# Triple Expansion Steam Engine

Posted by PITHOCRATES - November 6th, 2013

# Technology 101

## Pressure and Temperature have a Direct Relationship while Pressure and Volume have an Inverse Relationship

For much of human existence we used our own muscles to push things.  Which limited the work we could do.  Early river transport were barges of low capacity that we pushed along with a pole.  We’d stand on the barge and place the pole into the water and into the river bed.  Then push the pole away from us.  To get the boat to move in the other direction.

In more developed areas we may have cleared a pathway alongside the river.  And pulled our boats with animal power.  Of course, none of this helped us cross an ocean.  Only sail did that.  Where we captured the wind in sails.  And the wind pushed our ships across the oceans.  Then we started to understand our environment more.  And noticed relationships between physical properties.  Such as the ideal gas law equation:

Pressure = (n X R X Temperature)/Volume

In a gas pressure is determined my multiplying together ‘n’ and ‘R’ and temperature then dividing this number by volume.  Where ‘n’ is the amount of moles of the gas.  And ‘R’ is the constant 8.3145 m3·Pa/(mol·K).  For our purposes you can ignore ‘n’ and ‘R’.  It’s the relationship between pressure, temperature and volume that we want to focus on.  Which we can see in the ideal gas law equation.  Pressure and temperature have a direct relationship.  That is, if one rises so does the other.  If one falls so does the other.  While pressure and volume have an inverse relationship.  If volume decreases pressure increases.  If volume increases pressure decreases.  These properties prove to be very useful.  Especially if we want to push things.

## Once the Piston traveled its Full Stroke on a Locomotive the Spent Steam vented into the Atmosphere

So what gas can produce a high pressure that we can make relatively easy?  Steam.  Which we can make simply by boiling water.  And if we can harness this steam in a fixed vessel the pressure will rise to become strong enough to push things for us.  Operating a boiler was a risky profession, though.  As a lot of boiler operators died when the steam they were producing rose beyond safe levels.  Causing the boiler to explode like a bomb.

Early locomotives would burn coal or wood to boil water into steam.  The steam pressure was so great that it would push a piston while at the same time moving a connecting rod connected to the locomotive’s wheel.  Once the piston traveled its full stroke the spent steam vented into the atmosphere.  Allowing the pressure of that steam to dissipate safely into the air.  Of course doing this required the locomotive to stop at water towers along the way to keep taking on fresh water to boil into steam.

Not all steam engines vented their used steam (after it expanded and gave up its energy) into the atmosphere.  Most condensed the low-pressure, low-temperature steam back into water.  Piping it (i.e., the condensate) back to the boiler to boil again into steam.  By recycling the used steam back into water eliminated the need to have water available to feed into the boiler.  Reducing non-revenue weight in steam ships.  And making more room available for fuel to travel greater distances.  Or to carry more revenue-producing cargo.

## The Triple Expansion Steam Engine reduced the Expansion and Temperature Drop in each Cylinder

Pressure pushes the pistons in the steam engine.  And by the ideal gas law equation we see that the higher the temperature the higher the pressure.  As well as the corollary.  The lower the temperature the lower the pressure.  And one other thing.  As the volume increases the temperature falls.  So as the pressure in the steam pushes the piston the volume inside the cylinder increases.  Which lowers the temperature of the steam.  And the temperature of the piston and cylinder walls.  So when fresh steam from the boiler flows into this cylinder the cooler temperature of the piston and cylinder walls will cool the temperature of the steam.  Condensing some of it.  Reducing the pressure of the steam.  Which will push the piston with less force.  Reducing the efficiency of the engine.

There was a way to improve the efficiency of the steam engine.  By reducing the temperature drop during expansion (i.e., when it moves the piston).  They did this by raising the temperature of the steam.  And breaking down the expansion phase into multiple parts.  Such as in the triple expansion steam engine.  Where steam from the boiler entered the first cylinder.  Which is the smallest cylinder.  After it pushed the piston the spent steam still had a lot of energy in it looking to expand further.  Which it did in the second cylinder.  As the exhaust port of the first cylinder is piped into the intake port of the second cylinder.

