When Will God Destroy Our Money?

In a research paper, published today, author and derivative expert, Dr. Espen Gaarder Haug documents another weakness in our modern electronic fiat-currency system. According to the research, small solar storms knocks out our  telecommunication satellites on a regular basis –  but that’s the small storms…

“If you thought that the Federal Reserve and Ben Bernanke are the most powerful money masters in our current monetary system, you are wrong.”

Espen Gaarder Haug

“A very large coronal mass ejection from the sun that could cause a super solar storm if it should hit the earth might wipe out the global money system within minutes from impact. Stock exchanges would not operate, banking systems would not function, and both credit cards and ATM machines would stop working. We could find ourselves without the use of our modern electronic forms of money for months and possibly years,” Dr. Haug writes in his latest research paper released April 18th.

“And yet, even in a catastrophic scenario where water pumps, power plants, public transportation, and other infrastructural assets that are essential to contemporary life had failed, some type of functioning money system would be required to keep the basic necessities, such as food and medical supplies flowing without too much friction,” he adds.

Must Be Considered

“I am not a doomsayer. I do not predict that a super solar storm will hit us tomorrow, the day after tomorrow or next year, or even the year after that. The probability for a severe solar storm hitting the earth the next few years based on our limited amount of historical data seems to be low. However, it is probably higher than most people would imagine.”

“Before we completely ignore a relatively low probability event, we have to take into  account the consequences of that event occurring. The potential effects of a solar storm hitting earth range from some communication satellites being knocked out, on the minimal damage side, to a global disaster of tremendous proportions. The magnitude of the effect depends on a series of factors related to the severity of the solar storm and the level of preparation.”

“There is much that can be done to prepare for such a scenario; such plans should also cover the impacts to monetary systems,” Haug writes. Adding: “Humans seem to be particularly ignorant at preparing for events that happen infrequently, but that have massive impact.”

What are the Odds?

The sun’s activity is partly stochastic and partly deterministic. The term stochastic means uncertain and unpredictable, but still we can say something about the type of uncertainty.

Parts of the sun’s activity are to a large degree deterministic. That means partly predictable. The number of sunspots on the sun is a good indication on some types of solar activity. For the last few years, there have been very few sunspots to observe on the surface of the sun. In the few years before and after year 2001, there were a quite a lot of sunspots, according to Dr. Haug’s research.

The sunspot activity is related to the reversal of the sun’s magnetic field. The sun’s magnetic field flips somewhat regularly, approximately every 11.5 years on average.

The number of sunspots and the solar activity related to the probability of solar storms seems to peak around the time when the magnetic field of the sun is reverting. Figure 1 shows the monthly average sunspot numbers from 1749 to 2010.

The well known approximately 11.5 year cycle can easily be seen.

The next solar cycle, that we now have entered, is known as Cycle 24. An international panel of experts led by NOAA and sponsored by NASA has released a new prediction that it will peak around 2013, with a below-average number of sunspots, the report says.

“If our prediction is correct, Solar Cycle 24 will have a peak sunspot number of 90, the lowest of any cycle since 1928 when Solar Cycle 16 peaked at 78,”
says panel chairman Doug Biesecker of the NOAA Space Weather Prediction Center.

It is tempting to describe such a cycle as “weak” or “mild,” but that could give the wrong impression.

“Even a below-average cycle is capable of producing severe space weather,” Biesecker says.

“The great geomagnetic storm of 1859, for instance, occurred during a solar cycle of about the same size we’re predicting for 2013.”

The Great Solar Storm of 1859

In August and September of 1859, there was a severe magnetic solar storm hitting earth known as “The Carrington Event.”

Telegraph networks around the world experienced major disruptions and outages.

“Shortly after midnight on September 2, 1859, campers in the Rocky Mountains were awakened by an auroral light, so bright that one could easily read common print.”

Then again in 1921, there was another powerful solar storm affecting telegraph networks.

“In other words, powerful solar storms are nothing new, they are also not something that is purely theoretical, they are natural events that have happened in the past and they will happen again. We have written records of both the 1859 storm and the 1921 storm. And there are no guarantees that there not will be similar or even much more powerful solar storms than those two events in the future,” Espen Haug writes.

“In the 160-year record of geomagnetic storms, the Carrington event is the biggest.”

The Economic Impact

The NAS report states that it could take from 4 to 10 years to recover fully from a severe geomagnetic solar storm. Further they state that such a catastrophe would cost the United States $1 trillion to $2 trillion in the first year.

Espen Gaarder Haug

“This is particularly true if politicians, governments, and societies do not start to prepare for such events in advance,” Haug underlines.

The NAS report unfortunately shows that even building an advanced warning system could give us very limited preparation time.

Solar storms can move very swift, and a storm could actually hit us before the warning signals from the satellites reached us.

“However, if the plasma were traveling as fast as it is estimated that it traveled 150 years ago, it would get here in 12 minutes, so the advanced warning would not arrive in time.”

“The other satellite that can provide such information—it was damaged in the last solar storm in 2003—is SOHO, or the solar and heliospheric observatory. It, too, would have difficulty getting the information to us in time.”

“Our investment in satellite technology is approximately $200 billion. The US telecommunications industry reports annual revenues of $350 billion each year. The electrical power industry reports annual revenues of $250 billion,” the NAS report says.

“If a severe solar storm hits a series of satellites the losses in the insurance business could be substantial,” the Norwegian financial derivative expert points out.

Even smaller solar storms can cause considerably economic losses and blackouts, according to Mr-Haug’s research.

“On March 13, 1989, an electrical power blackout caused by a severe solar storm struck Quebec. It lasted 12 hours and affected 5 million people at an eventual cost of over $2 billion.”

“The electricity blackout of 2003 affected an estimated 10 million people in the Canadian province of Ontario and 45 million people in eight U.S. states, making it the most widespread blackout in history. This blackout was not related to solar activity, but, according to the final report from the U.S.-Canada Power System Outage Task Force, simply due to failure to trim trees in part of its Ohio service area.”

In 1859, the money system itself was not affected by the solar storm of that year. Today a similar solar storm could potentially cause a collapse in the monetary system, Dr. Espen Gaarder Haug concludes.

“Our current electronic money has certainly simplified transactions and been important for growth, by minimizing transaction costs. But if the advantages of this form of modernization have come at the expense of robustness towards extreme cosmic events such as solar storms, the price paid for the convenience could be a very high one
in the end.”

Here’s a copy of the research paper; “When Will God Destroy Our Money?”

Espen Gaarder Haug is a regular contributor to the Econotwist’s Blog.

Related by the Econotwist:

Sun Spots To Cool Down The Markets?

Mother Earth On Crack

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