Please read this, even if a rant, it's one of the most important posts I've ever written here.
The primary point Shostak (and I) are making, is that there needs to be a dramatic shift in how money is utilized. In theory it should be deployed productively, especially now. Now in my view the answer to what is productive is obvious, and if not to you, then just read through a random sampling of my posts over the last year, it will be evident enough, and no it's not more junk and appliances from China.
Now you have argued that easy money has nothing to do with energy shortages, commodity spikes, dislocations, bottlenecks and Train Wrecks, and I've said sorry, it does, big time. And the reason it does, is that it overloads economic activity into false consumption booms, that isn't supported by enough productive capital, things like refineries, and mines, and port facilities, and bridges, and even trained labor. The list goes on, maybe others can post examples?
As you may have noticed, I often point to examples of these maladjustments in my posts. So let me repeat a good example of one I've been using all week. Using energy as the topic, here we see what Shostak calls "first recipients" engaging in what we would all should agree is a counterproductive behavior in today's energy constrained world, the buying of more RVs.
biz.yahoo.com
Now I would be sure you would agree that these purchases to a large measure are on credit, pulling equity out of inflated assets, or perhaps partly with salaries from bloated overpaid financial or real estate industry types, etc, etc?: yes, no? If yes, easy credit is clearly creating a behavior that leads to more maladjustments.
And when you have these price spikes caused by assholes driving in 6 mile per gal RVs (just one example of many), bought on easy money, the higher energy costs need to be absorbed somewhere, and by somebody, especially since capital really isn't available for the more productive activity of creating viable energy sources. Now some of those "somebodies" don't have unlimited lines of credit drawn on Bubble assets, so guess what, they struggle. Here's my example of that, folks living in the boonies, leaving town, etc. They also get to use more fuel getting to work, shopping, indeed surviving.
azcentral.com
Some of those can get away with it for now, because they have gasoline credit cards. Energy bulls like me, love it, the "unfortunate" in the boonies, and assholes in RVs.
Unfortunately in Bubbles not everybody is a winner, as the darn thing flows very unevenly, and that's because it's a maladjustment, and many folks just get, fucked (yes, that's definitely the right word, and not frontally) in this kind of monetary regime. Shostak uses the rather sterile term, "late recievers" for them, or worse, "non-recievers".
Message 20816460
I see a more human side, and it pisses me off. Some of these unfortunates may be only 28 yos, and thus failed by unlucky timing of birth to get into Bubble inflated assets in time. They get to eat fumes from the RV/SUVing crowd, and try and figure out how to pay for next month's gas bill. I guess your solution is let me guess, more easy money? By my thinking I see this process as generational looting. Some may work in industries that don't benefit quickly from money printing, or the flow of easy credit. You know, industries like manufacturing. Not everybody can work in mortgage banking, and homebuilding, some actually have other jobs, some unfortunately in productive rather than consumptive areas of the economy. These people are the ones described in the AZ story. I lay their plight right at Easy Al's and the other Wizards doorsteps too.
No sorry, the time has come to move away from this kind of nonsense, and let the chips fall where they may. Of course they will be gradual and measured about it, insuring that the problem just intensified, but you know the nice thing is we can all bet accordingly on how to exploit this. That's what I spend way too much time doing myself. Productive use of my time, now largely consists of monitoring copper stock depletion and guessing what the next MoP misstep will be,
Message 20828796
etc, etc. So rather than going out and doing what I was once good at, vintage apartment building redevelopment, even I have sadly become an economic parasite, a speculator. What else is there?
Maybe the thing (deflation) you seem to fear so much will be part of the outcome in some areas of the economy. Frankly I hope so, in that folks who buy RVs on HELOCs will get to learn one of Bevis and Butthead's life's lessons, as will perhaps copper speculators too. It will no doubt be painfully (here we agree no argument from my end), but then the US economy can rebuild on sounder footing. I for one don't apology one iota for wishing it so. |
