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Stagflation 2011: Why It Is Here And Why It Is Going To Be Very Painful

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Are you ready for an economy that has high inflation and high unemployment at the same time? Well, welcome to “Stagflation 2011”.  Stagflation exists when inflation and unemployment are both at high levels at the same time.  Of course we all know about the high unemployment situation already.  Gallup’s daily tracking poll says that the U.S. unemployment rate has been hovering around 10 percent all year so far.  But now thanks to rapidly rising food prices and the exploding price of oil, rampant inflation is being added to the equation.  Normally inflation is a sign of increased economic activity, but when the basic commodities that we depend on to run our economy (such as oil) go up in price it actually causes a slowdown in economy activity.  When the price of oil goes up high enough, it fundamentally changes the behavior of individuals and businesses.  Suddenly certain types of economic activities that were feasible when oil was very cheap are not profitable any longer.  When the price of oil rises to a new level and it stays there, essentially what is happening is that more “blood” is being drained out of our economy.  Our economy will continue to function when there are higher oil prices, it will just be a lot more sluggish.

In some way, shape or form the price of oil factors into the production of most of our goods and services and it also factors into the transportation of most of our goods and services.  A significant rise in the price of oil changes the economic equation for almost every business in the United States.

Today, the price of WTI crude soared past 100 dollars a barrel before closing at $98.10.  The price of Brent crude increased 5.3 percent to $111.25.  The protests in Libya are certainly causing a lot of the price activity that we have seen over the past few days, but the truth is that oil has been going up for a number of months.  Right now we are only seeing an acceleration of the long-term trend.

Things are likely to get far worse if the “day of rage” planned for Saudi Arabia next month turns into a full-blown revolution.  Up to this point, the revolutions that have been sweeping the Middle East have been organized largely on Facebook, and now there are calls all over Facebook for the “Saudi revolution” to start on March 20th.

That date is less than 4 weeks away.  If Saudi Arabia plunges into chaos, the price of oil is going to go through the roof.

A rapidly rising price for oil is really bad news for the U.S. economy, because it is going to mean lots of inflation.  Unfortunately, this also comes at a time when the economy is also feeling the inflationary effects of more quantitative easing by the Federal Reserve.

So if rising oil prices are going to cause more inflation and if rising oil prices are also going to cause our economy to become even more sluggish, what does all of that add up to?

It adds up to stagflation.

Wikipedia defines stagflation in the following manner….

In economics, stagflation is the situation when both the inflation rate and the unemployment rate are persistently high.

This is going to rapidly become the “new normal” for America.  High oil prices are going to cause the cost of just about everything to go up, and high oil prices are also going to cause the economy to slow down thus making the unemployment numbers even worse.

It is going to be just like the 1970s all over again.

Only worse.

Economists differ as to how much rising oil prices affect U.S. GDP, but almost all of them agree that rising oil prices do cause a decline in U.S. GDP at least to some extent.

If American families have to spend $10 or $20 more each time they visit a gas station, that means that they are going to have less discretionary income.  They won’t be able to spend as much at the stores.

Not only that, but since the price of oil affects the price of almost everything else, Americans will find that their dollars have reduced purchasing power.

An oil crisis would force American families to stretch their already overburdened budgets even farther.

So where is the price of gasoline going from here?  Well, the average price of gasoline in the United States is rapidly sneaking up on the $3.20 a gallon mark.  Almost everyone believes that it is going to be going significantly higher.

Tom Kloza, the chief analyst for the Oil Price Information Service, was recently quoted in USA Today as saying that he believes that the average price for gasoline in the United States will reach somewhere between $3.50 and $3.75 a gallon by April.

As I wrote about yesterday, there are other analysts that believe that we are going to see $4.00 gasoline in the United States by the end of the year, and there are some that believe that we could see $5.00 gasoline if revolution sweeps Saudi Arabia.

If gasoline becomes that expensive and it stays there for a while, it is going to seriously start affecting the behavior of American businesses and American consumers.

Just remember what happened back in 2008.  Andrew Busch of BMO Capital Markets recently told CNBC the following….

