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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: benwood who wrote (25279)	12/8/2009 7:01:41 AM
From: axial	1 Recommendation Respond to of 71463

Right. Not only have we dawdled on necessary improvements, but now finance has misaligned economics. We won't see sufficient investment in energy, even at this late date: A Gesture from the Invisible Hand Ironically, this happens just as a perpetually expanding money supply driven by mass borrowing at interest has become an anachronism unsuited to the new economic reality of energy contraction. It also guarantees that any attempt to limit the financial sphere of the economy will face mass opposition, not only from financiers, but from millions of ordinary citizens whose dream of a comfortable retirement depends on the hope that financial investments will outperform the faltering economy of goods and services. Meanwhile, just as the economy most needs massive reinvestment in productive capacity to retool itself for the very different world defined by contracting energy supplies, investment money seeking higher returns flees the productive economy for the realm of abstract paper wealth. Nor will this effect be countered, as suggested by the well-intentioned people mentioned toward the beginning of this essay, by a flood of investment money going into energy production and bringing the cost of energy back down. Producing energy takes energy, and thus is just as subject to rising energy costs as any other productive activity; even as the price of oil goes up, the costs of extracting it or making some substitute for it rise in tandem and make investments in oil production or replacement no more lucrative than any other part of the productive economy. Oil that has already been extracted from the ground may be a good investment, and financial paper speculating on the future price of oil will likely be an excellent one, but neither of these help increase the supply of oil, or any oil substitute, flowing into the economy. energybulletin.net --- We're in a situation where financial incentives actually contradict economic needs in many different ways: in general, by diverting capital from the economic virtuous circle. For a number of reasons already discussed here, the broken virtuous circle is being perpetuated, creating a negative synergy: working against our real interests. We're entering a period of many negative synergies: in ecological and monetary terms, energy was cheap and easy: everything worked together to produce abundance never seen in human history. Now, as energy becomes more costly, the synergies will turn negative, adversely affecting everything we do and slowly marginalizing increasing portions of global society. Message 26160452 Negative synergies: coming to us all, as one of mankind's greatest bubbles deflates. Jim