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Tverberg: In 2023, Expect A Financial Crash Followed By Major Energy-Related Changes

Tverberg: In 2023, Expect A Financial Crash Followed By Major Energy-Related Changes

Authored by Gail Tverberg via Our Finite World blog,

Why…

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Tverberg: In 2023, Expect A Financial Crash Followed By Major Energy-Related Changes

Authored by Gail Tverberg via Our Finite World blog,

Why is the economy headed for a financial crash? It appears to me that the world economy hit Limits to Growth about 2018 because of a combination of diminishing returns in resource extraction together with rising population. The Covid-19 pandemic and the accompanying financial manipulations hid these problems for a few years, but now, as the world economy tries to reopen, the problems are back with a vengeance.

Figure 1. World primary energy consumption per capita based on BP’s 2022 Statistical Review of World Energy. Same chart shown in post, Today’s Energy Crisis Is Very Different from the Energy Crisis of 2005.

In the period between 1981 and 2022, the economy was lubricated by a combination of ever-rising debt, falling interest rates, and the growing use of Quantitative Easing. These financial manipulations helped to hide the rising cost of fossil fuel extraction after 1970. Even more money supply was added in 2020. Now central bankers are trying to squeeze the excesses out of the system using a combination of higher interest rates and Quantitative Tightening.

After central bankers brought about recessions in the past, the world economy was able to recover by adding more energy supply. However, this time we are dealing with a situation of true depletion; there is no good way to recover by adding more energy supplies to the system. Instead, the only way the world economy can recover, at least partially, is by squeezing some non-essential energy uses out of the system. Hopefully, this can be done in such a way that a substantial part of the world economy can continue to operate in a manner close to that in the past.

One approach to making the economy more efficient in its energy use is by greater regionalization. If countries can start trading almost entirely with nearby neighbors, this will reduce the world’s energy consumption. In parts of the world with plentiful resources and manufacturing capability, the economy can perhaps continue without major changes. Another way of squeezing out excesses might be through the elimination (at least in part) of the trade advantage the US obtains by using the dollar as the world’s reserve currency. In this post, I will also mention a few other ways that non-essential energy consumption might be reduced.

I believe that a financial crash is likely sometime during 2023. After the crash, the system will start squeezing down on the less necessary parts of the economy. While these changes will start in 2023, they will likely take place over a period of years. In this post, I will try to explain what I see happening.

[1] The world economy, in its currently highly leveraged state, cannot withstand both higher interest rates and Quantitative Tightening.

With higher interest rates, the value of bonds falls. With bonds “worth less,” the financial statements of pension plans, insurance companies, banks and others holding those bonds all look worse. More contributions are suddenly needed to fund pension funds. Governments may find themselves needing to bail out many of these organizations.

At the same time, individual borrowers find that debt becomes more expensive to finance. Thus, it becomes more expensive to buy a home, vehicle, or farm. Debt to speculate in the stock market becomes more expensive. With higher debt costs, there is a tendency for asset prices, such as home prices and stock prices, to fall. With this combination (lower asset prices and higher interest rates) debt defaults are likely to become more common.

Quantitative Tightening makes it harder to obtain liquidity to buy goods internationally. This change is more subtle, but it also works in the direction of causing disruptions to financial markets.

Other stresses to the financial system can be expected, as well, in the near term. For example, Biden’s program that allows students to delay payments on their student loans will be ending in the next few months, adding more stress to the system. China has had huge problems with loans to property developers, and these may continue or get worse. Many of the poor countries around the world are asking the IMF to provide debt relief because they cannot afford energy supplies and other materials at today’s prices. Europe is concerned about possible high energy prices.

This is all happening at a time when total debt levels are even higher than they were in 2008. In addition to “regular” debt, the economic system includes trillions of dollars of derivative promises. Based on these considerations alone, a much worse crash than occurred in 2008 seems possible.

[2] The world as a whole is already headed into a major recession. This situation seems likely to get worse in 2023.

The Global Purchasing Managers Index (PMI) has been signaling problems for months. A few bullet points from their site include the following:

  • Service sector output declined in October, registering the worst monthly performance since mid-2020.

  • Manufacturing output meanwhile fell for a third consecutive month, also declining at the steepest rate since June 2020.

  • PMI subindices showed new business contracting at the quickest rate since June 2020, with the weak demand environment continuing to be underpinned by declining worldwide trade.