“Remember when oil was last at $140 (a barrel), Americans reacted and cut the amount of miles they drove.”

Can you imagine what it would do to the economy if millions of Americans start sitting in their homes instead of doing their normal amounts of driving and flying?

In addition, one of the biggest problems with a higher price for oil is that it would cause our trade deficit to explode.  According to the U.S. government, more than half of the oil that we use is imported.  So every month we send the rest of the world billions and billions of our dollars and they send us massive amounts of oil.  We rapidly consume all of the oil they send us and we continually need more.  So we keep sending larger and larger amounts of money overseas and they keep sending us larger amounts of oil.  In the process, our national wealth is being drained at an astounding rate.  It is one of the greatest transfers of wealth the world has ever seen.

When the price of oil rises substantially, the transfer of wealth accelerates.  This is a very bad thing for the U.S. economy.  For example, when oil prices were above $100 a barrel back in 2008 our trade deficit for the year was almost 700 billion dollars.

It would be great if the Middle East would settle down and oil prices would start declining because that would really help out the U.S. economy.  Unfortunately, it does not look like that is going to happen.  Instead, it appears that we are steamrolling directly towards stagflation.  Anyone that lived through the stagflation of the 1970s knows that it is not a lot of fun.

The cold, hard reality of the matter is that without cheap oil our lifestyles are going to change.  Our economy was not set up to run on expensive oil.  If oil moves well above $100 a barrel and it stays there it is going to bring about significant societal changes.

For the rest of 2011, the price of oil will be the number one economic indicator to watch.  If it gets too high it is going to be an absolute disaster for the U.S. economy.

  • Afi K. James

    Gerald Celente is right

    What recovery, there is no recovery, it’s a coverup.

  • DeathSpiral

    Lindsey Williams has been deadly with his predictions. I would highly recommend that everyone on this blog take the time and listen to his last couple of interviews:

  • mondobeyondo

    Long, long, long ago – (I promise I will not start singing “Bye Bye American Pie!) – I vaguely remember the first bout with stagflation, back in 1975-76. President Ford even initiated a government campaign, called “WIN”, or Whip Inflation Now, because inflation at the time was getting out of control. And that was the extent of my knowledge at the time, as I was about 10 years old and had more important matters on my mind, like homework and the Cookie Monster and Big Bird.

    The same circumstances exist now as they did in the mid 1970’s. Everyone from Ben Bernanke to the MSM says inflation is low. It is not. Go to your local grocery store, gas station, clothing store, etc. EVERYTHING is going up in price.

    Au contraire, mon ami, but many American cities, especially the ones out west, were built on the assumption of eternally cheap oil. LA and Phoenix in particular, were built on this concept. Drive everywhere – to work, from work, to the park, drive around the block just to see the neighborhood, drive to the gym to exercise (now that’s a concept! Drive a mile or two to exercise at L.A. Fatness, when you could have walked or bicycled there!)

    There are no subways in Phoenix. When we in Phoenix think of a subway, it’s the restaurant that serves hoagies. The older eastern U.S. cities at least have some transportation infrastructure that’s not based on pavement. The relatively new boom towns here in the west will be hard hit by petroleum increases. And it won’t be just cars either. Buses need diesel. Up goes your bus fare. Get your shoes ready. You’re going to be walking a lot in the future.

  • stagflation nation

    oil will spike, but skyhigh unemployment will keep oil in check. oil will have a tough time holding $60 a barrel with 40 or 50 million folks sittin around watching endless commercials on tv.

  • michelle

    I saw an interesting youtube video about how facebook was funded by the CIA to get started…

    And I watched an interview of Lindsey Williams on Alex Jones the other day about how the elitists have been planning on sending oil through the roof by starting turmoil in the Middle East…

    Then they will open our own oil reserves when oil gets to $200 a barrel. They intend to double-cross the Arabian people by defaulting on our treasury debt.

    Since the Arab countries will no longer sell us oil, they will cash in on our oil reserves which are estimated at over 125 billion barrels.

