Model showing the effect of bank lending of deposited money as a multiplier in the creation of new money. Multiplier effect is shown as related to the bank reserve requirement on deposited funds.

Model of Covid-19 Outbreak in Burnie, Tasmania

When reported COVID-19 cases begin to show a rapid increase, the government will initiate control policies to deal with the spread.As the number of people tested increases and measures such as isolation and medical assistance are implemented, the number of people infected will decline rapidly.Therefore, the government's policy is to reduce and eliminate sources of transmission by increasing the number of tests and initiating control measures.At the same time, it also shows the negative impact of economic growth, which according to the model will stop in the next 20 weeks.

When people talk about a government deficit, they forget that this is only one side of the ledger. On the other is a corresponding non-government SURPLUS. The money the government spends is not lost but shows up in the private sector as income. When one talks only of the deficit then one can understand that many think it should be reduced or even converted into a surplus, but reducing the government deficit reduces private sector income and a government surplus forces a deficit on the private sector with a potentially devastating effect on private sector wealth and economic activity.  Unless the economy is overheating, government deficits are usually healthy. For countries that run traditionally a trade deficit, such as the US they are necessary to maintain economic activity. Consider this fact: for almost all of past 40 years the US and the UK have run deficits without any harmful effects!

The statement that there can be no economic activity without  energy and that fossil fuels are finite contrasts with the fact that money is not finite and can be created by governments via their central banks at zero marginal cost whenever needed.

An important fact about COAL, GAS and OIL (even when produced via fracking) is that their net energy ratios are falling rapidly. In other words the energy needed to extract a given quantity of fossil fuels is constantly increasing. This ratio (Energy Invested on Energy Returned - EIOER) provides yet another warning that we can no longer rely on fossil fuels to power our economies. We cannot wait until the ratio falls to 1/1 before we invest seriously in alternative sources of energy, because by then industrial society as we know it doday will have ceased to exist. 

PS: A link between growth in energy consumption and GDP growth is clearly illustrated on slide 13 of Gail Tverberg's presentaion entitled ''Oops! The world economy depends on an energy-related bubble''. In fact, the slide shows that growth in energy consumption usually precedes GDP growth.

https://gailtheactuary.files.wordpress.com/2015/10/oops-debt-bubble-10_30_15.pdf

Neoliberalism uses a deceptive narrative to declare that money the government spends into the economy in excesses of the taxes it collects creates a ‘government debt’. In fact, the money the government spends into the economy in excess of the taxes is an income, a benefit for the private sector. When the government issues bonds, the money the private sector uses to buy them via banks comes from a residual cushion of dollars that the government already spent into the economy but has not yet taxed back.  If this were not the case, if the government had taxed back all the money it spent into the economy, then the economy could not function. There would be no dollars in the economy, since the government is the sole supplier of U.S. dollars! In the doted rectangle in the graph you can see that the dollars paid to the government for bonds sits in a dollar asset account. When the government issues bonds it simply provides the public and institutions with a desirable money substitute that pays interest i.e. Treasury bonds. It is a swap of one kind of financial asset for another. To register this swap the government debits the dollar asset account and credits the bond account.  When the time comes to redeem (take back) the bonds, all the government does is revers the swap, and that’s all!  When you look at the total amount of finacial assets in the private sector,  these remain constant at $ 25 BN  after the payment of $ 5 BN taxes. This implies that  no lending of financial assets of the private sector to the government has taken place during the swap operation. The money was always there. The debt mountain is an illusion!

Model showing the effect of bank lending of deposited money as a multiplier in the creation of new money. Multiplier effect is shown as related to the bank reserve requirement on deposited funds.

Model supporting research of investment vs. austerity implications. Please refer to Modern Money & Public Purpose Video.

From Warren C. Sanderson in Population - Development - Environment, Wolfgang Lutz (Ed.), 1994, Springer.

A model to gain understanding of the causes and effects of a population's interest in engineering.

A model which simulates the competition between logging versus adventure tourism (mountain bike ridding) in Derby Tasmania.  Simulation borrowed from the Easter Island simulation.

Wealth can be seen as the factories, infrastructure, goods and services the population of a nation dispose of. According to Tim Garrett,  a scientist who looks at the economy from the perspective of physics, it is existing wealth that generates economic activity and growth. This growth demands the use of energy as no activity can take place without its use. He also points out that the use of this energy unavoidably  leads to concentrations of CO2 in the atmosphere.  All this, Tim Garrett says,  follows from the second law of thermodynamics.  If wealth decreases then so does economic activity and growth. The CLD tries to illustrate how wealth, ironically, now generates the conditions and feedback loops  that  may cause it to decline. The consequences are  inevitably economic  stagnation (or secular recession?). 

You can read about the connection Tim Garrett makes between 'Wealth, Economic Growth, Energy and CO2  Emissions' simply by Googling 'Tim Garrett and Economy'.

Haaglanden Social housing Fig 18 SD Model feedback structure from Eskanasi 2014  thesis Other models in the thesis include middle income households and mortgage debt

A model which simulates the competition between logging versus adventure tourism (mountain bike ridding) in Derby Tasmania.  Simulation borrowed from the Easter Island simulation.

Model in support of an article being written about the relationship between investment and austerity. See Version 2

See also:
* Inv vs Aust Sim [IM-2736]
* Inv & Output 1 [IM-2740]
* Inv & Output 2 [IM-2741]

To maintain economic wealth (roads, hospitals, power lines, etc.) power needs to be consumed. The same applies to economic activity, since any activity requires the consumption of energy. According to the Environmental Protection Agency, the burning of fossil fuels was responsible for 79 percent of U.S. greenhouse gas emissions in 2010. So whilst economic activity takes place fossil fuels will be burned and CO2 emissions are unavoidable - unless we use exclusively renewable energy resources, which is not likely to occur very soon. However, the increasing CO2 concentrations in the atmosphere will have negative consequences, such droughts, floods, crop failures, etc. These effects represent limits to economic growth. The CLD illustrates some of the more prominent negative feedback loops that act as a break on economic growth and wealth.  As the negative feedback loops (B1-B4) get stronger, an interesting question is, 'will a sharp reduction in economic wealth and unavoidable recession lead to wide-spread food riots and disturbances?'

A model which simulates the competition between logging versus adventure tourism (mountain bike ridding) in Derby Tasmania.  Simulation borrowed from the Easter Island simulation.