  • The global manufacturing PMI’s new export orders index has now signaled a reduction in worldwide goods exports for eight straight months.

  • Price inflationary pressures remained solid in October, despite rates of increase in input costs and output charges easing to 19-month lows.

The economic situation in the US doesn’t look as bad as it does for the world as a whole, perhaps because the US dollar has been at a relatively high level. However, a situation with the US doing well and other countries doing poorly is unsustainable. If nothing else, the US needs to be able to buy raw materials and to sell finished goods and services to these other countries. Thus, recession can be expected to spread.

[3] The underlying issue that the world is starting to experience is overshoot and collapse, related to a combination of rising population and diminishing returns with respect to resource extraction.

In a recent post, I explained that the world seems to be reaching the limits of fossil fuel extraction. So-called renewables are not doing much to supplement fossil fuels. As a result, energy consumption per capita seems to have hit a peak in 2018 (Figure 1) and now cannot keep up with population growth without prices that rise to the point of becoming unaffordable for consumers.

The economy, like the human body, is a self-organizing system powered by energy. In physics terminology, both are dissipative structures. We humans can get along for a while with less food (our source of energy), but we will lose weight. Without enough food, we are more likely to catch illnesses. We might even die, if the lack of food is severe enough.

The world economy can perhaps get along with less energy for a while, but it will behave strangely. It needs to cut back, in a way that might be thought of as being analogous to a human losing weight, on a permanent basis. On Figure 1 (above), we can see evidence of two temporary cutbacks. One was in 2009, reflecting the impact of the Great Financial Crisis of 2008-2009. Another related to the changes associated with Covid-19 in 2020.

If energy supply is really reaching extraction limits, and this is causing the recent inflation, there needs to be a permanent way of cutting back energy consumption, relative to the output of the economy. I expect that changes in this direction will start happening about the time of the upcoming financial crash.

[4] A major financial crash in 2023 may adversely affect many people’s ability to buy goods and services.

A financial discontinuity, including major defaults that spread from country to country, is certain to adversely affect banks, insurance companies and pension plans. If problems are widespread, governments may not be able to bail out all these institutions. This, by itself, may make the purchasing of goods and services more difficult. Citizens may find that the funds they thought were in the bank are subject to daily withdrawal limits, or they may find that the value of shares of stock they owned is much lower. As a result of such changes, they will not have the funds to buy the goods they want, even if the goods are available in shops.

Alternatively, citizens may find that their local governments have issued so much money (to try to bail out all these institutions) that there is hyperinflation. In such a case, there may be plenty of money available, but very few goods to buy. As a result, it still may be very difficult to buy the goods a family needs.

[5] Many people believe that oil prices will rise in response to falling production. If the real issue is that the world is reaching extraction limits, the problem may be inadequate demand and falling prices instead.

If people have less to spend following the financial crash, based on the reasoning in Section [4], this could lead to lower demand, and thus lower prices.

It also might be noted that both the 2009 and 2020 dips in consumption (on Figure 1) corresponded to times of low oil prices, not high. Oil companies cut back on production if they find that prices are too low for them to expect to make a profit on new production.

We also know that a major problem as limits are reached is wage disparity. The wealthy use more energy products than poor people, but not in proportion to their higher wealth. The wealthy tend to buy more services, such as health care and education, which are not as energy intensive.

If the poor get too poor, they find that they must cut back on things like meat consumption, housing expenses, and transportation expenses. All these things are energy intensive. If very many poor people cut back on products that indirectly require energy consumption, the prices for oil and other energy products are likely to fall, perhaps below the level required by producers for profitability.

[6] If I am right about low energy prices, especially after a financial discontinuity, we can expect oil, coal, and natural gas production to fall in 2023.

Producers tend to produce less oil, coal and natural gas if prices are too low.

Also, government leaders know that high energy prices (especially oil prices) lead to high food prices and high inflation. If they want to be re-elected, they will do everything in their power to keep energy prices down.

[7] Without enough energy to go around, more conflict can be expected.

Additional conflict can be expected to come in many forms. It can look like local demonstrations by citizens who are unhappy about their wages or other conditions. If wage disparity is a problem, it will be the low-wage workers who will be demonstrating. I understand that demonstrations in Europe have recently been a problem.