    And also I watched Jesse Ventura’s show on the Gulf of Mexico conspiracy – they shut off the loop current with the oil disaster and Corexit to cause a mini ice age so that the need for oil will increase!!!


    Well, it’s happening folks! Ice age, pole shift, plagues, inflation, deflation, stagflation, famines, floods, earthquakes and volcanoes…

    Here are some things to google for fun

    well, I guess that depends on your definition of “fun”.

    When does the revolution start? Just look on facebook to find out?

  • Gary2

    Michael-I think your right about the “new normal thing” where politicians move their focus on to other things and it kind of seems like 10% UE is normal-its been so hi so long people may get used to hearing it.

  • “The cold, hard reality of the matter is that without cheap oil our lifestyles are going to change. Our economy was not set up to run on expensive oil. If oil moves well above $100 a barrel and it stays there it is going to bring about significant societal changes.”

    Finally, it’s about time. Small, agricultural communities. Neighbors helping neighbors. Healthier, simplified life-styles. Cleaner air. Pure water. Nourishing food. No wars.

    25 years or so after, of course, the great massive die off.

  • Louise in MO

    The situation in the Middle East would be far less disruptive to the American economy if we used our OWN oil! The holier than thou” environmentalists deserve the anger of the American people.

    Elections have consequences and the man now in the Oval Office promissed that “under my energy policy, energy will necessarily skyrocket! Well, he was true to his word, refusing to lift the moratorium on drilling.
    Anyone who heard this nefarious position and voted for the man needs his or her head examined.

    Things in the Middle East will become violent beyond what we have seen to date. If Saudi Arabia falls, there will be war and this time around there will be hundreds of nuclear bombs. Does Armageddon ring a bell? Read the last chapter of the Book!

  • Colin

    I don’t think this current government is able to solve our problems. I feel the government is over-extended and is running out of excuses and solutions to the growing crisis. Everyday, there is some new report of unrest in the world or of an economy in decline. There are politicians in this country who are exploiting the economic chaos for their personal benefit. Witness the Governor Scott Walker debacle. The governor believes that by busting the unions, in concert with other governors, the Republicans will dominate the political landscape by starving the Democrats and, if the unions in Wisconsin are busted, Governor Walker will be hailed as a hero by the GOP establishment and base. Most importantly, President Obama will be weaken by this assault on his base and will be unable to be re-elected in 2012.

  • Here are 3 more things to look forward to:



    Stock markets don’t like rising interest rates. Rising interest rates in China and India are already sending these markets lower (see monthly charts for FXI or IFN).


    President Hugo Chavez of Venezuela is now selling oil from his country to China instead of the US. In addition, look what is happening in the Gulf of mexico:

    When Americans are forced to rely on their own oil and gas reserves, they will discover that most of these have been sold to foreign investors / nations.

    Thank you idiots in Washington!

  • Tom

    Let me give you a non-american perspective. You said in the article above: “So every month we send the rest of the world billions and billions of our dollars and they send us massive amounts of oil.” So that means that you get a REAL, essential commodity for PAPER that US prints. And it’s not like the Fed is afraid to print it in huge quantities. Not a bad deal if you ask me.
    Please let me know if I am wrong.

  • DC

    I was in high school and college in the 1970’s. What I mostly recollect, besides disco, is that the majority of the girls around my age were braless. I even knew a couple of girls who not only didn’t wear bras, they didn’t own any bras. Now that’s a revolution I can “support.” 🙂

    It would seem the Saudis are attempting to buy their way out of revolutionary trouble.

    And I thought this was interesting too. From

    Saudis, even more than Egyptians and Tunisians, are Internet savvy. Facebook has millions of subscribers and almost every Saudi has a cellphone or two. But shutting down both the Internet and cellphone networks should pose no problem for the omnipresent security forces.

    And indeed, the Saudis “tested” a complete shutdown of Facebook access in November 2010.

  • John Rambo

    Why American men should boycott American women

    I am an American man, and I have decided to boycott American women. In a nutshell, American women are the most likely to cheat on you, to divorce you, to get fat, to steal half of your money in the divorce courts, don’t know how to cook or clean, don’t want to have children, etc. Therefore, what intelligent man would want to get involved with American women?

