Posts Tagged ‘depression’

A Storm Is Brewing

Thursday, July 3rd, 2008

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.