The second cylinder is bigger than the first cylinder.  For the steam entering this cylinder is a lower-pressure and lower-temperature steam than that entering the first cylinder.  And needs a larger area to push against to match the down-stroke force on the first piston.  After it pushes this piston there is still energy left in that steam looking to expand.  Which it did in the third and largest cylinder.  After it pushed the third piston this low-pressure and low-temperature steam flowed into the condenser.  Where cooling removed what energy (i.e., temperature above the boiling point of water) was left in it.  Turning it back into water again.  Which was then pumped back to the boiler.  To be boiled into steam again.

By restricting the amount of expansion in each cylinder the triple expansion steam engine reduced the amount the temperature fell in each cylinder.  Allowing more of the heat go into pushing the piston.  And less of it go into raising the temperature of the piston and cylinder walls.  Greatly increasing the efficiency of the engine.  Making it the dominant maritime engine during the era of steam.

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# China’s Continuing Credit Expansion is Starting to Worry the IMF

Posted by PITHOCRATES - September 15th, 2013

# Week in Review

As the U.S. fiscal year draws to a close the Republicans and Democrats are digging in their heels over the upcoming debt ceiling debate.  The Republicans want to cut spending and taxes to rein in out-of-control spending.  So they don’t have to keep borrowing money.  Running up the national debt.  The Democrats, on the other hand, say, “Who cares about the debt?  We’ll be dead and buried when the nation collapses under the weight of this mammoth debt load.  As long as we get what we want why should we care about future generations?”  At least, that’s what their actions say.

A lot of leading economists on the left, Keynesians economists, see no problem in running up the debt.  Print that money, they say.  Keep that expansion growing.  What could possibly go wrong?  Especially when the federal government has the power to print money?  Just look at what the Japanese did in the Eighties.  And what the Chinese are doing now (see As the West Faltered, China’s Growth Was Fueled by Debt by Christina Larson posted 9/12/2013 on Bloomberg Businessweek).

As demand for Chinese exports diminished in the wake of the financial meltdown, the Chinese economy kept humming at more than 9 percent annual gross domestic product growth each year from 2008 to 2011. The trick? “A huge monetary expansion and lending boom,” says Patrick Chovanec, chief strategist at Silvercrest Asset Management and a former professor at Tsinghua University’s School of Economics and Management in Beijing. With bank lending restrictions loosened in late 2008, “Total debt accelerated from 148 percent to 205 percent of GDP over 2008-12,” according to a May 2013 report from research firm CLSA Asia-Pacific Markets. When Beijing tried to rein in the banks beginning in late 2010, shadow banking—lending outside the formal sector—exploded. Today “China is addicted to debt to fuel growth,” according to the CLSA report, with the economy hampered by “high debt and huge excess capacity with only 60 percent utilization.”

The Beijing-based firm J. Capital Research dubbed 2012 the “Year of the (White) Elephant” in a report detailing some of China’s questionable infrastructure build-out. To take one example, 70 percent of the country’s airports lose money, yet more are being built in small and remote cities. At the shiny new Karamay Airport in far western Xinjiang province, there are four check-in counters serving two flights daily. Local governments have splurged on “new towns” and “special zones,” many of which have already fallen into disrepair. The \$5 million Changchun Zhenzhuxi Park, intended as a scenic area, is now a large public garbage dump, as the local landscaping bureau never agreed to provide maintenance. Near the southern city of Hangzhou, a forlorn replica of the Eiffel Tower overlooks a faux Paris—the ersatz arrondissement attracted hardly any residents, and local media have dubbed it a ghost town.

“In China, you often hear people say they’re building for the future,” explains Chovanec. “But if you build something and it’s empty for 20 years, does that make any sense? By that point, it may already be falling apart.”

The classic Keynesian argument for economic stimulus is the one about paying people to dig a ditch.  Then paying them to fill in the ditch they just dug.  The ditch itself having no economic value.  But the people digging it and filling it in do.  For they will take their earnings and spend it in the economy.  But the fallacy of this argument is that money given to the ditch-diggers and the fillers-in could have been spent on something else that does have economic value.  Money that was pulled out of the private sector economy via taxation.  Or money that was borrowed adding to the national debt.  And increasing the interest expense of the nation.  Which negates any stimulus.

