From time to time I enjoy writing about economics. I also understand that any three economists, discussing any subject, will have at least five different opinions. As economics is an inexact science and subject to a wide variety of external pressures, it is difficult to make predictions with any accuracy. Now you understand, this is a disclaimer, just like you see on TV in those lawyer commercials. But if you take the time to read or listen to a lot of news and think about the opinions of smart and knowledgeable people that you respect, you find, that on occasion, two plus two plus two actually does equal six.
I am predicting here, really bad times for the US economy. I don’t want make this prediction. I truly hope I am wrong. But I am compelled to write this, because I believe it may be true. There are three big pressures on the economy today that could, combined, cause serious damage. The first, the Bernanke Bubble is a subject I have written about often before. In fact, I coined the phrase “Bernanke Bubble”. There are two main points of the Bernanke Bubble. The first is “quantitative easing”. That is printing money as fast as the presses will run. The net effect of this is lowering the value of the dollar on world markets. And today, all markets are world markets. The second is artificially keeping interest rates low. It prevents the inflation that would normally come with excessive monitization, but it hurts the elderly as they get no return on whatever savings they may have. It also primes the pump for rapid inflation once rates are loosened.
The Bernanke Bubble is why the stock market keeps going up despite the rest of the economy being in deep stagnation. The new money is used to buy back T bills freeing up money into the equities market, while the banks are over capitalized making their balance sheets look extra good. But it is all air. Jobs are still down. The GDP is in the toilet. Both housing and manufacturing are barely alive. But those that want your vote will tell you “the economy is great. Just look at the stock market.” It’s a bubble.
Big problem number two is the turmoil in the mid-east. That part of the world has been in turmoil for some time, granted. It may get tragically worse in the near future. Syria, of course, is the major danger zone. Will the United States do something? Maybe. Will they put boots on the ground? I hope not. Will they arm the rebels? That is a nasty bird that could come home to roost. If our government just gives support to the Free Syrian Army, we may get away in fair shape. But our President has CAIR whispering in his ear. That might turn the situation bad for us. Just because no one knows what will happen, speculators are driving the price of oil higher. Just as we are coming into the heating season with middle class incomes down and a true unemployment rate approaching fifteen percent, the pressure on the economy is building higher.
The third problem is that our President will not allow a proper domestic energy program. Solar and wind are not up to the task now and probably will never be. We need fossil fuels, coal, oil, and natural gas. We are sitting on enough fossil fuel energy to see us into the next century but extracting and using it is being blocked by Mr. Obama. His agenda and the agenda of those that have cranked millions of dollars into his campaigns do not allow it. Our future is controlled by a bunch of Luddites that wish to live in a nation sized park. Under these circumstances, a manufacturing economy is near impossible. What many people do not recognize is that manufacturing has supplied the good paying jobs that have allow the poor to grow into the middle class and to educate their kids to do even better. So unless we stop sending our national fortune to the middle east for them to supply what we already own, the economy is,at best, stymied.
At some point in time, Mr Bernanke or his replacement will have to shout “Stop the presses.” At some point in time, Mr. Bernanke or his replacement, will have to let the interest rates rise. At that point, the Bernanke Bubble will burst. At that point it may be “Economy, Rest in Peace”.
Robert Owen your Cranky Conservative http”//cranky-conservative.blogspot.com