thing. People will just work on what they want to work on. I don’t currently envision ever retiring and putting my feet up and waiting to die. It’s not really on my agenda. But if you’re doing work that aligns with your core essence, interests you, and so on, why would you stop?

So yeah, we’re due an overhaul.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We’re going to talk about interest rates on bonds today. What’s going on that people need to know about here?

Well, a few years ago, we did a piece on this. What I said was that the interest rates being commanded were a result of several different factors. One of them is the basic rate for basically hiring some money for a period. Another factor is how reliable you regard the borrower as being.

The other one was what you expected the exchange rate to move over the loan period. I probably also said that the classic way of looking at it appeared to have broken down. If you go back 10 or 15 years, the interest rates on government bonds were insanely low.

There was recently a UK Treasury bond due to mature around 2035, but trading way above par. The question is, why? We’ll come back to this, but let’s first cover the theoretical principles.

How It Should Work

The essential idea is that if somebody has a bunch of cash, they could just stick it under the bed, but the prevailing wisdom is that you want to make it earn its living. You make it earn its living by investing it in something which is going to pay you for the period that it’s tied up in that investment.

If you go to the main investment areas like the stock exchange, there are broadly two types of investment. You might get equity shares, which give you part ownership of an enterprise. Or you could make a loan, or you could put it in a deposit account in a bank, which is another way of loaning the money to the bank….

You’re actually giving the money to the bank…

Yeah, it’s no longer your money once you’ve put it in the bank. That’s another major misunderstanding that they’re very keen for most people not to realise. But we won’t get into that today. Essentially, if you look at banking in the conventional traditional way, what they’re doing is acting as an intermediary between you and their customers who want to borrow some money.

It’s a lot more complicated because, as we’ve discussed elsewhere, most of the money that the banks are lending, they’ve simply made up. They haven’t borrowed from their customers, but that’s another story for another time.

So suppose you’ve got a stack of cash and you’d like to draw an income from it. The classic position most people are in when they want to do that is thinking about being able to retire at the end of a working life. Being able to have a steady income from what they’ve accumulated over the course of a working lifetime. It’s more abstract than that for most people, but that’s what it amounts to.

As I say, the two principal ways you could invest it, apart from simply putting it in the bank and having the bank pay you interest, are either making a loan (either to the government or to a corporation, or a local government entity like the county council), or you could take part ownership of an enterprise. That’s what is called shares or equity shares.

There’s a range of risks that are associated with that. If you’re investing in a corporation that runs an operation, you might consider something very reliable, like Unilever or Procter & Gamble. There’s a very predictable amount of soap powder they’ll sell every week. There’s a very predictable profit margin on it, so it’s a very solid business. It doesn’t fluctuate much. That would be a low-risk equity.

Alternatively, you could invest in a high-tech start-up company, which might yield you an enormous return. Or it might just fizzle out and go bankrupt, and you lose the lot.

Or you might invest in a new company that has the rights to prospect where they think there’s a gold deposit. Obviously, they’ve got to spend a lot of money digging holes in the ground and seeing what they get out. If it turns out that there are nuggets of gold down there, they’ll get an enormous return for the people who invested in that. If all they dig out of the hole is a lot of dirt, you won’t get anything.

So there are high and low-risk investments. Suppose even buying shares in the soap powder company is a bit too risky. You could invest in something which is really safe.

If you go back to the 19th century, what we call gilt-edged investments or gilts for short, are government bonds. In those days the most reliable government bonds were British ones. Everybody expected the British Empire to be in business for the foreseeable future.

Right up to the early 20th century, most people made this assumption that it was going to be around forever. But it didn’t take more than a decade or two for the cracks to start appearing.

All of these things implode under their own weight in the end.

This is, of course, the lesson of history.

At that point, the British government could issue an undated bond. It had no redemption date at all. You’re basically lending your money to the British government forever on the basis that if at some point in time you want your money back, there’s always going to be somebody else who’d be prepared to take it off you.

This held up until it gradually began to fall apart after the First World War through the interwar years. Then it went rapidly downhill after that. Most of those British government bonds were around 2.5 - 3% interest. Some of them were 3.5%, depending on the prevailing circumstances when they were issued.

Suppose at a later period of time, the prevailing rate of interest is higher. Then that would mean that for each £100 nominal worth of government bonds that you’ve got, the price of the bonds would have to go down. Supposing that the prevailing rate of interest is 5%, then you’d only get £50 when you come to try and sell your £100 bond of British government debt.

The £2.50 interest on the £50 you’ve invested to get a nominal £100 would yield you 5%. It’s a straightforward ratio. If, for any reason, the interest rate went down below 2.5% or 2%, you could probably trade those 100-pound blocks for more than 100 pounds, so it would go the other way.

In recent years, since the First World War, people have been unwilling to buy undated government bonds. They would want a bond which had an expiration date when they knew they’d get the money back. This still assumes that whichever government you’ve invested in will be solvent enough to continue paying interest over the period. It’s going to be solvent enough to give you your money back when the bond expires or matures, as it’s called. Any thoughts up until this point?

So how solvent are they currently??

Well that is the big question, which is why we’re revisiting this discussion today! I’ll come back to that, but first let’s go into more detail about those other factors that set the prevailing interest rate.

We’ve covered the fact that your borrower might not be completely reliable. If you’ve got a borrower who’s not all that reliable, you’d probably want to charge a higher interest rate. You’d want to put a premium on that basic 2.5% for the rental of the money to allow for...

If I was lending money to my mates, there are certain mates that this would probably apply to!

Yeah, do you lend money to your mates?

No!

Well, that’s the point of course. If it’s all-or-nothing, then this is hypothetical. As with all statistics, you need a large base to spread your risk. If you’re talking about a single person making a single investment, it’s all or nothing. You’ve either got a reliable borrower and you get your interest paid and you get your money back at the end of the period, or you don’t, and then you lose it. But of course, if you’re thinking about something like an insurance company where you’ve got a lot of funds under your management, you’re spreading them across a lot of different people.

The idea of a risk premium makes sense. You might be lending money to the British government, the French government, the German government, and the American government. You figure that they’re not all going to go bust simultaneously, but some are looking dodgier than others. You charge them a higher rate of interest, and the others not quite as high.

Over the entire portfolio, if one or two of them go bust, then the extra income that you’ve had from the higher rate of interest would cover your losses. That’s the theory of it. If you’re moving into lending money to corporations, because corporations raise money not only from their shareholders but also from their bondholders...

They’re people who are basically lending them money. Rather than taking the risk of fluctuating interest rates, they’re assuming the corporation is solvent enough to pay a regular, reliable rate of interest, which would be lower than the interest they would expect on shares with more risk.

But this is likely to be regarded as riskier than government bonds. The other factor you need to take into account is your view on the likely inflation in the currency this bond is denominated in. If you bought Zimbabwean bonds, you might figure their currency is unlikely to hold its value. You want to really stack up the interest to take account of that.

In theory, those are the factors that set the prevailing interest in the market. A few years ago, I would have backed these factors to play out quite confidently.

For example, when I was working in the early 70’s as an investment analyst for a stockbroking firm, we had very high inflation.It had also been only a few years since the humiliating devaluation of the pound. British government undated bonds were selling at about £16 for each 100-pound block of bonds. That was the price at which you would get the prevailing market rate, which was about 16% interest. It had to be 16% because you were taking account of the fact that your money wasn’t going to go very far when you got it back, maybe 10 years later.

The people who were buying those British undated bonds at £16 per 100, they maybe were smarter than the people who were selling them as a dead loss. Because 40 years later, the government finally decided to cash in all those undated bonds. (Foolishly, as it has turned out.) The prevailing market interest rate was then even lower than 2.5%.

Anybody who bought those bonds at £16 for the £100 worth would have been getting 16% on their interest on the money they actually spent to buy them - for the last 40 years. Then they’d have got six times as much when the government cashed them in, which obviously they did at par at £100 per bond.

Now, obviously, the bonds which have already been issued and out there in the marketplace, as we’ve just illustrated in that fairly extreme example, are going to trade at a rate which is the inverse of the prevailing interest rate. When interest rates rise, existing bonds in the market decline in price.

At the price they change hands, they’ll yield the prevailing rate of interest. If the market interest rate goes down, the price of bonds will go up. This led to a situation where the British government issued bonds that, as I say, had a maturity of 2035 or 2040.

They were originally issued at 4.25%. Then, in 2005, the prevailing interest rate was around 2%. Those 4.5% treasury bonds, maturing 30 years later, were changing hands at £220 per £100 nominal.

I thought: “This is insane. Who would spend £220 today in order to get back £100 in 30 years’ time? Who knows what the £100 is going to buy you in 30 years’ time?”

There are so many unknowns.

It was a dead cert that this was a poor investment, but that was the state of the market.

What’s Happening Today?

The reason this has come to the fore now is that the entire Western world, in particular the United States, is in a situation where all the American treasury bonds held by other countries are being allowed to expire. They’re not reinvesting in dollars. There may well be a political axe to grind in the course of that decision, but I would think that it is probably an entirely rational assessment.

First of all, they no longer need to, because over the past few years most of the rest of the world has decoupled from the need to use dollars for international trade.

Until recently, that was the only game in town, except that the chickens have come home to roost because of the way that the Americans have taken advantage of the situation to a ridiculous degree. Plus, the dollar has actually fallen quite significantly over the last year or so relative to other currencies.

It’s entirely rational that people no longer want to hold dollars, given the confident expectation that those dollars won’t buy them as much next year, the year after, or in five years’ time. That’s why these considerations of the ways that interest rates are computed are relevant today.

How’s that sound?

Yeah, to me it reiterates that we’re seeing the emergence of a multipolar world. There are definite trends moving in that direction.

Just going back to earlier in the conversation, if you’ve got money that you want to lend out and earn interest on, I was thinking of Richard Koch and his Star Principle where he talks about investing. He’s earned a lot of money by investing in small but very fast-growing companies, which is obviously quite different from a government bond, but it’s the other end of the spectrum.

Yeah, it’s the other end of the spectrum.

So, coming back to the bonds due to mature in 2035 or 2040, we reckon they were trading well over the odds. Why is that?

They were trading at that level because they had been issued at 4.5% in 2005. But after the markets had been flooded with currency by the so-called ‘quantitive easing’ in response to the crash of 2008, the prevailing market interest rate had been driven down to less than 2%. So the prices of existing bonds with higher rates moved up to keep their yield in line with that.

There’s a psychological dimension to this, as there was a lot of talk about a bond ‘bull market’. A bull market is a rising market, or one in which people have a lot of confidence, whereas a bear market is a falling market. It means people who were holding those bonds could feel good because they’d be able to sell them at a higher price.

But if they’re holding these as a safe, reliable way of getting interest, that wouldn’t actually help them. They’d make a capital gain on the bond sale, but it wouldn’t do them any good, because if they wanted to reinvest that money, it would be at the current interest rate. They’d still only be getting 2% on it.

The underlying reason interest rates were so low is that all the central banks were busy increasing the money supply. You’ve got a certain supply and demand logic in that if there’s a demand for borrowing money and there’s lots and lots of money to borrow, then you can’t charge a lot of interest for lending it.

However, like any other self-fulfilling prophecy, it has reached a point where the contradictions have become too apparent. This is what’s happening now. The central banks are stuck between cutting off the endless supply of new money, which will obviously create all kinds of solvency problems for various governments, or continuing to do so and thereby eroding confidence in the marketplace about the currency’s viability. The period of cheap borrowing for governments in the Western world is coming to an end.

