Dr Martenson:Great job of putting all the parts and pieces together to make the point that well, we have reached the point of no return. There are no easy answers now.
I do not see how we can avoid DEFLATION. As u pointed out in the past (100 – 150 years ago), after every war we had inflation and then we had deflation because the money supply collapsed.
Ever since we went off the gold standard, it has been a one way ride to bigger deficits and inflation numbers (albeit masked by govt deceit). so one can make the case that we have ALREADY had the inflation and what is waiting in the wings is the collapse i.e. DEFLATION. This is where cash will be king except that we have a fiat currency. I am not sure of how this unfolds but I believe the eventual result will be a "hard" currency and indebted Americans who took on ungodly amounts of debt in a FIAT currency will be forced to pay it back in a HARD currency. This will have the effect of forcing change (BALANCED BUDGETS) on all and it will have profound implications for future debt creation.
OK, now I must admit this entire theory, although logical, is being severely tested with pervasive dollar strength and deflation.
The bubble keeps expanding. . . and expanding. . . and the figures of bailout, will keep expanding. . . with the money supply expanding.
Some say that the figures can just keep getting higher and higher and it won’t have a real effect. However I don’t see wages expanding and I see the pretend “everything is okay” talk from behind the wizard of Oz curtain, but reality of real assets being out of reach as prices spiral makes their speeches look silly. The only bargains seem to be those due to demand destruction and pain of others. It almost makes you wonder if some of the energy problems (if peak is supply related instead of finds related), is a scam and an attempt to destablize the system. In other words you put the squeeze on one area, then when the effects cause a downward price, you stock up on values there and on resulting stampedes. It becomes a game to outguess the flow and ebb of monies form one panacked market to another. All brought about by oil prices to begin with.
And in the end the oil companies get to keep high prices, expand production in Alaska, and do off shore drilling. They get everything they want, but the prices don’t drop. Because of that many don’t see peak oil or recognize it. They think peak is a fallacy and invention, like some other supply scam to raise prices. I live in Michigan and people often talk about some oil capped somewhere as if there’s a vast conspiracy to keep oil off the market for national security reasons. It’s very difficult to mention these different dynamics and not see seemingly sane people make counter arguments with things that are not logical and offer sources of energy based on a flawed view of the law of conservation of energy. They feel energy can be created out of magic fairy dust. To me, this energy thing is the thing that will be the undoing of the American GNP power and that with lack of jobs, caused by greed and desire for profits from slave labor will prevent any real recovery, no matter what accounting tricks are performed on the books. Look for more exports of real assets to pay or create some “trade value” surplus as we are apparently abandoning value added work related exports.