Conflict can also take the form of wide differences among political parties, and even within political parties. The difficulty that the US recently encountered electing a Speaker of the House of Representatives is an example of such conflict. Political parties may splinter, making it difficult to form a government and get any business accomplished.

Conflict may also take the form of conflict among countries, such as the conflict between Russia and Ukraine. I expect most wars today will be undeclared wars. With less energy to go around, the emphasis will be on approaches that require less energy. Deception will become important. Destruction of another country’s energy infrastructure, such as pipelines or electricity transmission, may be part of the plan. Another form of deception may involve the use of bioweapons and supposed cures for these bioweapons.

[8] After the discontinuity, the world economy is likely to become more disconnected and more regionally aligned. Russia and China will tend to be aligned. The US seems likely to be another center of influence.

A major use of oil is transporting goods and people around the globe. If there is not enough oil to go around, one way of saving oil is to transport goods over shorter distances. People can talk by telephone or video conferences to save on oil used in long distance transportation. Thus, increased regionalization seems likely to take place.

In fact, the pattern is already beginning. Russia and China have recently been forging long-term alliances centered on providing natural gas supplies to China and on strengthening military ties. Being geographically adjacent is clearly helpful. Furthermore, major US oil companies are now focusing more on developments in the Americas, rather than on big international projects, according to the Wall Street Journal.

Countries that are geographically close to Russia-China may choose to align with them, especially if they have resources or finished products (such as televisions or cars) to sell. Likewise, countries near the US with suitable products to sell may align with the United States.

Countries that are too distant, or that don’t have resources or finished products to sell (goods, rather than services), may largely be left out. For example, European countries that specialize in financial services and tourism may have difficulty finding trading partners. Their economies may shrink more rapidly than those of other countries.

[9] In a regionally aligned world, the US dollar is likely to lose its status as the world’s reserve currency.

With increased regionalization, I would expect that the US dollar’s role as the world’s reserve currency would tend to disappear, perhaps starting as soon as 2023. For example, transactions between Russia and China may begin to take place directly in yuan, without reference to a price in US dollars, and without the need for US funds to allow such transactions to take place.

Transactions within the Americas seem likely to continue taking place using US dollars, especially when they involve the buying and selling of energy-related products.

With the US dollar as the reserve currency, the US has been able to import far more than it exports, year after year. Based on World Bank data, in 2021 the US imported $2.85 trillion of goods (including fossil fuels, but excluding services) and exported $1.76 trillion of goods, leading to a goods-only excess of imports over exports of $1.09 trillion. When exports of services are included, the excess of imports over exports shrinks to “only” $845 billion. It is hard to see how this large a gap can continue. Such a significant difference between imports and exports would tend to shrink if the US were to lose its reserve currency status.

[10] In a disconnected world, manufacturing of all kinds will fall, especially outside of Southeast Asia (including China and India), where a major share of today’s manufacturing is performed.

A huge share of today’s manufacturing capability is now in China and India. If these countries have access to oil from the Middle East and Russia, I expect they will continue to produce goods and services. If there are not enough of these goods to go around, I would expect that they would primarily be exported to other countries within their own geographic region.

The Americas and Europe will be at a disadvantage because they have fewer manufactured goods to sell. (The US, of course, has a significant quantity of food to export.) Starting in the 1980s, the US and Europe moved a large share of their manufacturing to Southeast Asia. Now, when these countries talk about ramping up clean energy production, they find that they are largely without the resources and the processing needed for such clean energy projects.

Figure 2: New York Times chart based on International Energy Agency data. February 22, 2022.

In fact, ramping up “regular” manufacturing production of any type in the US, (for example, local manufacturing of generic pharmaceutical drugs, or manufacturing of steel pipe used in the drilling of oil wells) would not be easy. Most of today’s manufacturing capability is elsewhere. Even if the materials could easily be gathered into one place in the US, it would take time to get factories up and running and to train workers. If some necessary items are lacking, such as particular raw materials or semiconductor chips, transitioning to US manufacturing capability might prove to be impossible in practice.

[11] After a financial discontinuity, “empty shelves” are likely to become increasingly prevalent.

We can expect that the total quantity of goods and services produced worldwide will begin to fall for several reasons. First, regionalized economies cannot access as diverse a set of raw materials as a world economy. This, by itself, will limit the types of goods that an economy can produce. Second, if the total quantity of raw materials used in making the inputs declines over time, the total amount of finished goods and services can be expected to fall. Finally, as mentioned in Section [4], financial problems may cut back on buyers’ ability to purchase goods and services, limiting the number of buyers available for finished products, and thus holding down sales prices.