    American women are generally immature, selfish, extremely arrogant and self-centered, mentally unstable, irresponsible, and highly unchaste. The behavior of most American women is utterly disgusting, to say the least.

    This blog is my attempt to explain why I feel American women are inferior to foreign women (non-American women), and why American men should boycott American women, and date/marry only foreign (non-American) women.


  • Michael2

    But nothing that has been tried satisfies. We, the people, are locked in a death grapple and nothing our leaders offer, or are willing to offer, mitigates our troubles. George said, “The people must think because the people alone can act.”

  • Michael2

    We have reached the deplorable circumstance where in large measure a very powerful few are in possession of the earth’s resources, the land and its riches and all the franchises and other privileges that yield a return. These positions are maintained virtually without taxation; they are immune to the demands made on others. The very poor, who have nothing, are the object of compulsory charity. And the rest — the workers, the middle-class, the backbone of the country — are made to support the lot by their labor.

  • Michael2

    If your feeling sorry for yourself, when your ready to quit, look at this. If you know something is drastically wrong in the world, look at this. If your tired of the psycho-babble-double-code-speak of politicians, mainstream press and etc., look at this.

    Mad as Hell. . .

  • Here it comes!
    Where was green energy over the last decade?
    Why are banks offering opinions?
    Who trusts banks!
    Cover-ups from unemployment #’s to econmy to war to budget cuts
    LIES wake up!!!!

  • Laticia

    Excellent article, but weak, as usual, on the ecological dimension. Amory Lovins and the National Academy of Sciences have long argued that the problem with oil could be READILY fixed through conservation. We can, for instance, triple gas mileage on our cars. But that would cut profits for Exxon, BP . . . and they have more power than the rest of the world combined. So oil scarcity is a phony issue, at least in the short term, merely the result of greed, corruption, and absolute control of bankers and oil men of our body politic.

  • sharonsj

    Even though I’ve been hoarding certain foods and buying up second-hand jewelry, I’m not going to survive in the northeast without heat and electricity. And those tens of millions you think will be at home because they can afford to drive anywhere–they’ll be in the same boat.

    And if you add in all the Republican governors trying to throw tens of thousands more out of work, we’ll have the makings of the next revolution. I can’t wait for that to happen.

  • Patriot One

    All we have to do is abolish the EPA and start drilling. Once our wells are drilled the price of oil will drop like a rock. My guess is we would see prices around $23 barrel.

    Every time OPEC raises the price, we open our wells here at home. Really folks look what happened when Americans were screaming drill baby drill, the price collapsed.

    Our national energy policy should be; we are ready willing and able to open our own wells. Also we should move to more Nuke power.

    The green economy is a scam. High speed rail is a scam. The big money will go to manufacturing in China. No jobs in america just an endless dependent drain on tax payers, just like Amtrak and the post office.

  • You’re right to highlight the threat of stagflation in the economy.

    The record-high prices now seen in commodities like cotton and silver justify inflation scare.

    When analyzing how fuel prices may contribute to stagflation, however, as when you say, “the price of oil rises to a new level and it stays there,” one may also take into consideration short-run and long-run price elasticity.

    See “How Libya Protests May Affect Oil Prices” – click here.

    Ronald Grey

  • impeachRonPaul

    Republicans have blocked trains and anything that competes with big oil. The GOP only cares about the rich and big oil. we are pawns in their game.

    We need a gas tax now. It will help people conserve. We need a VAT tax to pay down the debt. We need to tax the rich not just 15% but fully like the rest of us. We need one stable world currency. The only way to get religion off the dollar!

  • “In a world where things are in reasonable order, the Nazis could never have come to power. They did come to power because something was wrong with a world in which millions of people in every country were out of work, where they went hungry while in other countries millions of bushels of wheat and grain were poured into the ocean; where millions suffered from over-industrialization of their country while even more millions were denied the benefits derived from basic industries; where whole countries sank to a subhuman standard of life because they were not rich enough to import the necessary raw materials, the others suffocated in gold and had to bury it deep in the ground. And the Nazis will come to power again if that something which is wrong with the world is not . If we can make our world a better world, the Nazis will disappear into the abyss of history.

