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

To: gregor_us who wrote (28502)	5/10/2010 11:51:39 PM
From: axial	1 Recommendation Respond to of 71475

"In order to have flow, you need to be churning affordable energy through your innovation machine, and getting output in return. The developed world probably started to struggle with flow over 15 years ago. That's when we turned to credit." Exactly! But the process started with the first oil embargo in '73, IMO. A few years later that stimulated the introduction of neoclassical economics along the Thatcher-Reagan axis: there were other intellectual antecedents to present-day practice, but the long-term outcome was to transfer the economic effects to steadily growing debt. Voters were too easily attracted by the appearance of former prosperity, which politicians were willing to give them. The reality was that rising energy costs were parasitic in proportion to rising debt. Refusing reasonable taxation for borrowing, accompanied by massive spending only accelerated the growth of debt. Had voters been willing to accept the consequences of higher energy costs, western economies might have adapted to a lower standard of living, and true improvements in productivity might have occurred. Whether politicians understood the effect of new economic orthodoxy is debatable, but unquestionably they were pandering to voters, rather than providing economic leadership. We can quibble about cause and effect, but there's no doubt we're entering an era of even higher energy cost, and increasing fossil fuel scarcity. This time, we're doing it with an anchor of debt around our necks, and virtually no borrowing capacity. The consequences are predictable. Or inevitable. Jim