You can only kick the can down the road so far…

That’s exactly it. They’ve kicked the can down the road, and this is as far as it goes. Of course, what they failed to take into account was that their hold over the rest of the world was not going to persist indefinitely.

It’s not as though the actions of China in particular, but the rest of the world in general, in diversifying out of the dollar are an attack on the dollar as such. It’s simply a preservation of their own self-interest in having put together arrangements that enable them to become more and more independent of the dollar.

The prevailing conversations around this are quite interesting. There’s an acknowledgement that the era is coming to an end. Usually, there’s a proviso added that it will take time to play out and that the dollar is still a major important currency, which it is.

But as I’ve said before, this could spiral down far more rapidly than most commentators expect. The reason is that positive reinforcing feedback mechanisms are involved. Now that the conversation has started about your dollars not buying as much in the near future, more and more people will sell, which will drive the price of dollar-denominated assets down.

Of course, the faster it goes down, the more people are going to panic and pile in. So it’s definitely going to be a very interesting few months in the very near future. We’ll see how this goes.

Watch this space is the usual way we end these episodes, and this seems to apply here. If anyone is listening to this and you have a question about something that Derek said, leave a comment below and we’ll cover it in a future episode.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We thought we’d do a bit of a roundup of current affairs and goings-on today. What’s going on that people should be aware of?

Well, the short answer is, of course, more of the same! I was leafing through my journal over the past three or four months. I’ve been saying more or less the same things every time.

We’re like a broken record…

Yes. We have yet another peace plan in Gaza. It’s quite interesting, there’s considerable criticism and disappointment in some quarters about the fact that the United Nations Security Council, Russia and China abstained from voting on this plan. The United Nations officially adopted the plan, whereas either or both could have used their no votes to veto it. The Security Council has to make unanimous decisions.

This is of course, one of the design flaws of the United Nations. Because of the five permanent members of the Security Council, who effectively have a veto, this now allows one or more of them to paralyse any decision that’s made. Both China and Russia gave very concise, clear speeches about why they thought the plan was not going to work.

Had they vetoed it, and then it not been implemented, they would have been held responsible in the public opinion of the world for having prevented it from being enacted. Abstaining was the only thing that they could reasonably do.

You can see the headlines already, can’t you, in the Guardian, etc.

They had already put forward proposals to modify this plan, which might have made it more realistic. But these were not agreed to by the rest of the council. Abstaining and giving a concise summary of what they’re thinking was probably the best they could do.

As we know, it’s going to be yet another thing that makes no difference. The Israelis certainly aren’t taking any notice of their obligations under this. They’re continuing the slaughter, they’re continuing the starvation. There’s no end in sight.

What the Israelis say appears to all be white noise to me.

Yeah.

We now also have a 28-point plan for peace in Ukraine that Trump has put forward. Whether this is acceptable to either side or not, we just don’t know. So far, the signals from Zelensky are that he’s not prepared to make any concessions.

In the world of reality rather than fantasy, he’s not really in a position to make any concessions or to withhold any.

He’s a bit short on bargaining chips!

Exactly. The lack of realism among Western leaders is, to my mind, staggering. They’ve nailed their colours firmly to the mast of supporting Ukraine and trying to turn the situation around. Whereas every single day for the last year and a half, Russia has made larger and larger gains.

Not only that, it’s outproducing the entire Western world combined in manufacturing new weapons, more ammunition, and more missiles. It’s got a large, growing army, which is rotated to keep its troops fresh. Okay, it’s taking casualties, but it’s inflicting casualties at about 10 times the rate it’s taking them.

Ukraine doesn’t have the population that Russia has, for starters. Seven million people have left the country in the course of this conflict, at least. They have very few fighting-age men left to recruit. The ones that they are recruiting are deserting in large numbers.

Some of them are being murdered by their own side when they attempt to desert. Some of them are being taken prisoner. A great many of them are being slaughtered.

It’s a tragedy, isn’t it? It’s all completely pointless.

I’m not a military expert, but it was obvious to me that it could not go any other way. Yet somehow the Western leaders have convinced themselves that they have.

Unless the Western leadership are just puppets. They’re not really the leaders; they’re not really making the decisions.

Well, it’s quite obvious that somebody or some entity has a hold over them, that goes without saying. But they haven’t been able to find any way to negotiate their position away from the one they’ve rigidly adopted.

In the meantime, in this country, our own public services are being cut more and more deeply. I don’t know what we’ve sent to Ukraine in terms of equipment or money. The equipment sent there is usually promptly destroyed.

As we covered last time out, the money we sent there has been magicked up out of nowhere.

Yeah. For the reasons we discussed with them about the issues, it’s getting harder and harder to perpetuate that. Of course, the latest news over the past few days is the accusations of staggering levels of corruption by Zelensky’s closest accomplices. Theft of funds in the hundreds of millions of euros or dollars.

I would like to gasp in shock.

Well, the thing that amazes me is that if you were into that, you could embezzle £10 million. It wouldn’t bend your entire country’s economy out of shape.

Yeah, why go for £100 million? How many houses do you need to buy?

Exactly. £10 million would enable you to do whatever you wanted for the rest of your life. It’s demented, isn’t it?

We’ve always known, throughout the entire time, that Ukraine isn’t the democratic nation portrayed by the press. It is quite a corrupt place. They have a neo-Nazi battalion as part of the army.

Yeah. The prevailing living standard in Ukraine was very low, which led to widespread discontent among the population. It was possible for the various manipulators of the situation to direct against the government of the time. To overturn it in 2014, bringing in a government that was even more corrupt.

Revolution doesn’t always end very well, does it? It just brings in someone else to fill the power void.

Exactly so. It remains to be seen what’s happening. Apparently, two American generals are going to meet with Zelensky and presumably give him an ultimatum. What will come of that, or how they can spin this not to be an abject defeat by all of Europe, we’ll have to wait and see. Again, watch this space.

Again, watch this space.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We were talking in the conversation last time about energy and how energy is generally misunderstood or misused. We left last week’s conversation by saying that, at some point in the future, we’re going to hit limits in how we generate energy at the moment. If it’s going to be a transformation, we might need to use less energy or be more strategic about it. So we thought we’d unpack that a bit today.

Yes. It seems that the mainstream commentary about this is, “Well, we can’t do without fossil fuels. They’re essential for maintaining the standard of living that we want and improving the lot of poor people.” I wanted to address some of the perhaps low-hanging fruit we could use to consume less energy without reverting to a medieval or Stone Age standard of living.

Without living a small, cold, dark existence, which seems to be the plan for us by those up top!

Yeah, it does seem so. Anyway, I was looking at the analysis in a very good book, written by the late Professor David McKay in the mid-90s, called Sustainable Energy Without the Hot Air, which is an interesting pun. It spawned quite a lot of ‘without the hot air’ books. Of course, he was making a sideways reference to climate change, as well as using the phrase ‘hot air’ in the usual rhetorical sense, because there’s a lot of talk on both sides of the debate that is disconnected from reality.

Now, according to his analysis, the average energy consumption in Europe, including the UK, is about 125 kilowatt-hours per person per day. It’s about twice that in the United States. He did a breakdown of what this is, the various ways that it’s used. I thought if we just look at each of those one by one and see what scope there is for making economies that are not particularly onerous for us.

The biggest contributors to that total, according to his analysis, were car and jet flights, heating and cooling, and what he called stuff —manufacturing and transporting stuff. So let’s look at those for a start.

The manufacturing of goods accounts for 48 kilowatt-hours per day per person. Now, we’ve discussed before that the planned obsolescence and the throwaway culture are really completely unnecessary. Over the course of an adult lifetime, most households buy perhaps somewhere between five and ten of every single one of their domestic appliances. So it’s technically not at all challenging to make these so that they’re A, durable and B, easy to maintain and repair when they’re needed.

It’s the absence of a more modular design, where you can’t repair a single element.

Yeah, exactly. Without getting into a detailed engineering conversation, it’s obvious to anybody. The mere fact that you very often can’t even get them open to examine anything. All of the bearings are not removable and replaceable when they wear out. There’s no supply chain for components, there’s no standardisation across one and another.

There’s a multiplicity of marginally different designs from different manufacturers, resulting in a huge duplication of labour in designing and developing them. We could, purely and simply by shifting from the planned obsolescence and non-repairability model to a far more sensible one, probably cut that 48 kilowatt hours per day per person by a factor of at least five. So that would bring it down to about 8 kilowatt-hours per day.

Transporting stuff is another 12 kilowatt hours per day; you could take that down by a similar factor. So the two of those together come to 60 kilowatt hours a day. It could easily come down to say 12 or 10 without any reduction in our standard of living, and possibly one could say an enhancement. At the same time, it would free us from the financial churn we’re all experiencing of having to earn money to replace all these things, which is entirely unnecessary.

The next thing is the car: 40 kilowatt-hours per day. Of course, these are averages. Averages are fairly misleading unless you’ve got a very symmetrical normal distribution, which you haven’t with any of these things. Probably the majority of people aren’t using anything like that amount of vehicle transport, and it’s a relatively small proportion of the population who use a lot more than that to bring the average up to that level.

It’s a power curve, isn’t it? 10% of people account for 90% of car journeys.

Yeah, probably. So not only is there scope for actually reducing the number of journeys that are done by car, we could probably take a serious look at the amount of time we’re all spending on travelling from one place to another and ask whether this is really necessary and whether it’s really enhancing our lives.

A great many people have horrendous commuter journeys to work and back, a colossal amount of time, stress, and money spent on that, and also disproportionate energy consumption. As we’ve said, if you’ve ever been anywhere near a main transport artery during rush hour, you’ll know that it’s an incredibly inefficient way of getting from one place to another. The majority of those cars have one occupant, sometimes two; very rarely are they full.

Definitely 90 per cent of that could be reduced either by doing far fewer journeys or by doing a lot more of them by efficient public transport. Even with public transport, there’s a lot of scope to improve how it’s done at the moment.

The public transport system is a mess. If you compare the infrastructure we had 70 years ago, compared to the one we have today, and consider the average price of a rail ticket, it’s not comparable.

Yeah. So once again, that could go down either with more efficient transport or with less of it. Very easily from 40 kilowatt hours per day per person to, around four or five.

To be clear, we’re not talking about mandating anything or about telling people they can’t do these things or travel. It’s just structuring things differently so that people don’t have to do these crazy commutes if they don’t want to.

Yeah. Then we’ve got jet flights at 30 kilowatt hours per day. I’ll do a more detailed analysis of what that works out to. Once again, we’re going to have a power-law distribution, where the average is skewed by a relatively small number of people taking many long-haul flights. We could look at what would be possible for the typical person not to be necessarily deprived of holidays and a reasonably different change of climate and culture.

Then there’s heating and cooling: 37 kilowatt-hours per day, on average. That could obviously be greatly reduced by the kinds of measures we all know about —better home insulation, more efficient heating, and, again, more solar harvesting. As I’ve mentioned before, in a climate like ours, the solar contribution is not so easy to do because the time when we need the heating is the time when there’s less sunlight available to provide the energy.

But as far as air conditioning, which is a massive expense in hotter climates, that could very easily be all solar powered, and it would be self-regulating by means of the fact that the time you have got the most demand for air conditioning is the time when you have the most available sunlight.

What do you make of the government initiative to introduce heat pumps and similar measures?