    The Nazis Go Underground
    Curt Riess 1944

    The globalists are a threat and we the people are a threat to the globalists.

  • mondobeyondo

    @ Leticia
    Any ecological solutions to our present crises (energy and otherwise) are being intentionally suppressed – unless and until they become profitable for the powers that be.

    Yeah, we can come up with cars that run on water. But water is not a profitable commodity. There’s plenty of it in the Pacific Ocean, and the cost of desalinization, etc. would offset any profits from manufacturing and developing an H2Omobile.

    So, we’re pretty much left with “Drill Baby, Drill”.

    @ John Rambo
    You can’t be serious! There are some very attractive and decent women in southern California, Florida and Texas, and yes, even here in Arizona. Although I have to admit, Swedish blondes are very attractive too…

  • DownWithLibs


    What, no “tax the rich and spread the wealth”? OK, who are you and what have you done with Gary2?

  • John Thomas

    Patriot One is absolutely right.

  • The US economy is already in a free fall!!! There is nothing now that can stop it!!! As situations in the world gather momentum such as revolutions and rioting and the steady increase in oil and food prices, you will see before your eyes disasters and chaos in the streets like nothing you have ever seen before!!! I’m just thankful that the staff of the Economic Collapse keeps coming out with very insightful articles that keep many people from different cultures and Americans in the know!!! May God continue to guide, direct and bless your articles for people wanting the real truth!!!

  • Gary2

    The economic Top 1% owns more than 90% of us combined. 400 people have as much wealth as half of our population. If people understood just how concentrated wealth has become in our country and the effect it has on our politics, our democracy and our people, they would demand our politicians do something about it.

    This is why I say we need to tax the rich and spread the wealth. I do not mean to tax the small business person who works his/her butt off to make a million. The above article are who I mean by rich. I have been somewhat sloppy in my blanket tax the rich statements.

    Is one hedge fund manager worth many hundreds of police/teachers/firefighters etc? Yet they only pay 15% cap gains while the rest of us pay more on our income from work? Is this fair/moral?

  • You forgot, not only high unemployment, but FALLING WAGES into price inflation! Oh, and people would sit in their homes instead of driving….if they HAD homes.

  • Night Tiger

    Along with that StagFlation, you can expect CrimeNation, that is high crime in your country. I know a guy in California who said that he is afraid to take a vacation, because he is concerned his house will get broken into. Stagflation, CrimeNation. Hand-in-hand.

  • Lightning Bolt

    Ron Paul for President, 2012!!!! Patriot One for Vice President! And to the guy with the name “Impeach Ron Paul” – buzz off you Marxist!

  • Global Perspective

    John Rambo,

    You forgot that American women are often single, brash, abrasive, domineering, loud and play mind games. My friend from Belgium had the same experience. American women need a reality check.

  • mondobeyondo

    Keep spreading the wealth – until there is no more wealth to spread. Equal playing field. Everyone owns, earns or possesses the same amount of money/property/assets. Your standard of living will be the same as someone’s in India, or Australia, Ethiopia or South Africa.

    Oooohhhh, yes it will. There’s a name for that. It’s called “globalization”. We in the U.S. will find out soon enough, how the rest of the world lives.

    You thought it would be different. You thought, “Oh wow, the rest of the world will have microwave ovens and big screen TV’s and drive a Chevy truck to work. Those poor despotic type people will all live like we Americans do! This is a wonderful proposition!!”

    Nope. You forgot about the inverse… that WE may actually be brought down to THEIR level.

    YOU – meaning the American public – will be the people searching for bargains on rice and tomatoes at your grocery store. Just like your counterparts in Bangladesh. You will be standing in line to buy milk and eggs. With or without a food stamp card – doesn’t matter really.

    Suddenly this whole globalization stuff sounds pretty ugly, doesn’t it? If you’re used to driving that Ford Explorer beast 2 or 3 miles to the grocery store and back, this will come as an extreme shock. A bicycle will do the same job. Total cost for gasoline: $0.00.

