candooman

The Declining Usefulness of Debt

Here is my two cents worth of observation that may help explain the deminishing return being observed here. I am in the engineering/construction business and I have seen over the last 20+ years how we are forced to do more and more of things that do not contribute to a good end product. We spend so much resources - material as well as manpower - to avoid exposing ourselves to the risk of being sued should something bad happen. Cost benefit analysis are not done nor required for taking those extra measures that "avoids" a lawsuit. [This by the way can be clearly seen in the medical field when unecessary tests are ordered to protect the medical service provider.... at the expense of the consumer.]

This is also done in the name of "better safety". Extra and expensive steps are taken to make an action that has a probability of being 99.95% safe already --- so it will be 99.99995% safer -- based usually in the 'judgement' of an unqualified person who has no idea on the subject of risk analysis. This happens daily in industry and in business.... millions of times. We are spending an ever increasing amount of money in the US on activities that bring negligible or zero returns. Billions are wasted every year on these kinds of activities!

On the other hand, an activity that will increase the usefulness of debt to very large scales is building of nuclear power plants and retirement of coal power plants. Nukes built 30 - 40 years ago are still giving us solid returns. In fact some of them have been upgraded to bring even more returns for the next 20 years. We need more of them to both replace the ones nearing their end-of-life, to provide power to the rising demand of our increasing population and to ---- this is the big one --- replace coal fired power plants.

Coal fired power plants are a very expensive losing proposition. They produce the highest volume of CO2 that causes our climate to change that in turn, causes destruction all over the US. Destruction by wild fires, tornadoes, hurricane, floods, extreme drought --- are all hugely negative returns! We should stop building new coal plants and start building new Nuclear Plants. The Asians and Europeans have realized this and are starting to build nuke plants. Clean coal is a myth. Anyone who has taken basic chemistry understand that when air and carbon in coal are burned, CO2 is produced and -- in very high volumes. To think that these high volumes of CO2 gas emitted by coal fired power plants all over the US can be captured and stored underground is absurd. To capture it, highly compresse it and send it to underground storage takes more than half of the useful energy produced in burning it. And then the big question is, how much compressed gas can be stored and for how long? A few years? At what cost?

The US economy grew larger and faster than most countries in large part, because of cheap energy. Investing in nuclear energy is undoubtedly, one of the best way to bring up the usefulness of debt.