If that money was invested to expand a business that was struggling to keep up with demand that money would have created a return on investment.  That would last long after the people who built the expansion spent their wages.  This is why Keynesian stimulus doesn’t work.  It is at best temporary.  While the long-term costs are not.  It’s like getting a 30-year loan to by a new car.  If you finance \$35,000 over 5 years at a 4.5% annual interest rate your car payment will be \$652.51 and the total interest you’ll pay will be \$4,018.95.  That’s \$39,018.95 (\$35,000 + 4,018.95) of other stuff you won’t be able to buy because of buying this car.  If you extend that loan to 30 years your car payment will fall to \$177.34.  But you will be paying that for 30 years.  Perhaps 20-25 years longer than you will actually use that car.  Worse, the total interest expense will be \$23,620.24 over those 30 years.  That’s \$58,620.24 (\$35,000 + 23,620.24) of stuff you won’t be able to buy because of buying this car.  Increasing the total cost of that car by 50.2%.

This is why Keynesian stimulus does not work.  Building stuff just to build stuff even when that stuff isn’t needed will have long-term costs beyond any stimulus it provides.  And when you have a “high debt and huge excess capacity with only 60 percent utilization” bad things will be coming (see IMF WARNS: China Is Taking Ever Greater Risks And Putting The Financial System In Danger by Ambrose Evans-Pritchard, The Telegraph, posted 9/13/2013 on Business Insider).

The International Monetary Fund has warned that China is taking ever greater risks as surging credit endangers the financial system, and called for far-reaching reforms to wean the economy off excess investment…

The country has relied on loan growth to keep the economy firing on all cylinders but the law of diminishing returns has set in, with the each yuan of extra debt yielding just 0.20 yuan of economic growth, compared with 0.85 five years ago. Credit of all types has risen from \$9 trillion to \$23 trillion in five years, pushing the total to 200pc of GDP, much higher than in emerging market peers…

China’s investment rate is the world’s highest at almost 50pc of GDP, an effect largely caused by the structure of the state behemoths that gobble up credit. This has led to massive over-capacity and wastage.

“Existing distortions direct the flow of credit toward local governments and state-owned enterprises rather to households, perpetuating high investment, misallocation of resources, and low private consumption. A broad package of reforms is needed,” said the IMF.

Just like the miracle of Japan Inc. couldn’t last neither will China Inc. last.  Japan Inc. put Japan into a deflationary spiral in the Nineties that hasn’t quite yet ended.  Chances are that China’s deflationary spiral will be worse.  Which is what happens after every Keynesian credit expansion.  And the greater the credit expansion the more painful the contraction.  And with half of all Chinese spending being government spending financed by printing money the Chinese contraction promises to be a spectacular one.  And with them being a primary holder of US treasury debt their problems will ricochet through the world economy.  Hence the IMF warning.

Bad things are coming thanks to Keynesian economics.  Governments should have learned by now.  As Keynesian economics turned a recession into the Great Depression.  It gave us stagflation and misery in the Seventies.  It gave the Japanese their Lost Decade (though that decade actually was closer 2-3 decades).  It caused Greece’s economic collapse.  The Eurozone crisis.  And gave the U.S. record deficits and debt under President Obama.

The history is replete with examples of Keynesian failures.  But governments refuse to learn these lessons of history.  Why?  Because Keynesian economics empowers the growth of Big Government.  Something free market capitalism just won’t do.  Which is why communists (China), socialists (the European social democracies) and liberal Democrats (in the United States) all embrace Keynesian economics and relentlessly attack free market capitalism as corrupt and unfair.  Despite people enjoying the greatest liberty and economic prosperity under free market capitalism (Great Britain, the United States, Canada, Australia, Hong Kong, Taiwan, South Korea, etc.).  While suffering the most oppression and poverty under communism and socialism (Nazi Germany, the Soviet Union, the communist countries behind the Iron Curtain in Eastern Europe, the People’s Republic of China under Mao, North Korea, Cuba, etc.).

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# GDP Growth, Recession, Depression and Recovery

Posted by PITHOCRATES - March 18th, 2013

# Economics 101

## Gross Domestic Product is basically Consumer Spending and Government Spending

In the 1980 presidential campaign Ronald Reagan said, “A recession is when your neighbor loses his job.  A depression is when you lose yours.  And a recovery is when Jimmy Carter loses his.”  A powerful statement.  And one that proved to be pretty much true.  But don’t look for these definitions in an economics textbook.  For though they connect well to us the actual definitions are a little more complex.  And a bit abstract.

There is a natural ebb and flow to the economy.  We call it the business cycle.  There are good economic times with unemployment falling.  And there are bad economic times with unemployment rising.  The economy expands.  And the economy contracts.  The contraction side of the business cycle is a recession.  And it runs from the peak of the expansion to the trough of the contraction.  A depression is basically a recession that is really, really bad.