Well, we’ve got a heat pump and I’m very happy with it. It’s worth pointing out, though, that as they’re driven by electricity and the process of generating electricity has its own inefficiencies, so does the distribution. One thing that’s worth saying: all the defenders of the fossil fuel approach keep harping on how it’s not feasible to switch to renewable sources for all our energy because of the intermittency of wind and solar, and that you need baseload power stations.

This needs a serious debate, but a mix of arrangements so we get away from the simplistic idea that we need enormous battery storage to tie solar, wind, and water generation together when it’s not productive. Another point, a proposal Buckminster Fuller came up with as far back as the ‘50s, certainly the ‘60s, was that a worldwide energy grid would go a long way toward solving these problems.

There are parts of the world somewhere or other that are in sunlight at any given time, and there are parts that are in darkness. If it were all connected together, providing continuity of service would be quite easy worldwide.

I’ll just mention another factor that’s in there: 15 kilowatt hours per day for food, farming and fertiliser. I’m not sure how much of that total is for agricultural machinery, which I’m quite in favour of. It was an enormous release of humanity from the backbreaking labour that had been its historical lot when we used human and animal muscle power. But the energy input to fertilisers and pesticides is enormous, and that’s a whole thing that would be cut through.

I think we’re papering over the cracks of soil degradation by just caking on more fertiliser.

Exactly. Yeah.

There’s a whole regenerative farming practice where if you structure things differently, you don’t need anywhere near as much fertiliser.

Yeah, exactly. So in short, it would be quite easy to have a perfectly acceptable standard of living for perhaps no more than 20 per cent of the current energy consumption. One figure I found surprising is that he calculated the defence’s energy consumption at just three or four per cent of the total for European energy consumption.

A more detailed analysis of what goes into that is well worth looking at. We’ve mentioned before the colossal energy expenditure in manufacturing explosives and propellants. Then, of course, you’ve got all of the steel manufacturing that’s going into armoured vehicles and tanks and so forth. So if we had a world where the human race regains its sanity and abandons warfare, which I actually think is quite likely, we could abandon it because we destroy ourselves entirely or destroy our social and political structures.

We’ve commented recently that it’s futile. It doesn’t help. It just blows s**t up.

Yes, it doesn’t solve anything. So anyway, those were my thoughts on the low-hanging fruit for improving the quality of life and improving the viability of our energy consumption.

There are two angles we can take on this: the residential angle we’ve outlined on this call. But yeah, there’s surely the industrial angle, where the biggest industry for these things seems to be the military. That may be the biggest low-hanging fruit of all. But yeah, it’s like trying to turn around a battleship, isn’t it? Because there’s so much money and so many big interests invested in its continuation and expansion. It’s perhaps clear that if they don’t spend on the military, the entire financial system might collapse in itself even faster than it’s going to anyway?

Yep.

So is there anything individuals can do on a more hands-on level?

I would say that anybody thinking of starting up an enterprise of any sort is well worth being aware of these factors and creating something for the future rather than perpetuating the inefficient methods of the past.

I noticed that in the resort where we had a holiday in South Wales last month, all of the toiletries and cleaning products and things that were provided in the housing on the resort had all come from a local Welsh company which was committed to refilling bottles rather than simply following the standard practice of giving you not only a new bottle but a new spray head every time.

Once again, if we look at the economics of that, we’ll see that for many of the products lining supermarket shelves, the packaging might well account for more than half, perhaps more than three-quarters, of the cost of producing the item. In other words, it completely outweighs the cost of the product. So once again, there are opportunities there.

I think the future is going to involve far more return to local businesses, which is going to again reduce the costs and the energy consumption of transporting things from one end of the country to another when they could—

I think people generally want that as well. We want to buy local, we want to support local people. The answer to the energy question seems unlikely to come from the top down. It feels more likely to emerge as a bottom-up thing.

Yeah. I think so.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We’re going to talk about energy today. Where do we need to start with energy?

Well, on YouTube lately, I don’t know whether you’ve noticed the same thing, but I get an enormous number of ads for heaters that supposedly heat your room in seconds for next to nothing in energy costs.

They work by magic.

Yeah, exactly.

I thought, actually, this is physically impossible. There’s a very marginal difference in the efficiency of one heater versus another, because, by default, turning any power into heat is what happens when you’re trying to do anything else. I thought I’d just start with a review of what it is, why we need it, how it relates to our general prosperity, and what the prospects are given the wider picture of the exhaustion of oil, coal, and gas resources, and concerns about global warming or climate change, and so on.

Let’s start with the absolute basics. Two universal laws apply whenever one form of energy is changed into another. In its most basic definition, energy is the capacity to do work. The simplest form of work is applying a force to move something from one place to another. Or if we’re going to be more strict about it, — to either overcome resistance or accelerate something.

You need energy to get your car moving. That obviously comes from the fuel in your tank. The two laws that apply are: the first is that energy is neither created nor destroyed. In other words, the total amount of energy you’ve got inside any closed system is the same at the end of any conversion as you had at the beginning.

The total amount of energy you have at the end of your car journey, or the total amount that exists at the end of your car journey within the totality of you and the environment, is exactly the same as when you started. But of course, when you began, it existed as fuel in the tank, which enabled you to do something, i.e., go on that journey.

At the end of it, there’s less fuel in the tank. All the other energy has turned into the car’s momentum while it’s moving. By the time it’s come to a standstill at the end of the journey, all of that energy is out in the form of heat in the air, possibly some in the brake drums, perhaps some in the engine block and the radiator.

It’s either gone out of the exhaust pipe or been dissipated through the air passing through the radiator, or it’s heated the brake drums and brake discs, then cooled down by heating the air around them. That’s not available for doing any work, which is what brings us on to the second law.

The second law says that any time you convert energy from one form to another, some of it is no longer available to do anything useful with.

Because it dissipates into various forms and is no longer in a single convenient fuel tank.

Yeah, so there are two aspects to this. One is that it relates to imperfections —the shortfall from the ideal of any physical implementation you make. That’s on top of a fundamental limitation.

The fundamental limitation is that if you built the most efficient motor that you could build, it would not be 100% efficient in turning the energy, whether that’s electricity or petrol or whatever it might be, into actual movement. There’s a theoretical maximum to that.

These are called the laws of thermodynamics. Thermodynamics is an unfamiliar word, which immediately makes people think it’s obscure and complicated. Funnily enough, this is not something which is taught in any of the school science courses until you get to a pretty advanced level. Is that your experience from what you remember?

Yeah, I was trying to think if I was taught it at school. It’s more things I’ve learned for myself as I’ve got older.

Yeah, that’s probably about right. I think that’s most people’s experience. The funny thing is, it’s really intuitive. If you see a movie, you can immediately tell whether it’s running forward or backwards. It looks completely ridiculous if it’s run backwards.

If you’ve got a glass that falls to the floor, breaks into pieces, and shatters, that is clearly absurd when you play the movie backwards: all the pieces gather, form into the shape of a glass, and jump back onto the table.

That is because the energy that you had by virtue of the height above the floor is transformed into the glass moving faster and faster as it falls. It hits the floor, it stops. Some of that energy is used in breaking the bonds that held the glass together. Some of it is converted into the movement of the glass pieces skittering around until they come to a stop due to friction.

Some of it is caused just by the directed motion of all the atoms moving together in the glass getting jumbled up and moving around randomly. Atoms moving around randomly is what heat is. I don’t even think that changing the name of thermodynamics to ‘heat and movement,’ which makes it sound a little less obscure, is really the whole story. Because this applies to any conversion of energy from one form to another, whatever that is.

For instance, if you charge up a battery, it takes a certain amount of electricity to power the battery charger. The battery charger gets warm, so some of that heat is lost. The current flows into the battery. Some of it warms the wires up slightly, so that gets lost.

When it gets to the battery, some of it is used to convert the chemical energy into stored energy. But the battery also gets warm, so that dissipates a bit. When you use that battery to run a little electric motor, once again, you’ve got the same thing. There will be a little bit of warmth in the battery as the actual conversion takes place.

There’s going to be some heat in the wires from the current flowing through their resistance. The motor itself will get a bit warm. Through those stages, the same thing applies when sunlight shines on the leaves of a plant. It converts chemicals in the plant into sugars, which store energy. When you eat those plant products, you get energy into your body.

When you think, type, ride a bicycle, or do anything, as we all know, you get hot during exercise — you sweat and lose heat.

So how does anything happen? It happens because the Earth isn’t a closed system. The Earth is constantly taking in and losing energy. It’s taking in high-quality energy—short-wavelength radiation from the sun. That is being converted in one way or another: either by plants, by warming the atmosphere, which creates air currents and winds, or by evaporating water from the ocean, which rises and forms clouds. Then that falls to the ground and runs downhill in rivers.

All of these circulations of energy are coming from the sun. Then approximately the same amount of energy that arrives every day is lost to radiation into space. Of course, the debates about global warming stem from the fact that, with a higher concentration of carbon dioxide and methane and other gases in the atmosphere, the rate of radiation into space is slower, leading to a gradual temperature rise. There are probably all sorts of different processes at work to complicate the overall picture.

Yeah, like the oceans are a big sink of carbon dioxide, aren’t they? They release carbon dioxide into the atmosphere as temperatures change.

Yeah, which creates other problems because then they become more acidic, disrupting coral reefs and the functions of the algae. So you’ve got a very much more complex dynamic system.

It’s presented as a straightforward thing, but it’s not, like any complex system. It’s hard to pinpoint one strand and say, ‘ This is it. ‘

Yeah. The energy that we’re using from coal or oil, or natural gas is energy which has come through that same process, has come from sunlight, which was converted into sugars and other high-energy chemicals in the leaves of plants 300 million years ago, which are then buried under the ground and stored there for 300 million years. Then we’ve blasted through it in just over two centuries.

Once again, this is a key point because, whichever way you look at it, we have used the majority of the readily available supplies of these things. People argue, but it’s really only a matter of detail whether we start to feel the pinch in 10, 20, 50, or 100 years. But it’s obvious to all of us.

At some point, it’s inevitable as the costs of extraction increase.

Yeah, in case we were wondering, it’s clearly the case with the rises in fuel bills of all kinds over the last year, the previous year, and the previous decades. This is a process which is obviously accelerating.

It doesn’t help when we blow up certain pipelines carrying fuel from one place to another…

Yeah, absolutely. That’s dissipation of what has already been harvested before it’s even been used, which is the most extreme form of wastefulness. But the entire business of warfare and modern industrial conflict is squandering energy at a huge rate.

I was just doing some back-of-the-envelope type calculations. I looked at a figure I found for the conflict in Gaza, which was that a little over a year ago, it was estimated that about 70,000 tonnes of bombs had been dropped on Gaza by the Israelis in the course of that war. Of course, we’re now over a year further on, so that’s probably more like 100,000 tonnes.

Probably underestimated anyway.

It’s probably an underestimate anyway, but even that would be three times the number of bombs that the Germans dropped on London in the Blitz. Then you’ve got something that is obviously a similar order of magnitude in Ukraine, or probably much larger, given the area of the conflict.

But just taking that 100, that 100,000 kilotonnes of bombs: a kilotonne of explosive is equivalent to a million kilowatt-hours of electricity or of any other form of energy that you might be considering. That’s just the energy that’s actually in the explosives of those bombs.

You could at least double it for the energy used to manufacture those explosives and the capability. You could double it again to account for all of the transportation from the weapons factories to the battlefield, from the point where they’re fired to where they’re delivered by missiles or aircraft or artillery shells. So we’re now up to about 400 million kilowatt-hours in that conflict.