A major reason empty shelves become can be expected to become more prevalent is because more distant countries will tend to get cut out of the distribution of goods. This is especially the case as the total quantity of goods and services produced falls. A huge share of the manufacturing of goods is now done in China, India, and other countries in Southeast Asia.

If the world economy shifts toward mostly local trade, the US and Europe are likely to find it harder to find new computers and new cell phones since these tend to be manufactured in Southeast Asia. Other goods made in Southeast Asia include furniture and appliances. These, too, may be harder to find. Even replacement car parts may be difficult to find, especially if a car was manufactured in Southeast Asia.

[12] There seem to be many other ways the self-organizing economy could shrink back to make itself a more efficient dissipative structure.

We cannot know in advance exactly how the economy will shrink back its energy consumption, besides regionalization and pushing the US dollar (at least partially) out of being the reserve currency. Some other areas where the physics of the economy might force cutbacks include the following:

  • Vacation travel

  • Banks, insurance companies, pension programs (much less needed)

  • The use of financial leverage of all kinds

  • Governmental programs providing payments to those not actively in the workforce (such as pensions, unemployment insurance, disability payments)

  • Higher education programs (many graduates today cannot get jobs that pay for the high cost of their educations)

  • Extensive healthcare programs, especially for people who have no hope of ever re-entering the workforce

In fact, the population may start to fall because of epidemics, poor health, or even too little food. With fewer people, limited energy supply will go further.

Governments and intergovernmental agencies may start to fail because they cannot get enough tax revenue. Of course, the underlying issue for the lack of tax revenue is likely to be that the businesses within the governed area cannot operate because they cannot obtain enough inexpensive energy resources for operation.

[13] Conclusion.

If the world economy experiences major financial turbulence in 2023, we could be in for a rough ride. In my opinion, a major financial crash seems likely. This is could upset the economy far more seriously than the 2008 crash.

I am certain that some mitigation measures can be implemented. For example, there could be a major push toward trying to make everything that we have today last longer. Materials can be salvaged from structures that are no longer used. And some types of local production can be ramped up.

We can keep our fingers crossed that I am wrong but, with fewer oil and other energy resources available per person, moving goods shorter distances makes sense. Thus, the initial trends we are seeing toward regionalization are likely to continue. The move away from the US dollar as the reserve currency also looks likely to continue. Moreover, if the changes I am talking about don’t occur in 2023, they are likely to begin in 2024 or 2025.

Tyler Durden Tue, 01/10/2023 - 18:05

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“I Can’t Even Save”: Americans Are Getting Absolutely Crushed Under Enormous Debt Load

"I Can’t Even Save": Americans Are Getting Absolutely Crushed Under Enormous Debt Load

While Joe Biden insists that Americans are doing great…

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"I Can't Even Save": Americans Are Getting Absolutely Crushed Under Enormous Debt Load

While Joe Biden insists that Americans are doing great - suggesting in his State of the Union Address last week that "our economy is the envy of the world," Americans are being absolutely crushed by inflation (which the Biden admin blames on 'shrinkflation' and 'corporate greed'), and of course - crippling debt.

The signs are obvious. Last week we noted that banks' charge-offs are accelerating, and are now above pre-pandemic levels.

...and leading this increase are credit card loans - with delinquencies that haven't been this high since Q3 2011.

On top of that, while credit cards and nonfarm, nonresidential commercial real estate loans drove the quarterly increase in the noncurrent rate, residential mortgages drove the quarterly increase in the share of loans 30-89 days past due.

And while Biden and crew can spin all they want, an average of polls from RealClear Politics shows that just 40% of people approve of Biden's handling of the economy.

Crushed

On Friday, Bloomberg dug deeper into the effects of Biden's "envious" economy on Americans - specifically, how massive debt loads (credit cards and auto loans especially) are absolutely crushing people.

Two years after the Federal Reserve began hiking interest rates to tame prices, delinquency rates on credit cards and auto loans are the highest in more than a decade. For the first time on record, interest payments on those and other non-mortgage debts are as big a financial burden for US households as mortgage interest payments.