But even these definitions are vague.  Because getting an accurate measurement on economic growth isn’t that easy.  There’s gross domestic product (GDP).  Which is the sum total of final goods and services.  Basically consumer spending and government spending.  Which is why the government’s economists (Keynesians) and those in the Democrat Party always say cutting government spending will hurt the economy.  By reducing GDP.  But GDP is not the best measurement of economic activity.

## Even though Retail Sales may be Doing Well everyone up the Production Chain may not be Expanding Production

One problem with GDP is that the government is constantly revising the numbers.  So GDP doesn’t really provide real-time feedback on economic activity.  The organization that defines the start and end points of recessions is the National Bureau of Economic Research (NBER).  And they often do so AFTER the end of a recession.  One metric they use is GDP growth.  If it’s negative for two consecutive quarters they call it a recession.  But if there is a significant decline in economic activity that lasts a few months or more they may call that a recession, too.  Even if there aren’t two consecutive quarters of negative GDP growth.  If GDP falls by 10% they’ll call that a depression.

There’s another problem with using GDP data.  It’s incomplete.  It only looks at consumer spending.  It doesn’t count any of the upper stages of
production.  The wholesale stage.  The manufacturing stage.  And the raw commodities stage.  Where the actual bulk of economic activity takes place.  In these upper stages.  Which Keynesian economists ignore.  For they only look at aggregate consumer spending.  Which they try to manipulate with interest rates.  And increasing the money supply.  To encourage more consumer spending.  But there is a problem with Keynesian economics.  It doesn’t work.

When economic activity slows Keynesian economic policies say the government should increase spending to pick up the slack.  So they expand the money supply.  Lower interest rates.  And spend money.  Putting more money into the hands of consumers.  So they can go out and spend that money.  Thus stimulating economic activity.  But expanding the money supply creates inflation.  Which raises prices.  So consumers may be spending that stimulus money but those businesses in the higher stages of production know what’s coming.  Higher prices.  Which means people will soon be buying less.  And they know once these people spend their stimulus money it will be gone.  As will all that stimulated activity.  So even though retail sales may be doing well everyone up the production chain may not be expanding production.  Instead, wholesalers will draw down their inventories.  And not replace them.  So they will buy less from manufacturers.  Who will buy fewer raw commodities.

## The continually falling Labor Force Participation Rate suggests the 2007-2009 Recession hasn’t Ended

So retail sales could be doing well during an economic contraction.  For awhile.  But everything above retail sales will already be hunkering down for the coming recession.  Cutting production.  And laying off people. Making unemployment another metric to measure a recession by.  If the unemployment rate rose by, say, 1.5 points during a given period of time the economy may be in a recession.  But there is a problem with using the unemployment rate.  The official unemployment rate (the U-3 number) doesn’t count everyone who can’t find a full-time job.

U-3 only counts those people who are looking for work.  They don’t count those who take a lower-paying part-time job because they can’t find a full-time job.  And they don’t count people who give up looking for work because there just isn’t anything out there.  Getting by on their savings.  Their spouse’s income.  Even cashing in their 401(k).  People doing this are an indication of a horrible economy.  And probably a pretty bad recession.  But they don’t count them.  Making the U-3 unemployment rate understate the true unemployment.  A better metric is the labor force participation rate.  The percentage of those who are able to work who are actually working.  A falling unemployment rate is good.  But if that happens at the same time the labor force participation rate is falling the economy is still probably in recession.  Despite the falling unemployment rate.

The NBER sifts through a lot of data to decide whether the economy is in recession or not.  Do politics enter their decision-making process?  Perhaps.  For they said the 2007-2009 recession ended in 2009.  The U-3 unemployment rate had fallen.  And GDP growth returned to positive territory.  But the labor force participation rate continued to fall.  Meaning people were disappearing from the labor force.  Indicating that the 2007-2009 recession hasn’t really ended.  In fact, one could even say that we have been in a depression.  For not only did a lot of our neighbors lose their jobs.  A lot of us lost our jobs, too.  And because the president who presided over the worst economic recovery since the Great Depression didn’t lose his job in 2012, there has been no recovery.  So given our current economic picture the best metric to use appears to be what Ronald Reagan told us in 1980.  Which means things aren’t going to get better any time soon.

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