A typical household uses about 4,000 kilowatt-hours of electricity a year. In other words, that conflict has burned up the energy that would power 100,000 households’ electricity for a year. Clearly, this has been wasted. Not only has it been wasted, of course, because it has destroyed the embodied energy that went into building all the houses, apartment blocks, bridges, and roads, which are destroyed by the conflict.

So we’ve got this energy squandering. At the same time, there are a lot of conversations around where people are trying to say, ‘But we really need energy for the level of prosperity that we have. We don’t want to live in poverty.’ You may not want to, but somehow or other, we’re going to have to accommodate ourselves to the realities of physics and geology.

One way or another, this means we’re going to have to live consuming an order of magnitude less energy. We’re going to need to be harvesting that from the sun —current energy flowing into the Earth —and the difference between that and the energy dissipated into space.

I contend that doesn’t mean we have to return to a lifetime of medieval or Stone Age poverty. This is something we’ll explore in the next episode —the various ways we could do that. But the short answer is that, for a start, we could stop the utterly wasteful and destructive, not to mention devastatingly inhumane, activities of warfare and destruction.

Another is that we could generally stop squandering energy by manufacturing things designed to be thrown away. We could stop wasting energy on all this febrile rushing about in individual vehicles. We’ll do some sums to work out what that could involve.

Insofar as there’s no discussion in the wider public discussion sphere about this, it is along the lines of, ‘Well, we’ll replace all of the petrol cars with electric cars.’ Well, quite apart from the fact that if we were serious about that, we’d have been going flat out to do it 20 or 30 years ago. All we’re doing is a bit of messing about in the margin.

But apart from that, I expect you, like me, manage to avoid too much exposure to driving around on motorways in the rush hour or anything like that. Is that the case, Rob?

Only when I have to, yeah.

Exactly. You mean you avoid it?

Yeah, where possible. The electric car thing is interesting because it’s advertised as zero emissions, but that can’t possibly be true. Unless all of your electricity that’s going into that has been generated by immediate sunlight, which obviously it hasn’t.

Yeah, you’ve just moved the pollution to the power station. You could argue they have a certain amount of value. When you’re stuck in a traffic jam, an electric car isn’t using anything. When it’s crawling along, it uses less energy, whereas your petrol car still uses it when you’re stalled in a traffic jam. It’s using more energy per mile when you’re crawling along at walking pace.

It also made the car very expensive in the process!

But leaving that aside, part of the total solution, which would make all of our lives better rather than worse, is to re-evaluate how much moving around we really need to make. There’s obviously great scope for getting whatever amount of work is necessary done without everybody having to rush in the same time slot to get from there.

I feel like this has happened a bit over the last few years, since all the lockdown shenanigans...

Yeah, probably 1% to 5% of the way that it needs to go.

It’s just when you go to the supermarket and you buy some apples and they’ve come from, I don’t know, South America or somewhere. We have apple trees here. So it’s not just people moving about. I’m very wary of these top-down diktats and 15-minute cities. We’re not for any of that, but especially the movements of things. If we can minimise the movement of things you’re buying locally, support things made locally, and support local industry in the process, surely that’s a big thing.

Yeah. When you buy milk and it came from another country, for instance. There’s plenty of scope here. This is something that we’re all going to have to look at.

Apart from that, I thought we’d just have a quick review of contemporary global events.

Just before we do, I was thinking about the amount of energy required to operate an AI data centre, because it appears to be quite a lot. Something like eight times as much energy is required to query an AI tool as it takes to do a Google search. There’s a big investment going on in these data centres. So again, it is a case where we’re told one thing, but then there’s unlimited energy and resources for other things, like AI and warfare. Or like travelling around in private jets. I don’t see any leadership coming from the top, which is the issue. Nobody visible is living it. They’re just telling us what to do. Until someone lives it, I can’t get on board with it.

Yeah. Or like cryptocurrencies. Yeah. Yep, fair comment.

What’s been going on this week then?

Current Events

In a way, it’s the same, the mixture of the same, except the main actors keep doubling down. We have had a much-trumpeted peace plan from Donald Trump for Israel, which is, of course, immediately violated, with each side blaming the other for the breakdown of the ceasefire and the failure to follow through. So once again, it’s the picture as before.

In Ukraine, there’s been a major development. In the two major towns, Pakrovsk and Kupiansk, there have in each case been 5,000 or so Ukrainian soldiers entrapped by being surrounded by Russian troops, or at least having all their possible escape routes and supply lines cut by Russian control.

I don’t know whether you’d heard that Putin announced he was prepared to observe a six-hour ceasefire in both cases and to provide safe passage for any Western journalists who wanted to go there and see what the immediate situation on the ground was. Had you heard that?

I’ve not, no.

A lot of people haven’t. It was not very much reported. Of course, the proposal was rejected by the Ukrainians. So we’ve been deprived of the opportunity to find out those realities. But what is interesting to me is that as I watch this, it’s pretty obvious which way the conflict is going.

The Russians have far more troops. They’re losing them at a much slower rate. They’re still recruiting volunteers without having to conscript. Whereas the reverse is the case on the other side. Ukrainian losses, by estimates, range from 7:1 to 20:1 in terms of casualties per Russian casualty.

I know that many Western outlets report the opposite, but that doesn’t add up. Plus, they’ve got very exhausted troops, whereas the Russians keep circulating them. They’ve burnt through most of the supplies of arms and ammunition and vehicles that the West have provided them with.

Although the Russians have taken losses of equipment, they’re plainly completely outproducing, in terms of ammunition and all kinds of weaponry, the entire Western group of nations put together. So there’s only one way that the conflict can go.

Once again, the Western media tries to portray the Russians as being the ones who are reluctant to talk, whereas as far as I can see, they’ve said over and over again that they would sooner settle it by diplomacy than on the battlefield. But if they can’t have what they laid out at the outset as their clear objectives —namely, that they were not being threatened by a hostile power right on their border —then there was no other eventuality up for debate.

So this is just moving on and on. The European leaders and the British leaders still seem stuck in this, a fantasy world of thinking that somehow the tide can be turned. Sooner or later, they’re going to face the reality that this is not the case. How they cope with that, or how the population in general is going to cope with that reversal in position —that acceptance of the reality on the ground. Have you got any thoughts about that?

No, it’ll be interesting to see how the narrative and propaganda around it changes. Because these people also control all of the major news outlets. You get this psychological nudge operation. You can tell when the tide’s beginning to turn. It was the same during the COVID period, when all of a sudden, medical products went from being fully safe and effective to only partially safe and effective. There was just this nudge. It transitioned over time. I see the same thing happening.

Yeah. Well, the other big thing, of course, is that Virginia Giuffre’s book, Nobody’s Girl, has been published and has become an instant worldwide bestseller. Have you followed any of the commentary about this at all?

No.

Okay, well, I bought a copy and I’ve read it. It’s a very harrowing read. There are many things that are unpleasant to face. One of them is that it’s not a matter of merely rich and powerful people having sexual escapades with young, poor, vulnerable women and girls. But it’s the brutality and the nastiness of it. It is a genuine infliction of pain and suffering, which is extraordinary.

In the circles that I’ve lived in my entire life, and I would have hoped that everybody did, sex was something which was, as one young woman put it to me years ago, a really groovy way of being nice to each other. The idea that people get a kick out of using it to be horrible to others is hard to face up to.

But regardless, the book names a number of people. It certainly highlights their involvement, whether there are particular accusations of sexual misconduct. There are very direct accusations against unnamed individuals. For legal reasons, but there’s enough information there to tie up with other public-domain details to identify those people.

This is going to reinforce the demands that all the material gathered by the FBI in its investigation be uncovered and that the people concerned be held to account. Because quite apart from people’s outrage against the nature of the crimes, the main outrage is about the one law for the rich and another for the poor syndrome. Whereby rich and powerful people can just flagrantly ignore the legal system and ignore any norms of civilised behaviour, and walk away with complete impunity.

That obviously is a kind of injustice which applies not just to sexual indiscretions, but it applies to fraud and theft on a grand scale and all manner of things. When I look at all these different threads, the conclusion I come to is that there are all manner of fault lines that have been hidden and are becoming increasingly clear.

Some people are more exercised by, for instance, the sexual scandal. Some people are more exercised by the abuses of the financial system. Some people are more exercised by the horrors of warfare. Some people are more exercised by the growing, completely unnecessary and highly destructive gap between the ultra-rich and the mass of the population.

All of these things are coming to the boil. This is quite apart from the pressures imposed by rising energy costs, declining output, vanishingly adequate supplies of raw materials from mining, and population pressures. All of these factors are coming together. One or the other will trigger an avalanche. Then it’s going to spread over into the others.

So it’s going to be pretty dramatic in the coming years, possibly even months. But my conviction is that there is at least a possibility of something much more positive arising out of this. So we do live in interesting times.

There’s a lot of negative energy about it, isn’t there? It’s very easy to get wrapped up in that. But there is an alternative route of focusing on what we do want to create or co-create and move towards. There’s a lot of positive energy around that as well. So yeah, keep standing in the light.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

Today, we’re going to talk about how wealth is seemingly represented by weaponry and other destructive elements of society, and relate that to some current events. So what do people need to know?

“Ilth” and the Futility of War

Well, it’s worth reminding ourselves of the definition we settled on: wealth is what people want. Obviously, people do want weapons, and therefore you could indicate that that’s a form of wealth. Certainly, in accounting, we add up all the financial transactions to get a number —the gross domestic product (GDP). The prevailing attitude is still that this should be regarded as some proxy for human wellbeing. Obviously, if you’re making huge quantities of weapons, it adds to the GDP. Particularly if you use the weapons and destroy a lot of things, and you then have to spend more money rebuilding them, that adds to GDP too, which highlights the absurdity of this as a metric.

I think ”illth” is a better word for things like weapons, ammunition and military equipment; wealth being a measure of wellness, and ills being a measure of illness. So with illth, it should be a negative and subtracted from the metric. But even if we get away from money, what does that represent? Well, apart from enormous margins of profit, which are simply being funnelled into the pockets of the people who are the ultimate beneficiaries of the arms manufacturers. The rest of the money is going to pay people to design the weapons, to pay people to manufacture the weapons, and to buy the materials that go into their manufacture and to pay for the energy that goes into the manufacturing process.

But more importantly, it goes into the energy in the explosives and the propellants. All that is energy which could have been used for something else. It could have been used to delay the transition away from fossil fuels once there are no longer any economic sources of them, quite apart from the pollution aspect. So this is truly tragic, and that’s before we’ve even gone on to the humanitarian issues of the pain and the suffering and the bereavement that this causes.

Another thing that I’ve been increasingly reflecting on over the last year or so is that warfare itself is becoming futile. Even within the mindset of regarding tanks and personnel carriers and bombers and missiles and fighter aircraft and all the rest of it, even if you regard that as an investment, it’s only an investment if once you’ve got it, you can use it over a period of time to do the job that you wanted to do, to get something that seems to the weapon owner as being worthy of the investment in terms of a result.

What we’re plainly seeing is that enormously expensive pieces of equipment get put into the battlefield, and a large number of them get destroyed very often by very cheap drones within a matter of days or weeks. Sooner or later, even within the calculations of people who think that warfare is a worthwhile operation in the first place, even within their calculations, it must get to the point where, hang on a minute, this looks self-contradictory. What do you think?

I was wondering whether warfare has been largely futile for pretty much a hundred years, other than as a way to cull the population, if that was your goal. Perhaps the Vietnam War was a good example of a war that was futile, not winnable, even with the unlimited arms budget. So I don’t think this is necessarily new. It’s just an extenuation of a process that’s been happening for a while.