According to the report, this presents a difficult reality for millions of consumers who drive the US economy - "The era of high borrowing costs — however necessary to slow price increases — has a sting of its own that many families may feel for years to come, especially the ones that haven’t locked in cheap home loans."

The Fed, meanwhile, doesn't appear poised to cut rates until later this year.

According to a February paper from IMF and Harvard, the recent high cost of borrowing - something which isn't reflected in inflation figures, is at the heart of lackluster consumer sentiment despite inflation having moderated and a job market which has recovered (thanks to job gains almost entirely enjoyed by immigrants).

In short, the debt burden has made life under President Biden a constant struggle throughout America.

"I’m making the most money I've ever made, and I’m still living paycheck to paycheck," 40-year-old Denver resident Nikki Cimino told Bloomberg. Cimino is carrying a monthly mortgage of $1,650, and has $4,000 in credit card debt following a 2020 divorce.

Nikki CiminoPhotographer: Rachel Woolf/Bloomberg

"There's this wild disconnect between what people are experiencing and what economists are experiencing."

What's more, according to Wells Fargo, families have taken on debt at a comparatively fast rate - no doubt to sustain the same lifestyle as low rates and pandemic-era stimmies provided. In fact, it only took four years for households to set a record new debt level after paying down borrowings in 2021 when interest rates were near zero. 

Meanwhile, that increased debt load is exacerbated by credit card interest rates that have climbed to a record 22%, according to the Fed.

[P]art of the reason some Americans were able to take on a substantial load of non-mortgage debt is because they’d locked in home loans at ultra-low rates, leaving room on their balance sheets for other types of borrowing. The effective rate of interest on US mortgage debt was just 3.8% at the end of last year.

Yet the loans and interest payments can be a significant strain that shapes families’ spending choices. -Bloomberg

And of course, the highest-interest debt (credit cards) is hurting lower-income households the most, as tends to be the case.

The lowest earners also understandably had the biggest increase in credit card delinquencies.

"Many consumers are levered to the hilt — maxed out on debt and barely keeping their heads above water," Allan Schweitzer, a portfolio manager at credit-focused investment firm Beach Point Capital Management told Bloomberg. "They can dog paddle, if you will, but any uptick in unemployment or worsening of the economy could drive a pretty significant spike in defaults."

"We had more money when Trump was president," said Denise Nierzwicki, 69. She and her 72-year-old husband Paul have around $20,000 in debt spread across multiple cards - all of which have interest rates above 20%.

Denise and Paul Nierzwicki blame Biden for what they see as a gloomy economy and plan to vote for the Republican candidate in November.
Photographer: Jon Cherry/Bloomberg

During the pandemic, Denise lost her job and a business deal for a bar they owned in their hometown of Lexington, Kentucky. While they applied for Social Security to ease the pain, Denise is now working 50 hours a week at a restaurant. Despite this, they're barely scraping enough money together to service their debt.

The couple blames Biden for what they see as a gloomy economy and plans to vote for the Republican candidate in November. Denise routinely voted for Democrats up until about 2010, when she grew dissatisfied with Barack Obama’s economic stances, she said. Now, she supports Donald Trump because he lowered taxes and because of his policies on immigration. -Bloomberg

Meanwhile there's student loans - which are not able to be discharged in bankruptcy.

"I can't even save, I don't have a savings account," said 29-year-old in Columbus, Ohio resident Brittany Walling - who has around $80,000 in federal student loans, $20,000 in private debt from her undergraduate and graduate degrees, and $6,000 in credit card debt she accumulated over a six-month stretch in 2022 while she was unemployed.

"I just know that a lot of people are struggling, and things need to change," she told the outlet.

The only silver lining of note, according to Bloomberg, is that broad wage gains resulting in large paychecks has made it easier for people to throw money at credit card bills.

Yet, according to Wells Fargo economist Shannon Grein, "As rates rose in 2023, we avoided a slowdown due to spending that was very much tied to easy access to credit ... Now, credit has become harder to come by and more expensive."

According to Grein, the change has posed "a significant headwind to consumption."

Then there's the election

"Maybe the Fed is done hiking, but as long as rates stay on hold, you still have a passive tightening effect flowing down to the consumer and being exerted on the economy," she continued. "Those household dynamics are going to be a factor in the election this year."

Meanwhile, swing-state voters in a February Bloomberg/Morning Consult poll said they trust Trump more than Biden on interest rates and personal debt.