    “But I can’t carry all my stuff on a bike”, you say.


  • WhiteRose

    I think we all know that unemployment isn’t really 10% unless you still believe what your government tells you.

    The higher gasoline prices will make it difficult to just keep up with the bills cause the price of gasoline will stop most summer vacation trips cause that money is going for fuel.

    Need to read a great book out about Americans who finally take a stand against high taxes, corrupt govt. & continual foreign wars. It’s a must read as we watch what is happening in Wisconsin.

    Great article & well documented. It’s going to get ugly soon & I can only suggest that buy all the canned food you can now cause the prices are going up soon.

  • Nicole

    For those who want to redistribute wealth, where do you get the Constitutional authority to do that?

    Seriously, do you ever consider that GOVERNMENT is the problem?

    You complain about concentrated economic power, but pay no attention to concentrated political power that strips the rights of individuals and states.

    The federal power to tax should be limited to funding a constrained government, not to “setting the world” right.

    Government should have delinated powers.

    When you have unlimited government, you have the mess we’re in with social engineering (freddie/fannie collapse), trillion-dollar deficits, quantatative easing and environmentalism gone amuck.

    Give this government back to the people. Put it back on the people’s side. Then maybe the cronies and their government allies won’t have so much power.

  • When all is said and done, it would have been most prudent to let the respective banks, wall street firms, and insurance companies to go belly up. Government will now have to devalue the $ or start with a new currency to get out of this Fed debt mess they have put us in. We are in for a long, long period of minimal growth and reduced government services and/or massive and long term inflation.

    We help Americans find jobs and prosperity in Asia. For details, visit

  • Kevin

    Watch the “blame game” increase. Everyone will be blamed except what is truly responsible.

    It’s a bad remake of the 1970s when labor got blamed for inflation when in actuality they we’re just playing catch up. Business got blamed because it was said their profits we’re too high. The “Independent Free Media” fed these useless debates never pointing out the effects of government deficits and the abandonment of the Bretton Woods international gold standard in 1971 and the creation of the “Oil Peg”.

    The “Watch Dog” media will be just as useful today feeding the left/right debate which does nothing but divert attention from the root cause.

    Watch these phrases get re-run over and over. Gobles would be proud.

    “Good jobs at good wages”
    “We will re-train for the jobs of the future”
    “You don’t want those old smokestack jobs”.

  • Tom, very astute comment from a non- American. We (Americans) are printing worthless money and using it to buy natural resources from other countries. Who is screwing who? Also, everyone needs to know that the true definition of inflation isn’t and increase in the price of goods and services. Inflation is an increase in the money supply which WILL cause an increase in the price of goods and services eventually.

  • mushroom

    you ain’t seen nothin’ yet. wait until fiat money QE3.

  • “Stagflation 2011” sounds like a bad horror movie title. Unfortunately it’s reality.

    When you combine weather related crop damage in Mexico and other places, inflation, and now higher fuel costs, food prices are going to skyrocket this year.

    Now is the time to start your own garden and food storage program, to save money and protect yourself.

    Free Food 2 Go is a CO-OP that provides quality food storage, preparedness, and emergency items at discount prices.

  • steve

    Gas in LA is already over $4 at some stations, so you no longer have to wait for that.

    In my view Katrina was a test. The powers that be tested America to find out where our pain level was. Gas went through the roof and stayed there fore a while. What happened next is what is important. Exxon had record profits. The following year they could not tell their shareholders that they had an unusual year do to Katrina and they did not expect to make less money. This may have gotten them sued for profiteering during a disaster as well. Therefore, they jammed us again and made even more money the following year. The formula is FEAR. They scare us (war, plague, terrorists) and we accept their lies because it makes us feel safe. That is what is happening here. The world is in depression and all prices should be falling. Until money is out of politics, we are doomed.