Yep. Obviously, the whole thing, from my point of view, and I would say from the point of view of anybody who wasn’t actually insane, the whole enterprise is disgusting. We just shouldn’t be doing it. There should be more in the way of a convincing attempt to avoid it than there seems to have been over the last few years.

But what I’m saying is that the drone warfare that we’ve seen in Ukraine has really shifted the balance entirely. In Vietnam, the slaughter on both sides was horrific, but the equipment and the weapons that went in there were reasonably durable, whereas we’re seeing no durability at all on the battlefield in Ukraine. This is going to be increasingly the case going forward.

Current Affairs

I don’t know whether you saw or not, but there was an article in The Guardian revealing that Boris Johnson had received a kickback of £1 million (or a present or a consultancy fee) around the time that he went over to Kyiv and strong-armed Zelensky into backing out of the peace deal that was on the point of being signed. This donation came from a British man who lives in Thailand, who is apparently the largest shareholder in three UK arms manufacturers.

So I don’t know how widely this has been disseminated, apart from amongst Guardian readers and some followers of George Galloway and other alternative news channels on the internet. Had you come across this at all? What is interesting is how much effort will be made to hold him to account for that in some way, or to provide an explanation.

I’d not known. It doesn’t surprise me at all. I don’t think there is any holding of accounts of people allegedly at the ‘top’. It seems that they just do what they want with no consequences. That would be my prediction if I were a betting man.

Yeah, mine too, I’m afraid, but we’ll watch this space.

The second thing that’s happened is that there is supposedly a peace deal for Gaza on the table. Whether this comes to anything or not, we’ll just have to watch this space. Given the record of Israelis holding to any agreements they’ve made, personally, I find it very difficult to raise any optimism about the likelihood of anything good coming from this, apart from hand-waving.

Another interesting thing that has happened this week is that China has really taken the gloves off by imposing export restrictions on rare earth minerals and the high-performance magnets made from them, as well as on the technology for processing and refining them and making these magnets. Bearing in mind the depletion of the US and Western arms because of the Ukraine conflicts and the Israeli conflicts and the far lower output of the weapons manufacturers in the States and the importance of these magnets for just about the entire range of high-performance modern weaponry, it looks like that’s a serious torpedoing of the ability to replenish the stocks, which I can only say is a good thing.

Of course, there have been howls of outrage and accusations of unfair trade wars and so on, but the Chinese clearly know what they’re doing.

So bearing in mind what I’ve said, it is potentially a real game-shifter. Of course, more or less every day this week, there’ve been conflicting stories about whether America is going to provide Tomahawk missiles to Ukraine and what impact this would have on the war. There have been the usual contradictory statements from one day to the next, along with ambiguities from Trump.

It now looks as though the latest thing is that he’s said he’s not going to send them, which is just as well. It couldn’t possibly be anything but catastrophic, I would say, if they went there and started firing missiles which have a nuclear capability. Of course, until they land, you don’t know whether it’s got a nuclear warhead or a conventional one. But the only point of Ukraine having them would be to make more attacks deep inside Russia.

Zelensky’s gone to Washington. It looked like he had a bit of a low-key arrival. There was very little pomp and ceremony, which wasn’t a good omen, according to people who read these signs. He’s due to meet with Donald Trump today. So at the end of that, we will know whether the Tomahawk missiles are on or off, and we’ll know what statements, if any, have been given about how much extra support he can expect from the United States. So this will be interesting, and we’ll see what the implications of that are and what people make of it over the next few days.

Of course, the much more significant thing is that yesterday, Trump said he had a long phone call with Putin and that they’re going to arrange a face-to-face meeting, possibly next week, possibly in Hungary. That is a bit of a smack in the teeth for Zelensky. Let’s hope that it’s a helpful sign. Because of the erratic nature of Trump’s pronouncements, it’s very difficult to know for sure where he’s going, what he thinks, or how much is a bluff and how much he knows himself.

Of course, the big question is what is going on behind the scenes? Who has leverage over him? How strongly that leverage is being applied, how much of what we’re seeing is a result of him trying to accommodate that, and how much of it he still is a loose cannon from the point of view of the intelligent deep-state bureaucracy.

Yeah, I don’t know about Ukraine, but I think regarding Israel, he definitely seems to be a controlled actor in the process. People like Miriam Adelson seem to have given him many billions during the election.

Right. Well, things are being revealed more candidly to more people, and this is an accelerating race. The other thing that’s happened is that in Germany, there’s been the most enormous anti-war demonstrations and demonstrations against Chancellor Mertz.

Sooner or later, the ruling elites of Britain, France, Germany, and Europe in general are going to have to make some accommodation with how far out of step they are with their populations at large. Rather worryingly, so far, it seems to be more and more draconian crackdowns. It’s difficult to know how far that will go and to what extent it will be effective in the long run. So we’re definitely living in interesting times.

Perhaps a little bit too interesting!

Yeah, perhaps. Okay, so assuming we’re here next week, the focus of next week’s talk, I want to look at the role of energy and what could be possible as we move out of the age of being totally dependent on fossil fuels, which is something that’s going to unfold in your lifetime if not in mine.

No doubt at great cost to us peasants.

Yes, okay, we’ll see.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We’re talking about inflation today. I was talking with my wife Linzi the other night about how we basically can’t go to Aldi, which is our local supermarket, and spend less than a hundred pounds, no matter how hard you try these days. She was like, well, where does this end? Because people can’t carry on doing this. I said, “It ends with the complete controlled demolition of the financial system and digital serfdom!” But that’s just my take.

Yeah, well, it’s very interesting to know to what extent it’s a conspiracy and to what extent it’s a cock-up.

Anyway, I was thinking about it because I did some calculations, and they surprised me. For one thing, I’ve looked at the prices of various things in pounds and in gold. I’ve also looked at the prices of things measured in terms of hours or minutes or weeks, or years at minimum wage, according to what the scale is. Some of those results surprised me, but they’re quite illuminating.

The calculation that I did, which brought me up to thinking about all this in more detail, was a reflection that when I went into the shops, if I pay cash, which I try and do as much as possible, as a rule, anything less than 50p, I tell them to put it in the charity box.

I don’t feel I’m being overly generous there. So I thought, ‘What is a pound worth these days?’ I tried to compare it over the period across my lifetime. For many people listening, the time when I was a schoolboy might as well have been the era of cavemen or dinosaurs. But it’s real for me!

I lived through the 1950s, and there were occasional comments about how prices had changed since the war. However, prices were generally stable throughout my childhood and university years. There was perhaps a slow, gradual erosion. The two-ounce bar of chocolate stopped saying two ounces on the front, and it very imperceptibly got smaller. But inflation wasn’t romping away; prices were on the whole fairly stable.

The smallest coin in circulation was half a penny, half an old penny that was. There were 240 of them in the pound.

So, how does a pound these days compare with that? The short answer is that throughout my childhood, a pound was worth 2.9 grams of gold. Now that had gone down from 7.3 grams of gold in 1914. By 1930, it was 4.2 grams of gold. By 1945, it was 2.9 grams of gold, which was stable through my childhood.

There was the frightful humiliation and shock of the devaluation of the pound in 1967 when the exchange rate was reduced from the post-war $2.8 to $2.4, valuing the pound at 2.5 grams of gold. So that’s actually not very much difference. There were shrill cries of horror about what a humiliation this was, how incompetent the Labour government under Harold Wilson was to have allowed this to happen; but it was actually the accumulated effect of the disparity of economic performance in Britain compared with the United States over 23 years from the end of the Second World War.

Anyway, now in 2025, any guesses how many milligrams you get for one pound?

Not many. 0.2 grams?

It’s actually now 11 milligrams. That’s 0.011 grams. So that’s 11 milligrams of gold for a pound now, which ironically is almost exactly the value of one penny in my childhood - and a penny was then valued at 12 milligrams of gold. So in other words, a pound now will get about the same amount of gold as one penny’s worth in 1960.

Again, the reminder that that was not a hundredth of a pound, it was a 240th of a pound. Anything smaller than a halfpenny obviously didn’t exist. Well, there were farthings (a quarter of a penny), but they had practically stopped being circulated.

So I then started looking at some other things. I thought, “What’s the minimum wage?” I was actually quite surprised that minimum wage is now, do you know what it is?

About £15 an hour?

You’re closer than I was. It’s £12.21. For some reason they call it the ‘national living wage’. I don’t know what that’s supposed to mean. For a 40-hour week, that comes to £488, which certainly makes the old-age pension look a bit stingy.

In 1960, there was no formal minimum wage in place. Except for catering workers and agricultural workers, because those were the groups that held the least bargaining power. So presumably, I would have imagined that that was brought in by the Labour government in the post-war years. Those workers had a legal minimum wage. I’m not quite sure what it was.

But it was probably fairly close to the de facto minimum wage everywhere else, which was worked out by bargaining of one sort or another between employers and employees. For unskilled manual work that was five shillings an hour, 25 pence in today’s money. So for a 40-hour week, you got £10 a week. What’s your immediate reaction when you hear the idea of people living on £10 a week and how do you think the £488 minimum wage for a 40-hour week now compares with it?

It’s not a comparison. It feels like I’m trying to compare apples to oranges in my brain.

Well, you are in a way, and I’ll explain why in a minute. But in the first place, most people, even when I tell them what I was earning as a young graduate salaried worker, they go, “How did you live on that?” I reply, “That was about four times as much as a bus conductor was making! You could live quite well on it.”

But the thought is that that must have been incredibly difficult. Well, in fact, very few adults running a family earned as little as £10 a week, but they probably worked an extra 10 or 15 hours a week in overtime. Overtime was in those days almost universally paid at time and a half.

You’d be getting seven and sixpence an hour instead of five shillings for what you worked over 40. So most people in unskilled labouring jobs would probably take home about £15 a week. That of course was under the income tax threshold. So they’d be getting that net, which is another point. At £488 today, I think you’d be paying 25 pence in the pound tax on half of it, wouldn’t you? You’d definitely be getting some deductions.

I then calculated what that is worth in gold. So, your £10 a week in gold would be equivalent to 29 milligrams. The £488 a week minimum wage now works out to be equivalent to five milligrams of gold. So in other words, you’re earning less than a fifth of the amount measured in gold. So you’d have to be making something like 3,000 pounds a week these days to get the equivalent of a £10 a week minimum wage job in 1960.

Everyone feels they’re trying to run faster just to stand still.

The Red Queen in Alice in Wonderland is quoted more and more frequently these days, and it’s plainly the case. How does that compare with some real purchases? So I did a few things. I looked at a house, a pint of beer, a pint of milk, and a litre of petrol.

I try not to think too much about the inflation on a pint of beer...

Well, funnily enough, it’s not too bad in absolute terms. In 1960, a pint of beer in a pub was two shillings, that’s ten pence in modern money, which sounds brilliant. I put down for the price now £5, so it obviously depends on the pub and the city and everything. Is that still about right in Sheffield?

I’d say it’s a reasonable average.

Right. OK. So the two shillings pint of beer in 1960 would be 20 minutes’ work at minimum wage. The £5 pint of beer in a pub today is 25 minutes’ minimum wage. In fact, it’s quite similar.

I did a similar exercise with some of the other ones. The interesting one was housing. So, in terms of gold, I was surprised to find out it’s not nearly as different than I expected. I took a typical three-bedroom family house in 1960 as being £3,000. Obviously, it depends on how well-appointed the house is, its condition, and its location, and it will vary quite widely. But that would be quite reasonable for a modest family house in Winchester when I was growing up. Similar houses now change hands for about £600,000, which sounds like a walloping increase.

