A Storm Is Brewing
Crude oil futures soared past $145 a barrel for the first time ever Thursday before a bounce in the U.S. dollar cut into the gains.
Be Warned, good people. Regardless of any of the happy lies flowing from the mouths of pretty much all our politicians as well as the wanna-be contenders, it’s going to get a hell of a lot worse. The world has ridden the crest of the prosperity wave for a long time and now that wave is crashing on the rocky shore, as all waves must.
The Fed has run out of fixes for inflation and can now only issue statements designed to slow it down. It can’t actually do anything any longer, and it’s running out of statement material as well. The interest rate can’t be lowered more than the 2% it’s at now, to keep mortgages payable so people can afford housing. Raising interest rates raises loan costs and sucks money out of paychecks, which reduces sales of homes and goods, which puts people out of work, which results in recession/depression. This would ultimately reduce inflation except that now, the current inflation is being fueled by the rising cost of oil, from which comes all of our plastics and almost all of our fuel to transport all our goods.
The rise in oil prices is due to the devaluation of the dollar. When oil is $50 a barrel and then the value of a dollar drops to half, oil goes up to $100 a barrel to compensate and it does it RIGHT NOW. Wages and most goods take longer to react since it takes awhile for the increased costs to be felt.
Since the world is tied to the U.S. economy and our dollar, the lessening of the dollars value has an added impact beyond the increasing price of oil. China’s economy, for instance, is slowing down, since they sell so much to us. Our devaluating dollars that we pay them with, buy less oil and raw materials as each day passes. So they must raise prices to us. Higher prices mean that we can afford to buy less because our wages haven’t caught up, which means that more companies have less income and put more people out of jobs because of it. 62,000 more jobs this past month in the U.S.. This rising unemployment bounces back to the other countries, like China, whose economic growth is dependent on our trade, and they start laying workers off, too, which creates recession/depression in their countries.
The original cause of the devaluation of our Dollar is simple. Printing too much. The global economy is based on international credit and the reality is that only about 5% of the money in circulation is paper and coin. All the rest is electronic and exists only on computers and notes in ledgers, so creating more money is a snap. The money supply of the U.S. can be doubled or tripled literally in seconds on a computer keyboard. This sort of thing can raise havoc with a national credit rating, and it has for us.
In order to finance the horribly expensive war in Iraq, our government has created the money out of nothing. The longer this has gone on and the more money that’s been created, the less that money is worth because our credit has a spending limit the same as you have on your credit cards, in the international market place.
Now things are out of control. It’s like a snowball rolling down the mountainside. The farther it goes the bigger it gets. This is the whole purpose of our system of Checks and Balances in our government that George Dubya Bush has completely violated, and this is why the snowball has become an unstoppable juggernaut. Our government is supposed to be financed almost entirely by taxes. As corporate profits diminish and employees are laid off, government tax income steadily decreases. Yet our government continues to escalate its spending, by both borrowing and increasing the money supply. We’re making less and spending more. No one can keep that up for long, and no nation, either. We’re about to crash.
For some time now I’ve been watching how both major parties politicians, House and Senate, are grabbing off all they can get instead of doing their elected jobs, and it finally dawns on me, why. Just now. This is partly why I blog, as digging into this stuff always makes things come clearer. They’re rats abandoning the ship, and they’re gorging themselves as much as possible before they jump off at their own safe harbor.
This is a bad sign, Folks. A real bad sign. Before, I just thought it was a mutual feeding frenzy before the Democrats take over again, but the Democrats are just as much into it as anyone else. They’re all doing it with utter disregard for their political futures. That’s a black omen of things soon to come. Gird your loins, kiddies. Load the old blunderbuss and stock up the pantry, I do believe Hell is coming to breakfast and the Devil is going to be hungry.
July 5th, 2008 at 5:55 pm
It is really depressing, especially for any like me who have recently retired on a fixed pension. Not just the economy but the whole way that what little democracy we had is going backwards and more and more we can no longer recognise our own countries.
July 5th, 2008 at 8:39 pm
If your fixed pension will allow you to purchase a buildable bit of land, pretty much anywhere, get the best that you can afford as your payments will also be fixed, same as your pension. 10 years from now your pension may only purchase a fourth of what it did when you got it, but that piece of land will sell for 5 times what you paid for it. With the handsome profit thus gained, you can use some of it each month to augment your pension, and if possible, carry the mortgage yourself with a decent down payment. That way the Tax Man won’t suck up most of it immediately, and you will have your share of those monthly payments coming in for the rest of your life unless you live so long you ought to be shot, anyway.
Likewise, if you can afford to buy a small cottage that will hold up without needing expensive repairs over the years, and of course buy it in a decent white neighborhood if there’s any left, and then rent it out for at least the amount of the monthly payments, in 10 years, while your payments remain the same, you will have increased the rent to at least double and the difference, after the monstrous and growing tax burden has been met, will be yours.
It matters where you buy. Some counties have much higher tax rates than others. Likewise, it may be cheaper to buy in the French, or wherever, countryside than in any city. Shop around.
July 7th, 2008 at 8:14 pm
Possibly, but I thought I might just send the wife out on the streets. She is getting on a bit but I understand that income from such things is not so much what you look like as what your are prepared to do.
July 7th, 2008 at 8:38 pm
Umhum and is she aware that you say things like that about her in public forums? Is it ok if I tell her the next time we get together?
July 8th, 2008 at 12:14 pm
what i find scary is that its so clear that our country is in the beginning of a recession and the next 18 months are going to be extreemly hurtful, prices are already rising in all areas. However our prime minister seems to be more concerned about people wasting food and its effect on the rest of the world, is oposition on the other hand is tellng the fat lazy scrounging puplic to get off their asses and work for a living.
although i like what the latter one has to say i cant help but think they are missing the point of whats enevitable. (spell check)