  • TripodXL

    First, just because it indicates an inability to completely understand our national language and hence brings into question the intellectual audacity of the purveyor. The word “your” indicates possession of something, either physically or intellectually and the CONTRACTION you’re is a pronoun attached to a verb of being that indicates that YOU ARE about to perform some action, either physically or intellectually. For instance, the sentence “If your feeling sorry for yourself, when your ready to quit, look at this.” is the incorrect use of “your”, it should be the word “you’re”, just FYI! Further, here again the ability of people’s critical thinking skills must be called into question, when people make rants about big oil or big businesses as the boogie monster that causes all things bad to happen. First, for whom do you work, big business? I worked for a top 25 worldwide corporation, German. They paid me very well, in American money (FRNs, woohoo!) and allowed me to raise my American family. I’m sure all the people that work for corporations just absolutely hate them, if you do then you should quit and at least be intellectually honest with yourself. If you are self employed, then good for you, unless you’ve (oh, God forbid) incorporated. The governmental regulatory sea that they sail through drives business of any size, and they are in business to make a profit. The profit that pays dividends to people’s 401k’s so they have money to retire or send kids to college, the money that is re-invested in research that creates high-tech jobs. I love the point that people make when they complain about the corporations not paying their fair share of taxes. Seriously, go take a critical thinking or logic class. CORPORATIONS DO NOT PAY TAXES, regardless of how much you tax them as it becomes a cost of doing business and is passed along to the consumer of the goods and services provided. Go ahead and tax the crap out of Exxon/Mobil or Wal-Mart, and see how it helps make things better for you at the pump or the register, unless you don’t want them to make a profit and then they can go out of business and some foreign company can take their place. Drilling for American oil will HELP alleviate the domestic oil issue, but that’s all. It will never be the “happy days are here again” song that we have been used to in the past. Yes we have “lots” of oil here, but all of the easy oil, save ANWR, is gone! What’s left is the hard to get oil. If we popped a thousand producing wells in our proven reserves it will not produce oil faster than it is being depleted here and abroad. Look up Hubbert’s peak oil theory; it’s here, now. Here is some more logic, it does not make economic sense for the oil companies to want the price of oil to go up, especially if it changes behaviors to the point that it affects usage, which goes down, and negatively affects their bottom line. There is, in business, a price point range that people will pay for a product before they change their behavior and how they buy it. That price point is a fairly small range, even for necessities, so it doesn’t make logical sense for the oil companies to artificially cause price increases, since in the end it will negatively impact their bottom line. There is no magic bullet for the bloodsucking that is to come, other than quit spending what we don’t have, in the government and at home. We are where we are because of two things. One is the Fed, created by OUR government. Most of our founding fathers knew the abuse that would come at the hands of a central bank, that printed fiat monies and the social control they would have at their disposal and spoke against having one. The other thing is our own intellectual laziness and not knowing where we came from and understanding what our founding fathers gave us. We wanted it to just be easy. Our nanny-state, overreaching government is the result of this. We elected them, time after time, and let them woo us with all of their neat social engineering and touchy-feely social programs. They gave us Fannie and Freddie, with no down, no qualify, soooo everyone could have the “American dream”, even if they couldn’t pay for it……..something for nothing. Yeah! We will face, in the coming next few years, financial collapse of our country and all of western civilization, along with the BRIC countries. We will face continuing oil and energy shortages, for years, which in turn will mean less food and food shortages and possibly riots, for years. For years! We will face martial law and who knows what else will come out of the “re-balancing” of the world economic and political structure. We will have what I call “DESTAGFLATION”. Severe deflation of our “wealth” in real estate, and a vicious economic downturn coupled with significant inflation in the prices of commodities. In the next government, it should be a capital offense to even mention central banking. Buy commodities, both hard and soft, get out of debt and live a rural life, get out of town. At best this is five years away, and I’m being very generous here. I don’t think we have two years left, if that much, to be quite honest. It is coming, we have refused to make our government do the hard things and we have indulged ourselves for way too long, and now we will pay, if we haven’t paid for the things and preparations that MAY help us get through the coming dark times. Well, blues skies, unicorns, butterflies and best regards. Oh, and if you are wishing for this, as some have stated, which I am not, I hope you get all you wish for and more!

Finca Bayano

Panama Relocation Tours



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