However, if you measure it in gold, in 1960 that would have cost you 8.7 kilograms of gold. That £600,000 would have only cost you 6.3 kilograms. So in terms of gold, it has gone down a bit. However, if you look at it in terms of minimum wage, it’s equivalent to six years of continuous work for the value of that house in 1960. Obviously that’s hypothetical because if you’re on minimum wage, you wouldn’t be buying a house. You wouldn’t have anything left over after your basic expenses. But it’s helpful to get the ratio.

Today, of course, it’s more like 33 years of minimum wage, which explains why housing has become unaffordable for people. Bearing in mind, even people earning six times the minimum wage would still find it unaffordable. They would have found it as unaffordable as the people who were on £10 a week in 1960.

As I said, in 1968 it was 2.5 grams of gold to the pound. By 2006, that had gone down to 91 miligrams. In 2009, it had gone down from there to 28 miligrams. That was just after the financial crash, quantitative easing and so forth.

We’ve seen a lot of that in the last five years as well.

Yes, well exactly. At the end of 2019, just before the so-called pandemic, the price of gold was still at 28 miligrams of gold per ounce. By 2023, that had gone down to 20. Over the course of the pandemic, it lost nearly a third of its value, which is not surprising, given that a lot of money was printed and nobody was actually doing anything to earn it because they weren’t allowed to. What is interesting is that it’s almost halved in the last two years. So, if losing 50% of the value isn’t hyperinflation in two years, it’s certainly not far from it!

It explains why I can’t spend less than £100 at Aldi for just a few baskets of food!

Yeah, absolutely. Anyway, there we go. Those are all things that are worth reflecting on.

Obviously we don’t venture into the realm of financial advice, but if you do have large amounts of liquid assets in the form of cash, keep an eye on that because it’s dwindling away. You can probably buy less gold with it than you could a month or two ago, even.

The Multi-Polar World

Yeah. I think we mentioned last week that the parallel financial system being set up principally by Russia and China, the other members of the BRICS group and basically the whole of the rest of the world, is clearly moving towards a gold-based exchange arrangement.

My prediction is that these trading arrangements are in effect a return to the gold standard by stealth. It’s not being announced as such. That’s what it will relate to in reality. They’ll still be talking about their own currencies. Over time, the settlement arrangements have returned to a full circle, reverting to the pre-1914 arrangements, where London was the primary centre at that time. Later, it became divided between London and New York, and possibly Frankfurt as well.

But where the gold holdings were stored, they were simply transferred between one ownership and another. That is what’s happening with the gold exchanges in Shanghai and in various other places. The development is that these are also going to include various other strategic metals as well as gold. So that’s a very interesting development.

Technics and Civilisation

Anyway, I wanted to say a bit more about this book. As I said, it’s called “Technics and Civilisation”. What Lewis Mumford meant by the term “technics” was not just technology, but also the entire political, economic, and financial structure of society, both nationally and globally. There’s a historical view. Then the last section was a reflection on essentially what’s working, what’s not working, and how things might work.

Now, he wrote this in 1932, just after the Wall Street crash in the early years of the Great Depression. It’s very interesting because the book had a second edition in 1963, and he wrote a foreword to that, saying “I was wrong about a lot of things. I was optimistic that things would get better, but the last 30 years have actually seen things go from bad to worse in a lot of ways.”

It’s interesting that 1932 was when Aldous Huxley wrote “Brave New World”. In the early 60s, he wrote “Brave New World Revisited”.

Huxley said, “In the novel, I projected this as 600 years in the future, but in fact, we have practically got there in 30 years”. It wasn’t until a decade or so later that it became obvious to many of us that the prosperity was suddenly going into reverse.

This particular edition was released in 2010. So that was just after the global financial crash. There is a foreword written by someone else stating that the ideas in this book are worth reconsidering. I just wanted to read one passage, give you a flavour that sums up how visionary some people were, even in those dark times of the 1930s depression, where he was talking about the structural unwisdom of the entire system.

He says, “At the same time, the conception of a normalised consumption acknowledges the end of those princely capitalistic dreams of limitless incomes and privileges and sensuous vulgarities whose possessions by the masters of society furnished endless vicarious gratification to their lackeys and imitators. Our goal is not increased consumption but a vital standard, less in the preparatory means, more in the ends, less in the mechanical apparatus, more in the organic fulfilment.”

“When we have such a norm, our success in life will not be judged by the size of the rubbish heaps we have produced. It will be judged by the immaterial and non-consumable goods we have learned to enjoy and by our biological fulfilment as lovers, mates, parents and by our personal fulfilment as thinking, feeling men and women.”

You could transplant that to today, couldn’t you?

You could indeed. Anyway, that’s worth doing. The only thing I’d like to say about the world is that it’s going on much as before. On all fronts, despite maybe a bit of arm-waving, the powers that ought not to be are doubling down on their lunatic behaviour.

One thing that I found particularly interesting is that there’s an annual think tank called the Valdai Discussion Group, held in Russia. There are a lot of business leaders, politicians and journalists there from all over the world, although not so many from the Western world, surprisingly enough.

Putin gives a keynote speech every year, or certainly most years. He spoke for over three hours this time, very light-hearted and quite humorous in places. Then he took questions and answers. He took any questions that came up and responded.

Whatever you think of him and whether you agree with him or not, it’s healthy to examine what he says thoughtfully and evaluate it as best we can. So I thought, “I wonder what the BBC had to say about this.” So I went to the BBC website, I searched for Valdai, and a page of results came up. There were a couple there with things about Putin giving a speech at Valdai, and the headline in the synopsis seemed quite positive.

I thought, oh, that’s good. But then I started to read them and I thought, hang on, this doesn’t sound right! I looked and the two top results for that search were 2013 and 2015. There was nothing whatsoever about this event that happened last week! That’s at a time when, to my mind, we should be doing our very best to understand what his view of the world appears to be, rather than either hiding it from ourselves or somebody taking the opinion that it’s not worth drawing anybody’s attention to.

As usual, it is propaganda by omission in this case.

Yeah. Okay. Well, assuming we’re still here, we’ll meet again sometime next week.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

So we thought we would pass comment on current events today. What’s going on that people should pay attention to?

Well, probably at the top of the list would be alleged incursions by Russia into the airspace of various NATO countries. We briefly discussed this a couple of weeks ago when the drones appeared in Poland.

All of the people that I regard as sensible commentators are now firmly saying what I strongly suspected at the outset, that this is a straightforward false flag operation. It had nothing to do with the Russians at all. They were Russian pattern drones. None of them were armed.

They were all drones that are used as decoys to confuse the air defence systems. The house that was damaged was damaged by a missile fired from a Polish warplane which shot a missile at the drone, which landed on the house instead. Since then, we’ve had screaming headlines, I certainly saw on the newsstands, front page headlines in the Daily Mail about alleged Russian planes violating Estonian airspace.

Russians have firmly said that they definitely did not deviate from internationally agreed flight paths and encroach on anybody’s airspace. Then just yesterday we had three drones appearing over Danish airports, causing a lot of disruption. Actually, nobody knows where these came from, although the Western media are firmly saying this is a Russian provocation.

What strikes me about these stories is that they’re monumentally implausible. Russia would have no conceivable benefit by aggravating any NATO countries. They’re focusing entirely on the objectives that they stated at the outset of the Ukrainian conflict. They’ve not budged from that. If you actually listen to what they’re saying, it’s an entirely understandable concern. You may or may not agree with them, but most of the comments about it are complete fabrication and speculation rather than spin put on the interpretation. Unfortunately, people are so ready to be stirred up on nationalistic or ethnic divisions. To me, the fundamental thing is that we’re all human beings. A lot of the conflicts are not even between ethnically or genetically diverse populations. Even the most genetically diverse populations on earth are still human beings. The fundamental thing is the brotherhood of the entire human family.

Yes, they get us punching sideways to prevent us from punching upwards.

People fall for it so readily. It’s really perilous in an increasingly nuclear-armed context.

There must be some people who are absolutely itching to fire a nuclear weapon. They talk about tactical nukes as though this were something very minor. A tactical nuke is about the size of the ones that destroyed Hiroshima and Nagasaki. So it’s not trivial. I don’t suppose you’ve ever seen the movie called “The War Game,” which was made in the 1960s? It was intended to be broadcast on television, although they decided to pull it. But it did have a very limited showing in the cinema, I saw it when I was at Cambridge. The scenario they had for how the war started is precisely that: firing a tactical nuclear missile, which then triggered a much larger exchange. What was depicted in the movie was a very limited strategic exchange that was enough to bring the fabric of society to a standstill.

A cascade of events. It’s not just movies, I was thinking of Daniel Ellsberg, who wrote The Doomsday Machine; he makes a very good case for the cascade of events that would happen if that were to be triggered.

Yeah, there are plenty of accounts, but obviously, there are people who are making increasingly reckless choices in the face of this. Israel apparently has 90 warheads, and it seems to be the one that is most likely to act recklessly.

Douglas MacGregor has just been speculating that they’re gearing up for another attack on Iran. I would have thought Iran had demonstrated conclusively that this would unleash a decisive response.

But that doesn’t stop people from seriously considering it. Then many in America believe that China must be contained in some way. They should have thought that before they built the fastest-growing economy in the world.

Just shows what you can do, doesn’t it?

One of the things that occurs is that there seems to be absolutely zero strategic thinking in any of the Western nations, including the United States. They seem to be rushing around trying to apply fixes to something or other without any long-term vision of how this might work out, how it is likely to work out, how it could possibly work out and what they would like it to work out to. That is really the picture across the entire board. I seriously wonder what private communication has occurred between Putin and Trump.

I don’t know how high Putin’s expectations were of getting anywhere with normalising the relations, but that seems to have ground into the sand. It looked very promising to me that, whatever one thinks of Russia, most of us have a very unrealistic picture of it. We imagine it’s very much like the Soviet era. We don’t realise the progress that has been made economically and socially within Russia over the last 25 years. For one thing, but regardless of what differences of strategy and philosophy or anything else, we’re all living on the same planet. We need to find a way to get along with each other. The first one is to actually listen. The dogged refusal to listen or even to accurately report what they do say is extraordinary.

It’s like any relationship, though, isn’t it?

Yeah. So the public position is that Trump is more or less washing his hands of Ukraine. He’s saying if the European countries want to buy American weapons and give them to Ukraine, they’re welcome to do that. None of the European countries have got any money to buy the weapons with, we can’t even afford them.

Not a problem, for weapons we just magic up more money!

Yeah. Which just impoverishes everybody by devaluing the currency. So the only hope is that the American economy and the economies of the British, French, and German countries tank so conclusively that we can’t pursue this. The trouble is that the personnel and weapons are already in place. The question is whether economic collapse will overtake the military situation.

There’s no doubt the big picture is that the dollar-based global economy is coming to an end. I probably sound like a broken record because I say this every broadcast, but it’s becoming increasingly obvious.

So if you’ve missed any of the last 17 broadcasts, we will repeat the message until it’s clear!

Yeah. The developments with the Chinese setting up gold exchanges in various places, including Saudi Arabia, are essentially facilitating what is, in all but name, a gold-based international trade. It’s just returned to exactly what it had been from the time of the Venetian bankers up until really up until Nixon took the dollar off the gold standard because effectively when the dollar was backed by gold and when there was a kept commitment to retain its conversion value at $35 to the ounce, then effectively World Trade was in gold, even if it was denominated in dollars.

