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The other day, I mentioned the death of gold in a deflationary scenario to great mockery and derision. I think the insistence on inflation is a combination of wishful thinking, the dominance of the conversation by gold-dealers, and a kind of hypnotic power wielded by the FED, as in, people understand the Fed is the danger, but they feel that the Fed is invincible, and so they cower as it casts its dread shadow across the landscape. The key to this “power” is the Fed’s purported ability to inflate at will. However, there are indicators that the Fed is not as omnipotent as we have all been led to believe.
The Milken Institute….isn’t that like Fagan’s School for Pickpockets?
Of course it doesn’t add up. Just like the Euro-bond issue doesn’t add up, or Social Security doesn’t add up, or like when a convenience store hires a drug addict as a clerk and the till doesn’t add up at the end of the shift.
If you wrote an article and said, “Wow, it looks like CalPERS has managed to make enough money on its investments to meet the needs of its retirees”, we’d all be reading investment and golf-tip blogs instead of TEOTWAWKI ones.
I admit I’m a little smug. I have no retirement, no savings, no health insurance, no investments, and no employment other than my own. I always suspected that security was an illusion, and I’m just a little bit gratified to see that I really was right, after all.
“The greatest pain comes from the shattering of a cherished illusion.” -Anonymous
The banking meltdown was primarily due to energy expenditure overhang.
The massive energy glut of the 1990’s ended abruptly in 2005…it took three years for Peak oil to impact the financial markets.
The substitution of massive debt and QE for energy is obviously unsustainable. It was however predictable. Just as a household will, if its main income earners are laid off or incapacitated, try to sustain its standard of living by credit cards, so in the sudden absence of continually growing energy reserves, we start borrowing.
Perhaps it is wrong to blame Giethner and Bernanke for this. Would not any of us, faced with the same choice, wish to delay the day of reckoning as long as we could?January 10, 2013 at 4:27 am in reply to: One Inch Below The Surface (America, You're Being Punked) #6734
Ilargi, we’ll all be terrorists before too long. The right of free speech is the right to be named a thought criminal, a wrecker, and a reactionary. The right to bear arms is the right to be labeled a violent terrorist.
We are all fucked. But the most superficial study of history shows that the gain of the whole world at the price of one’s soul is still a bad bargain. Life is a fleeting shadow, and we all are like grass, which today is, and tomorrow is thrown in the oven. I’ll keep my integrity, thank you very much. The worst that the Statists can do to me is torment me and then kill me. I’ll see them at the judgment seat of God.
The problem with problems is one for philosophy.
We need gas now and drinking water can always be purified after the fact…
Optimism bias in action I suppose.
I don’t wonder why the econ blogs I read spend so much time covering Europe. I understand the slow motion train wreck- no make that the slow-motion covered in frozen molasses and then dipped in amber train wreck. I also am a firm believer that all the QE in the world cannot forestall a massive debt de-leveraging tsunami of apocalyptic proportions that will plunge the word into a deflationary winter. It’s a simple matter of thermodynamic accounting. All the fiat money in the universe cannot make up for a lack of fuel, literally, for the economic fire.
No, I understand it, but I’m afraid my 21st century attention span, measured on the tens of microns level, simply isn’t up to the task. I only want to watch for the fiery crash. But just like NASCAR, the racers just keep going round and round. Simply put, I’m bored.
Debt is the thermodynamic demand we place on the future.
Forget, and I mean it, forget, alternative energy. Whatever you have now, you have as a benefit of FIRE. Cars, computers, wind generator parts, solenoid operated steam valves, turbine blades… it all takes fire to produce. Someone, somewhere has to build a fire and melt the metal to make the things needed to make the things and to get the oil, or coal, or uranium needed to fuel the fires.
You and me, we’re on fire. It’s all about oxidation, baby. Oxidation, fast or slow, and the fuel to oxidize. That’s what the economy boils (no pun intended) down to. Debt overhangs and speculative bubbles are nothing more or less than indications of heat energy deficits. We promise more than we can deliver from our respective fires, or fuel stores to make the fires.
Excellent article. I must admit this is the great disconnect. I thought about this as a pilot- such a prodigious energy expenditure, and for what? To make people go fast?
Also, the economy adds distortions to otherwise physically impractical endeavors. take electrical generation for example. The best steam turbines run at 33% efficiency. That means 2/3 of the energy input is wasted as heat. if that energy input is coal, take another 10-15 % off the top to mine the coal and ship it the the generating station. Then if we consider another 15% loss in transmission, and further losses in the efficiency of the end-use machinery or illuminating device, we are operating at a net loss. Is it possible? Does it actually take more energy to shove the electricity into your house than you can derive as a benefit?
If this doesn’t make sense physically, how does it make sense economically? Only because the ponzi scheme is complicated enough, and delayed long enough to blur the physical realities that spell the doom of our modern energy-consuming society. And also because we so far have had the luxury of so much energy at our disposal that we could afford to waste it in a profligacy so opulent that it may never have an equal.