Stagflation + Economic Effects

ONASIS · Coal Joined: Apr 29, 2005 Posts: 17

Hi Everybody,

Do you think that PO will bring about a state of Stagflation (??), Where the economy isn't growing but prices are - not a good situation for a country to be in I'm sure !

This occurred to a great extent in the 1970s, when skyrocketing oil prices further slowed economic growth. The effects of inflation were made considerably worse by stagflation.

I can see that Global asset inflation is at play now which is causing huge residential property + commodity price increases. China + India, for example, are acting like a hugh magnet for commodities such as oil, scrap metals, steel products, and cement. This in turn is pushing up Ocean Freight rates both for dry cargo + oil Tankers (also increasing demand for marine fuel).

In the UK residential property has gone up 300% in the last 3 years alone + consumers have built up debts of over GB£ 1 Trillion !! Don't know figures for USA ??

In effect, money, currencies, etc., have been devalued over the last 3 years as they now purchase less - i.e. assets have appreciated by 300% - whereas your money in the Bank would only have grown by say 12% during this period !!

So, the developing economies are now acting as the 'offshore' manufacturing areas for the richer 'Western' Nations. In effect, the 'West' has evolved from agriculture through a 'Production' based economy and is now a 'Consumption' based model.

Of course, in order to sustain Global Expansion, this model needs growth + ENERGY !! i.e. No ENERGY = NO GROWTH !!

If we are in a PO zone then I fear that this debt bubble is going to burst + when it does it will make 1929, and the years that followed, look like a walk in the park !

Best Wishes,
Onasis - The Golden Greek - Rolling Eyes

vegasmade · Tar Sands Joined: May 01, 2005 Posts: 85

onasis you are very right. regardless of oil availability in the future, it's the economic effects that may be the most troubling. in our current state of global capitalism, cheap energy is the driving force in growth. as energy prices rise, growth slows. unfortunately, growth is necessary. here in the u.s., a minimum of 2% growth must be maintained just to service the national debt. that's the same debt our leaders claim will be cut by '09, while they are spending at an alarming rate.
every day a huge amount of money flows into this country from foriegn sources, in the way of investment. if that money doesn't come, our own bankers freak out. any significant hiccup in monetary flow could trigger a quick and lethal crash. our dollar is slowly declining, the stock market is dipping, and energy prices are rising-not a good combonation.
The great depression, and more importantly how we worked our way out of it, isn't a good indicator. At that time america didn't even import oil. it was literally dirt cheap. nowadays, that level of recovery is all but impossible. not to say it can't be done, but it would require the kind of resolve we just don't have.
last i checked, the american people were still mostly ignorant to the idea. our politicians can call special sessions to save one life, but aren't addressing all the lives that will be affected by peak oil. and any hope of riding this out intact is dependent on knowledge and action. even if that means just figuring out where we stand on the curve (i.e. what's been used, accurate reserve data,...), it would be a good start. but instead of coming clean, our governments are posturing like it is very real and very threatening.
ultimately i can't see this working out at all. unless of course there remains time to ween ourselves off oil. with 20 years and significant financial resources, a smooth transition is possible. it will mean a diminished lifestyle and other hardships, but it is the least painfull option. then again, VP Dick has said that the american way of life will not be sacrificed. if not us, who? the kind of mitigation needed can only be handled at the national/international level, yet those kinds of plans aren't being formulated. and they won't. global cooperation in a time of globalist division impossible.
information and time are our only hope, and both seem to be in short supply.