Of course, that was the origin of the wealth of the city of London; they held gold, which backed the sterling pound, which enabled transactions to be made in that. So we’ll definitely be returning to that. You can draw your own conclusions about what form you want to store your own wealth in. We won’t elaborate on that, but our reasoning is fairly straightforward. Then not only are they, there are certainly elements in the United States establishment that would want some conflict with China.

I would have thought the Chinese had just decisively demonstrated that they’re ready for anything. Now they’re making very ostensible warlike noises about Venezuela.

Yeah, I’m like guys, come on. We’ve had this psy-op a few years ago. Do we have to go through it again?

Yeah. Well, the excuse that they are pivotal to the supply of drugs to America doesn’t even bear thinking about. The majority of the drugs, as everybody knows, come from Colombia, Ecuador, and Mexico, all of which are firmly in the pockets of the United States.

It’s never about what they say it’s about. That’s obvious.

No, the most obvious thing to notice is that Venezuela has the largest oil supply reserves in the world, or among the largest. The question is whether the internal contradictions, whether financial or social tensions, which are endemic to the entire Western world, will overtake it before someone does something truly reckless. This is a pretty gloomy topic. Any other thoughts on this?

It feels to me like we’re watching the controlled demolition of all these economies in real time. It’s a question of what’s going to happen first.

One thing that is also significant is that there’s another current, which is the numerous ways in which our governments have been lying to us for years and years.

In pretty much every way!

Different people will have different wake-up moments. The moment that you’ve woken up about one really big thing that gets under your skin, you start looking at the others.

That was 9/11 for me, realising that there was probably not the way it was presented.

Can you remember which conversation it was that woke you up to that?

Yeah, I was a student in Sheffield, and there was a documentary that went around. It was a series of documentaries that explored the fact that it appeared to be a controlled demolition, whether it was or wasn’t exactly, but it examined some of the aspects that didn’t quite add up about it. But that was 2006-ish.

Yeah, well. This is getting a lot of coverage now.

There are a lot of people realising, since the Charlie Kirk assassination, that Israel probably is controlling more of American foreign policy, or seems to be influencing more foreign policy decisions than they’d been led to believe..

Well, exactly.

Tucker Carlson has produced a series of seven in-depth programs on 9/11. He was one of the speakers at the three-day event, which was held last week over the 10th, 11th and 12th of September. They had very knowledgeable speakers discussing various aspects of it. Building seven, the two towers, the Pentagon. There’s been huge coverage about this. Whatever you think, what is really weird is that for something as important as that, it was totally taboo to even discuss it.

That’s the point, isn’t it? If something is taboo, it’s worth looking at.

I wanted to ask you, the UK government has announced that digital ID is going to be mandated at some point soon. That was announced in the last couple of days.

There was certainly a petition saying we don’t want it, which I signed. I don’t know whether you saw it?

I’ve seen it. Yeah, I should sign it. But yeah it looks like they’re gonna try and ram it through.

Yeah.

So we’ll see how that goes. It feels like there should be enough people who say no to it to make it not enforceable. We’ll see. But tying that back to the finance lens, it’s like if we are arguing that this dollar-based currency is gonna not going to be a thing anymore, then what are they trying to build instead? This move to central bank digital currencies is very much on their agenda. Obviously, the digital ID is the prerequisite for that. So yeah, it’s just something to be aware of.

Yeah. It depends on whether the wider, more fundamental vulnerabilities are addressed before all this is in place. Yeah, there’s no doubt that there are very strong forces moving in diametrically opposite directions. Either one of them could prevent the other from happening.

I would say the heartening thing is the rapidly accelerating and self-reinforcing state of the awakening process.

Yeah. Thanks to COVID, there are more people switched onto the digital ID threat than would have been the case if they’d done it the way around and done digital ID first.

Incidentally, Tucker Carlson stirred up a huge storm with the eulogy he gave at Charlie Kirk’s memorial service. I don’t know whether you heard about that? He pointed out the fact that Jesus said things that people in power didn’t like, and therefore they decided to kill him. Now, some people think that it’s a bit of a stretch to draw the parallel with Charlie Kirk, but the point he was making is that Charlie Kirk was saying things that powerful people didn’t like, and then he got killed. Whether you think that the analogy with Jesus was appropriate or not is another matter.

He’s got a point, you know, as far as I know, Jesus was a maverick and a thorn in the side of the establishment; that much appears to be clear.

I heard the other day that in conservative Christian circles in America, if anybody suggests praying for the children of Gaza, they’re told to shut up. The extraordinary thing is that people who seem to most determinedly identify as Christians don’t seem to actually adopt the core teachings of loving thy neighbour.

It’s just the levels of indoctrination that we live under. I think you have to identify where these worldviews are somehow incompatible. When you’ve done mental gymnastics to support a worldview for long enough, eventually it’s going to crack. That’s an ongoing process for all of us.

Yes, the point I was going to make is that the number of views these various dissenting critics are receiving on YouTube alone is phenomenal. There was a Tucker Carlson interview on another independent news channel. He talked a lot about 9/11, also about Israel, Gaza and Charlie Kirk. In just in a few days, it had 347,000 views. You know, many of these channels are gaining millions of followers. So I’d like to finish on a more positive note that the awakening is the only way to say it.

Well, we’ve said this in the past, that the Matrix was both a documentary and a movie, wasn’t it?

Yes. So let’s finish on that positive note.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We thought we'd comment on the state of the world and some goings on today that relate to Sovereign Finance. So what's been going on that people should be paying attention to?

Well, there are lots of things that don't seem to be working. Rather than addressing them, our wonderful leaders seem to be simply doubling down. Some commentators think that Britain, France and Germany are all on the brink of civil war.

Pouring more petrol on the fire in the process of talking about it...

It would surprise me if it came to that. Once again, the trouble with civil wars is that they're probably more divide and conquer than actually overthrowing the causes of the problem.

It doesn't benefit the proles. Also, we're not well-equipped enough for it.

No, America, of course, is a different story. The assassination of Charlie Kirk this week has thrown that into sharp relief. I'll have a word about that in a minute.

I have to admit I didn't know who he was until that happened. It was pretty clear that whoever fired that shot was a professional and made a professional-level getaway.

Well, whether they were professional or not, they were certainly extremely competent. Whether or not there was any collusion in allowing them to get away is yet another question.

Yeah, there were two guys right behind him making funny hand signals right before the bullet hits him in the neck. Lots of things that look a bit suspect.

The thing that has come up for me is the extreme polarisation of the reactions to it. There are a few sane voices who are saying, well, you might or might not like what he was saying. But if we haven't got the right of people to express themselves and to deal with disagreements in a civilised manner by entering into a debate, then we're on the way down.

Ultimately, a family has still been left without its dad.

Yeah. I was generally aware of him, not of him personally, or the particular focus of his movement. But a few months back, I bumped into some videos of one of the meetings of his organisation. But we're still bumping up against these ‘left-wing’, ‘right-wing’ labels. Those terms are practically meaningless these days.

Thinking back a few decades, the distinction was pretty clear. Right wing meant being conservative, basically wanting to keep things the way they were, which primarily means keeping the privileges of the elites in place and keeping everybody else down. Left wing was anything from mild socialism to extreme communism, but essentially at least arguing in theory for equality of something or other between human beings. At least equality of opportunity and equality of access to education, and at least a bare minimum material standard of life. I'd find it difficult to argue with that as a broad agenda, but of course, it doesn't always work out as well as that in practice.

I quite like James Corbett's distinction where rather than left and right, it's actually uppest and downist, where uppest is your for more centralisation, more big power structures and downist is more towards anarchism.

Yeah. Anyway, so to get back to the, as I said, the same commentators to my way of thinking were the ones who said, you know, shooting people is no way to resolve disputes, basically. Freedom of speech is a genuine good; in fact, it is essential for the proper functioning of society.

We've been saying this on the show for ages as well, haven't we? You should go and listen to people that you disagree with, at least to try and understand what it is that they're trying to say.

I do a lot of listening to people I disagree with. But anyway, what it threw up was the extremity of the polarisation, particularly in American society, but across the Western world generally, possibly even the entire world, for all I know. But apart from the few sane voices, the majority of the comments are either "Ha ha ha, he got what's coming to him. That's what comes of saying that you support the Second Amendment and people should own as many guns as they like." Then, on the other hand, you've got people going, "we've lost a wonderful person who was a great leader, he would have made a wonderful president of the United States at some stage." Taking such extreme positions doesn't bode well.

No, the point to me is that anyone like this in the public eye shouldn't be endangered by visiting a university to give a talk.

Yeah. Another notable thing is that yesterday was the 11th of September, which marks the 24th anniversary of 9/11. Over yesterday, the day before and today is a major conference on the events of 9-11. Were you aware of that? No? Exactly. It hasn't got much coverage in the mainstream media.

Is this truth-based event of what really came to pass on that day? For people who have questions about how three massive buildings collapsed into their own footprint? And a missile-shaped hole appeared in the Pentagon?

Rather than an aeroplane-shaped hole. Of course, it happened to take out the office where they were investigating the hole in the Pentagon's budget…

You can't write this stuff can you? Or about how the steel girders apparently disintegrated, but two passports floated to the floor of Manhattan. Yeah, yeah, sure.

If you wrote it in a novel, nobody would believe it.

So apart from that, we've got Israel. Just when you think it can't get any worse in Gaza, it does. Just when you think Israel and their at least passive supporters in the West can't lose any more credibility with the rest of the world, it seems they do. Then they have an attempt at the so-called Houthi leadership in Yemen and certainly killed a lot of civilians there.

It's desperate actions by people who are likely to fail at what they're trying to do.

Well, I don't see how there can be any success. War orphans make great terrorists.

Why did Hamas exist in the first place? Other than the fact that the Israelis funded it, but why did people in Gaza want to get their own back in the first place? You don't have to be a huge historian to work out that.

Then of course, there was the attack on the Hamas negotiators in Qatar. There are two things. Well, three things about that. First of all, America arranged for them to go there to have peace negotiations, and then they got assassinated. Once again, it looks as it did with the Iranian situation, that America set up a meeting and that meeting was targeted for a lethal attack. Who knows whether that was deliberate or not? Yet again, the mere fact that there've been no cries of outrage from official sources in America shows how much under the thumb of Israel the American leadership is.

My rule of thumb is that they lie about everything, so the truth is probably the opposite of whatever they're saying.

Well, that's about the size of it anyway. Somebody pointed out that even the Mongols didn’t kill envoys or diplomats. That's just common sense, as well as established international standards of behaviour.

Even people who raped and pillaged their way across half a continent did not resort to that kind of tactic.

They didn't. It's also been a little while since the meeting in Alaska between Trump and Putin. As far as the Ukraine conflict goes, nothing much has changed.

Trump's public announcements are pretty mystifying, apart from explanations along the lines of:

* A, he's not very bright

* B, he has no attention span

* C, he's got no sophisticated knowledge of history or geopolitics or anything else. He's a real estate speculator and a TV reality show star.

But you've also got to take account of the fact that there are manipulations by what you might call the deep state intelligence services and their associates who have been really controlling the actions of every president since Kennedy.

So on the one hand, nobody knows what pressure or what leverage he's under. For another thing, he has to do the balancing act of keeping all his political enemies at bay, who seem to have significant legitimate grounds for criticism of him. Also, to keep his own supporters in line, who must be deeply dissatisfied by whatever progress they thought he was going to make towards their well-being.

I don't think he cares about his own supporters, for what it's worth.

