Silver Lining in Economic Collapse: Cheap Gas
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  • St. Bruno

    If Obama gets re-elected, we’ll have cheap gas for quite a while.

  • Jacksonian Libertarian

    As energy prices recede the deflation in the economy caused by deficit spending will become more apparent. All those saying we are going to have massive inflation will be revealed as fools suffering from Post Traumatic Inflation Syndrome (PTIS) brought about by the double digit inflation of the 70’s and 80’s.

    Real Inflation is caused by excessive growth in the Money Supply, not by energy supply problems caused by Environmentalist blocked energy development.

    I would rather have 10% inflation than 1% deflation, inflation is a pain, but deflation is destructive characterized by bankruptcies, unemployment, and foreclosures.

    Historians will recognize our present era as Great Depression 2.0, caused by the Government draining of the Capital markets just like Great Depression 1.0 was.

    “There is a reason why it’s called Capitalism; it’s because Capital is what Fuels it.” Jacksonian Libertarian

  • Jim.

    Goodbye to brown jobs, too?

    @Jacksonian Libertarian:

    Deflation is easy to avoid… just print money. Use that money to buy back government debt. Voila, simultaneous debt reduction and sound money management.

    I have to take exception to the idea that a spike in energy prices is somehow not “real” inflation. Expensive energy increases transaction costs across the board, meaning that marginally profitable companies go under, leading to bankruptcies, unemployment, and foreclosures. Money-supply inflation on the other hand (as long as it affects both wages and prices) is only painful for those who are facing price increases but not the salary increases, and those with existing savings (though it helps those with existing, fixed-rate debt.)

  • wanderer

    “Historians will recognize our present era as Great Depression 2.0, caused by the Government draining of the Capital markets…”

    Heh. With ten-year Treasuries paying 1.6%, with people *throwing* money at the federal government saying “Please borrow my money for a decade and pay me less than the inflation rate for the privilege!”, I don’t think government draining capital is the problem.

    And what was that you were saying about the purity of your precious bodily fluids?

  • Jim.


    Who’s throwing money at the federal government? Isn’t the Fed buying the majority of new bond issues?

    Besides, unless we’re paying off our debt at the end of those ten years — yes, running a budget surplus of a trillion dollars or more — that 1.6% is nothing more than a “teaser rate” on the biggest Adjustable Rate Mortgage in the history of mankind.

    It’s like some people have learned nothing from the last four years.

  • Cheap oil and gas may be closer and more enduring than you think.

    Recent study from Harvard states there’s “a sort of Saudi Arabia within the United States” due to new technology.

  • wanderer

    @5 “Who’s throwing money at the federal government?”

    People seeking a safe haven for their assets as they deleverage, which they are doing.

    A depression is when households, businesses, and governments all try to delever at the same time. It kills the economy.

    Households are delevering. Businesses are delevering. Local and state governments are delevering. If the federal government does too, then the economy, now sputtering along at near-zero growth, will tank completely.

    @6 The trouble is, shale oil has a high cost of production, and is only profitable at around $100/barrel. Watch for new oil projects getting delayed or killed as the price of oil drops.

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