Reverberations

These 'headwinds' have M3 Partners' Moshin Meghji concerned.

"Any tightening there immediately hits the top line of companies," he said, noting that for heavily indebted companies that took on debt during years of easy borrowing, "there's no easy fix."

Tyler Durden Fri, 03/15/2024 - 18:00

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Sylvester researchers, collaborators call for greater investment in bereavement care

MIAMI, FLORIDA (March 15, 2024) – The public health toll from bereavement is well-documented in the medical literature, with bereaved persons at greater…

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MIAMI, FLORIDA (March 15, 2024) – The public health toll from bereavement is well-documented in the medical literature, with bereaved persons at greater risk for many adverse outcomes, including mental health challenges, decreased quality of life, health care neglect, cancer, heart disease, suicide, and death. Now, in a paper published in The Lancet Public Health, researchers sound a clarion call for greater investment, at both the community and institutional level, in establishing support for grief-related suffering.

Credit: Photo courtesy of Memorial Sloan Kettering Comprehensive Cancer Center

MIAMI, FLORIDA (March 15, 2024) – The public health toll from bereavement is well-documented in the medical literature, with bereaved persons at greater risk for many adverse outcomes, including mental health challenges, decreased quality of life, health care neglect, cancer, heart disease, suicide, and death. Now, in a paper published in The Lancet Public Health, researchers sound a clarion call for greater investment, at both the community and institutional level, in establishing support for grief-related suffering.

The authors emphasized that increased mortality worldwide caused by the COVID-19 pandemic, suicide, drug overdose, homicide, armed conflict, and terrorism have accelerated the urgency for national- and global-level frameworks to strengthen the provision of sustainable and accessible bereavement care. Unfortunately, current national and global investment in bereavement support services is woefully inadequate to address this growing public health crisis, said researchers with Sylvester Comprehensive Cancer Center at the University of Miami Miller School of Medicine and collaborating organizations.  

They proposed a model for transitional care that involves firmly establishing bereavement support services within healthcare organizations to ensure continuity of family-centered care while bolstering community-based support through development of “compassionate communities” and a grief-informed workforce. The model highlights the responsibility of the health system to build bridges to the community that can help grievers feel held as they transition.   

The Center for the Advancement of Bereavement Care at Sylvester is advocating for precisely this model of transitional care. Wendy G. Lichtenthal, PhD, FT, FAPOS, who is Founding Director of the new Center and associate professor of public health sciences at the Miller School, noted, “We need a paradigm shift in how healthcare professionals, institutions, and systems view bereavement care. Sylvester is leading the way by investing in the establishment of this Center, which is the first to focus on bringing the transitional bereavement care model to life.”

What further distinguishes the Center is its roots in bereavement science, advancing care approaches that are both grounded in research and community-engaged.  

The authors focused on palliative care, which strives to provide a holistic approach to minimize suffering for seriously ill patients and their families, as one area where improvements are critically needed. They referenced groundbreaking reports of the Lancet Commissions on the value of global access to palliative care and pain relief that highlighted the “undeniable need for improved bereavement care delivery infrastructure.” One of those reports acknowledged that bereavement has been overlooked and called for reprioritizing social determinants of death, dying, and grief.

“Palliative care should culminate with bereavement care, both in theory and in practice,” explained Lichtenthal, who is the article’s corresponding author. “Yet, bereavement care often is under-resourced and beset with access inequities.”

Transitional bereavement care model

So, how do health systems and communities prioritize bereavement services to ensure that no bereaved individual goes without needed support? The transitional bereavement care model offers a roadmap.

“We must reposition bereavement care from an afterthought to a public health priority. Transitional bereavement care is necessary to bridge the gap in offerings between healthcare organizations and community-based bereavement services,” Lichtenthal said. “Our model calls for health systems to shore up the quality and availability of their offerings, but also recognizes that resources for bereavement care within a given healthcare institution are finite, emphasizing the need to help build communities’ capacity to support grievers.”

Key to the model, she added, is the bolstering of community-based support through development of “compassionate communities” and “upskilling” of professional services to assist those with more substantial bereavement-support needs.