Well, he's got midterm elections coming up at some point. I'm not an expert in American politics, but I would have thought there was a good chance that he'd lose control of both the House of Representatives and the Senate in those. If he does, it will be extremely constrained. So that's why he's got to pander to such supporters as he still has, as much as possible.

Anyway, so there's that, but the main thing is that Zelensky is not prepared to budge an inch. I don't know how convinced people are about him claiming that Putin's not interested in talking, when it's quite obvious that he's just taking an implacable position which makes it impossible.

Then you have the European leaders. In Britain, we can't keep our schools in order, our health service or the holes in the roads, and yet they're proposing to spend enormous sums on weaponry. Which if they get sent to Ukraine, will be annihilated in very short order.

Yeah. Super.

Whatever you think about the morality of the situation, any proposals you make, I should have thought, have to be grounded in some sense of realism. I would have thought any assessment of realism would indicate that the whole of Europe couldn't drum up an army that is capable of engaging with Russia in any way that wouldn't be annihilated in literally a matter of weeks, as far as I can see.

The alarming thing is that they are just talking up the prospect of war more and more as time goes by.

I don’t think there's any appetite for it, other than among the people who claim to be in power. I don't think anyone else wants it.

War is the last-ditch response to losing popularity. Look at what happened to Margaret Thatcher up to the point of going to war in the Falklands. Her popularity was plummeting for plenty of adequate reasons. All of a sudden, the whole country was behind her.

Over a rainy rock in the South Atlantic covered in penguin poo.

It has usually worked up until now that the country rallies behind its leaders during times of war. That's possibly what they're relying on...

Except we now have the internet to talk to each other.

We now have the internet, which is, of course, a big game changer. So, the reality is that there still seems to be the delusion that Ukraine might manage to get some victory, whatever they imagine that would look like. Anything short of driving Russia out of all of the areas that they have actually taken by force of arms strikes me as improbable in the extreme.

In fact, on the ground, there's only one little bit of the front where Ukraine is pushing back at small areas of territory that Russia has captured. That's to the northeast of the Kursk. That seems to be the only area of the front where they actually have got motivated, well-equipped, crack troops. Nobody really knows what cost these battles are being fought at.

But they've had to divert such resources from other parts of the front. The Russians are just moving ahead by leaps and bounds there. There was the opportunity again for a diplomatic solution that was rejected. Russia is clearly going to press ahead and resolve it on the battlefield, which is tragic. Both sides are losing lives all the time in every single life that's lost as a tragedy, whichever side they're on. We won't know until the war's over and the accounting is done, but this is tragic.

Of course, the latest thing this week is a lot of jumping up and down over the fact that 19 drones of Russian design encroached on Polish airspace. I note that almost all of the mainstream accounts of this repeat over and over again that this was a deliberate incursion by Russia. Actually, it's impossible for anybody outside to know. The only person who knows is whoever launched those drones. But to me, it doesn't even strike the plausibility test. Russia has so much going on that it doesn't need to go out of its way to do something that will cause a lot of aggravation and adverse publicity.

It could be a false flag event.

It wouldn't be the first time, would it? Finally, the ongoing grind away is on the international economic front. Several commentators I've heard lately say that the dollar is on the way out as a global reserve currency, which we've discussed several times. But most of them say this will take decades. My own guess - this is just my personal estimation - is that it could happen much more suddenly than that.

I heard some interesting statistics this morning. About 40 years ago, Europe had 10 times the level of economic activity as China. Now, China's economic activity is about equal to the whole of Europe put together. Europe is seriously economically declining as we speak. China is still going from strength to strength.

That in itself is significant. Of course, we have recently discussed the BRICS organisation, the Shanghai Cooperation Organisation, and ASEAN, the Association of Southeast Asian Nations. All of these are collaborating more and more tightly together. They're doing more and more transactions independent of the dollar system and independently of the American banking structures and institutions.

So we could turn around and see something reach a tipping point very quickly. So just watch this space. So that's about all I wanted to say for this roundup. You got any other comments?

If you told me 10 years ago that this would be the state of the world today, that we'd be banging the drums of war about going to war with Russia, I'd have been like, “nah, all of that's in the past!” So, I suppose that illustrates how poorly we tend to predict the future and how much we underestimate the people ostensibly in charge.

Yeah, absolutely. Of course, it's not helped, as we keep saying, by refusing to acknowledge or listen to or analyse what, if you like, our opponents are saying. For instance, while he was in China, Putin gave a very clear, very measured, striking speech to a big news conference over there. So I searched on the BBC website for “Putin press conference”. Guess what the most recent result I got was for that.

About 2015?

It was Putin and David Cameron giving a press conference in 2013.

Yeah, there we go. Propaganda is as much about omission as what they say.

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Rob’s comments below are in italics.Derek’s comments below are in normal font.

We’ve got some thoughts to share on the SCO Summit, which before this call, I was not aware of. So what is it, and what do people need to know?

Well, it's the Shanghai Cooperation Organization, an organisation which is oriented towards both defence and trade. It's another thing which has expanded enormously over the last few years.

One of the most notable things about it, which has largely been ignored in the Western media, is the enormous camaraderie between Putin, Xi and Modi from India. One of the things I found very interesting was comparing their body language, which came across to me as entirely natural and spontaneous. They were walking around grasping each other's hands, smiling, chatting, clearly totally relaxed with each other.

If you contrast that with all of the European gatherings, there's a lot of smiling and hugging and shaking hands. Even more ridiculous when you see it in movement, clearly posing for the camera, where they are shaking hands and turning to look at the camera, grinning inanely. The whole thing comes across to me as very clearly staged and formulated. They're not even terribly good actors.

Yes it's a PR exercise. Can we have some better actors please!

After all, Ronald Reagan was an actor.

Trump's got a few acting credits in his bio too...

Yeah, well, of course, he was in the reality show. He imagines he still is. But that's another story.

Anyway, the point is that there was clear enthusiasm. A major report was issued, detailing their findings on the future of global governance. It's the same theme. It keeps on recurring. It's obviously a wave of the future. It's building momentum. The theme is a multipolar world.

There was a catchphrase they had. The paper they produced was titled the Concept Paper on the Global Governance Initiative. I searched the BBC website for global governance initiative, and nothing came up.

One of the section headings was sovereign equality. This actually sums up the theme being pushed by both organisations, which is purely a trade, economic, and global finance outfit.

These two groups both have considerable overlap in their membership. Obviously, both of them have got Russia, India and China in them. Indonesia, Iran. Then there's another group of countries which are in one or the other, but not both.

The underlying themes discussed are very much along these lines. What's summed up by that phrase ‘sovereign equality’, is the idea that one nation-state has just the same rights to respect and justice as any other.

This discussion about multipolar polarity is obviously an attempt to move away from the unipolar world that the United States imagined it was living in since the collapse of the Soviet Union. Before that, we could have said we had a bipolar world.

Yet again, it was clear that any prospect of dividing Russia and China from one another is clearly fanciful. This was part of the game. Of course, in Orwell's 1984, you had the three global power blocks, which obviously were the American, the Russian and the Chinese, although they weren't actually labelled as such in the novel, and how the alliances shifted from one to another. That was what was happening all the way through the Cold War.

The more I look at it, the more it seems clear to me that when the Soviet Union dissolved and they terminated the Warsaw Pact, they imagined that it was going to really be the end of the Cold War. There was going to be open free trade and mutually beneficial relationships between all the countries in the world.

Of course, as we know, the American power centres didn't want that at all. They just wanted to decide now that they'd won the Cold War and that they were the hegemons that ruled the entire world.

Everyone else was now fully under the thumb.

People could be taken by surprise by how quickly this unfolds. Very interesting statistic I came across.

The trading transactions are increasingly being done in the native currencies of the trading partners. For example, over 54% of Chinese trade is in the Chinese currency. Over 90% of the China-Russia trade is in either renminbi or roubles. More than 75% of the Russia-Asian trade is in the national currencies of the relevant countries.

Where are these numbers from?

It might have been Jeffrey Sachs. It was certainly one of the prominent economic commentators. It could have been Richard Wolff in correspondence with somebody like Danny Haifong or Judge Nimboni Alataro.

So the dollar has already toppled from its position. The other thing to note is that the members of the BRICS consortium now account for somewhere around 50% of the world's population and somewhere around 50% of global GDP.

When you bear in mind that America is what, three or four per cent of the world's population, and the entire Western Bloc is a little under 10% of the world's population. It is plain that in these days, where we clearly have a much more universal grasp of technology and of military power, education and a rapidly rising expertise in finance and banking, the leverage that the West had over the rest of the world has already evaporated for all practical purposes.

Yeah, it's already gone.

Anyway, a couple of days after the SCO meeting in Beijing, there was an enormous military parade. This was a celebration of 80 years since the defeat of the Japanese, in which the Chinese had a large part. Obviously, the Americans think it was entirely them that defeated the Japanese, just as they believe it was entirely them that defeated the Nazis.

It's one of the forgotten theatres of war.

Yes. An interesting thing I found out is that the Second World War, or whatever label you put on it, didn't start in 1939 for China. It actually began with Japan's invasion of Manchuria in 1931. So by 1945, the Chinese had been at war for 14 years.

It suffered brutally. Many, many millions slaughtered by the Japanese. I don't think we take complete account of that. Once again, the Chinese and the Americans were allies in the war against the Japanese. Of course, as soon as the war ended, they became sworn enemies. Very similar situation with Russia.

People don't take that for granted. Another interesting aspect is that the enmity towards Russia from Britain, which the Americans inherited, is often attributed to the economic differences of opinion with the Bolsheviks in power. But it goes back way beyond that. It goes back another 100 years or so.

The British and Russians were geopolitical rivals with considerable bitterness since the 1840s onwards. Of course, they had a war in Crimea between them, which didn't work out all that well for the British.

Anyway, they have this enormous military parade showing the latest Chinese weaponry, which is obviously far more advanced than anybody in the West had ever realised. So there's a certain statement being made there.

Rather miserably and pettily, with the exception of Slovakia and Hungary, nobody from Europe or America went to join in with that parade. So once again, we're moving into a world where the powers that have been dominant for the last two or three hundred years and have imagined that this was going to continue indefinitely are finding themselves increasingly irrelevant.

Against that, it's worth commenting also that Trump seems to have an inherent contradiction in his approach to the dollar. He wants to eliminate the trade deficit by making America strong again. To do that requires a weaker dollar so that imports become more expensive and people are less inclined to buy from abroad. American exports become more attractive.

However, that is clearly incompatible with Trump's other declared intention, which is to maintain the dollar as the world reserve currency. Clearly, it's highly unattractive for the rest of the world to hold their investments in dollars and do their transactions in dollars if the value of it is evaporating before our eyes.

Needless to say, the same goes for Britain. As we noted the other day, the cost of borrowing each time that a bond issue expires and has to be replaced by a new issue has to be issued at ever-higher interest rates. This also has the effect of depressing the price of the old government bonds in the marketplace, which are paying a lower interest rate.

So it'd be very interesting to see how rapidly this unravels, but it could easily take a lot less time than people had been imagining.

There has to be a tipping point.

Of course, the other way in which the West is losing credibility is on the moral front, as more and more people. The rest of the world has been able to see what was going on in Israel for quite some time. But it looks to me as though even our own general populations are beginning to become horrified by it.

So it's difficult to see how the government are going to maintain the slavish support that they've been showing. There could well be some revelations as to what leverage Israel has over our own politicians.

Well, that's the big thing about how powerful the lobbies are.

Yeah. So interesting events this past week.

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