The model contains these pillars:

  • Preventive bereavement care –healthcare teams engage in bereavement-conscious practices, and compassionate communities are mindful of the emotional and practical needs of dying patients’ families.
  • Ownership of bereavement care – institutions provide bereavement education for staff, risk screenings for families, outreach and counseling or grief support. Communities establish bereavement centers and “champions” to provide bereavement care at workplaces, schools, places of worship or care facilities.
  • Resource allocation for bereavement care – dedicated personnel offer universal outreach, and bereaved stakeholders provide input to identify community barriers and needed resources.
  • Upskilling of support providers – Bereavement education is integrated into training programs for health professionals, and institutions offer dedicated grief specialists. Communities have trained, accessible bereavement specialists who provide support and are educated in how to best support bereaved individuals, increasing their grief literacy.
  • Evidence-based care – bereavement care is evidence-based and features effective grief assessments, interventions, and training programs. Compassionate communities remain mindful of bereavement care needs.

Lichtenthal said the new Center will strive to materialize these pillars and aims to serve as a global model for other health organizations. She hopes the paper’s recommendations “will cultivate a bereavement-conscious and grief-informed workforce as well as grief-literate, compassionate communities and health systems that prioritize bereavement as a vital part of ethical healthcare.”

“This paper is calling for healthcare institutions to respond to their duty to care for the family beyond patients’ deaths. By investing in the creation of the Center for the Advancement of Bereavement Care, Sylvester is answering this call,” Lichtenthal said.

Follow @SylvesterCancer on X for the latest news on Sylvester’s research and care.

# # #

Article Title: Investing in bereavement care as a public health priority

DOI: 10.1016/S2468-2667(24)00030-6

Authors: The complete list of authors is included in the paper.

Funding: The authors received funding from the National Cancer Institute (P30 CA240139 Nimer) and P30 CA008748 Vickers).

Disclosures: The authors declared no competing interests.

# # #


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Separating Information From Disinformation: Threats From The AI Revolution

Separating Information From Disinformation: Threats From The AI Revolution

Authored by Per Bylund via The Mises Institute,

Artificial intelligence…

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Separating Information From Disinformation: Threats From The AI Revolution

Authored by Per Bylund via The Mises Institute,

Artificial intelligence (AI) cannot distinguish fact from fiction. It also isn’t creative or can create novel content but repeats, repackages, and reformulates what has already been said (but perhaps in new ways).

I am sure someone will disagree with the latter, perhaps pointing to the fact that AI can clearly generate, for example, new songs and lyrics. I agree with this, but it misses the point. AI produces a “new” song lyric only by drawing from the data of previous song lyrics and then uses that information (the inductively uncovered patterns in it) to generate what to us appears to be a new song (and may very well be one). However, there is no artistry in it, no creativity. It’s only a structural rehashing of what exists.

Of course, we can debate to what extent humans can think truly novel thoughts and whether human learning may be based solely or primarily on mimicry. However, even if we would—for the sake of argument—agree that all we know and do is mere reproduction, humans have limited capacity to remember exactly and will make errors. We also fill in gaps with what subjectively (not objectively) makes sense to us (Rorschach test, anyone?). Even in this very limited scenario, which I disagree with, humans generate novelty beyond what AI is able to do.

Both the inability to distinguish fact from fiction and the inductive tether to existent data patterns are problems that can be alleviated programmatically—but are open for manipulation.

Manipulation and Propaganda

When Google launched its Gemini AI in February, it immediately became clear that the AI had a woke agenda. Among other things, the AI pushed woke diversity ideals into every conceivable response and, among other things, refused to show images of white people (including when asked to produce images of the Founding Fathers).

Tech guru and Silicon Valley investor Marc Andreessen summarized it on X (formerly Twitter): “I know it’s hard to believe, but Big Tech AI generates the output it does because it is precisely executing the specific ideological, radical, biased agenda of its creators. The apparently bizarre output is 100% intended. It is working as designed.”

There is indeed a design to these AIs beyond the basic categorization and generation engines. The responses are not perfectly inductive or generative. In part, this is necessary in order to make the AI useful: filters and rules are applied to make sure that the responses that the AI generates are appropriate, fit with user expectations, and are accurate and respectful. Given the legal situation, creators of AI must also make sure that the AI does not, for example, violate intellectual property laws or engage in hate speech. AI is also designed (directed) so that it does not go haywire or offend its users (remember Tay?).

However, because such filters are applied and the “behavior” of the AI is already directed, it is easy to take it a little further. After all, when is a response too offensive versus offensive but within the limits of allowable discourse? It is a fine and difficult line that must be specified programmatically.

It also opens the possibility for steering the generated responses beyond mere quality assurance. With filters already in place, it is easy to make the AI make statements of a specific type or that nudges the user in a certain direction (in terms of selected facts, interpretations, and worldviews). It can also be used to give the AI an agenda, as Andreessen suggests, such as making it relentlessly woke.

Thus, AI can be used as an effective propaganda tool, which both the corporations creating them and the governments and agencies regulating them have recognized.

Misinformation and Error

States have long refused to admit that they benefit from and use propaganda to steer and control their subjects. This is in part because they want to maintain a veneer of legitimacy as democratic governments that govern based on (rather than shape) people’s opinions. Propaganda has a bad ring to it; it’s a means of control.

However, the state’s enemies—both domestic and foreign—are said to understand the power of propaganda and do not hesitate to use it to cause chaos in our otherwise untainted democratic society. The government must save us from such manipulation, they claim. Of course, rarely does it stop at mere defense. We saw this clearly during the covid pandemic, in which the government together with social media companies in effect outlawed expressing opinions that were not the official line (see Murthy v. Missouri).

AI is just as easy to manipulate for propaganda purposes as social media algorithms but with the added bonus that it isn’t only people’s opinions and that users tend to trust that what the AI reports is true. As we saw in the previous article on the AI revolution, this is not a valid assumption, but it is nevertheless a widely held view.

If the AI then can be instructed to not comment on certain things that the creators (or regulators) do not want people to see or learn, then it is effectively “memory holed.” This type of “unwanted” information will not spread as people will not be exposed to it—such as showing only diverse representations of the Founding Fathers (as Google’s Gemini) or presenting, for example, only Keynesian macroeconomic truths to make it appear like there is no other perspective. People don’t know what they don’t know.

Of course, nothing is to say that what is presented to the user is true. In fact, the AI itself cannot distinguish fact from truth but only generates responses according to direction and only based on whatever the AI has been fed. This leaves plenty of scope for the misrepresentation of the truth and can make the world believe outright lies. AI, therefore, can easily be used to impose control, whether it is upon a state, the subjects under its rule, or even a foreign power.

The Real Threat of AI

What, then, is the real threat of AI? As we saw in the first article, large language models will not (cannot) evolve into artificial general intelligence as there is nothing about inductive sifting through large troves of (humanly) created information that will give rise to consciousness. To be frank, we haven’t even figured out what consciousness is, so to think that we will create it (or that it will somehow emerge from algorithms discovering statistical language correlations in existing texts) is quite hyperbolic. Artificial general intelligence is still hypothetical.

As we saw in the second article, there is also no economic threat from AI. It will not make humans economically superfluous and cause mass unemployment. AI is productive capital, which therefore has value to the extent that it serves consumers by contributing to the satisfaction of their wants. Misused AI is as valuable as a misused factory—it will tend to its scrap value. However, this doesn’t mean that AI will have no impact on the economy. It will, and already has, but it is not as big in the short-term as some fear, and it is likely bigger in the long-term than we expect.

No, the real threat is AI’s impact on information. This is in part because induction is an inappropriate source of knowledge—truth and fact are not a matter of frequency or statistical probabilities. The evidence and theories of Nicolaus Copernicus and Galileo Galilei would get weeded out as improbable (false) by an AI trained on all the (best and brightest) writings on geocentrism at the time. There is no progress and no learning of new truths if we trust only historical theories and presentations of fact.

However, this problem can probably be overcome by clever programming (meaning implementing rules—and fact-based limitations—to the induction problem), at least to some extent. The greater problem is the corruption of what AI presents: the misinformation, disinformation, and malinformation that its creators and administrators, as well as governments and pressure groups, direct it to create as a means of controlling or steering public opinion or knowledge.

This is the real danger that the now-famous open letter, signed by Elon Musk, Steve Wozniak, and others, pointed to:

“Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization?”

Other than the economically illiterate reference to “automat[ing] away all the jobs,” the warning is well-taken. AI will not Terminator-like start to hate us and attempt to exterminate mankind. It will not make us all into biological batteries, as in The Matrix. However, it will—especially when corrupted—misinform and mislead us, create chaos, and potentially make our lives “solitary, poor, nasty, brutish and short.”

Tyler Durden Fri, 03/15/2024 - 06:30

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