ozzy43

Commodities Correction: Painful but Healthy

Maybe Paul is on to something - instead of charting and technical analysis, perhaps we should start praying to the animal spirits, building animistic totems in our living rooms, etc. Then again, probably not.

Just a Commodities Correction - Not the End of the Bull (Part 1)

The slow spread of alternatives to fossil fuels has little to do with bribes or lobbying, though Big Oil certainly plays a role. But more importantly are the severe technological hurdles for, say, a 'hydrogen economy' which experts and scientists in the field predict is 40 or 50 years away. Additionally, even the terminology is misleading - these technologies are not so much 'alternatives' to fossil fuels as they are 'derivatives' of it.

Also, there is a fundamental distinction to be made here: fossil fuels are almost unbelievably energy dense - most of the 'alternatives' are, simply, not. And there are no good substitutes for liquids replacement that offer anywhere near the ERoEI metrics of traditional fossil fuels, and the ERoEI for fossil fuels going forward looks set to drop rather dramatically.

There is no magic wand - there is no 'switch' we can simply flip. And given that we do not have a free market, but rather a heavily regulated, subsidized and politicized market which operates under the burden of profound market distortions compliments of both the government and non-governmental entities like the Fed, you cannot expect 'market forces' (which are heavily suppressed) to come to the rescue.

Additionally, while human ingenuity is a marvelous thing, it is *not* a miraculous thing. If it were, we'd have solved the battery problem decades ago, dontcha think? Not like there haven't been really smart, really motivated people working on this particular challenge for years and years and years - and with the dollar incentives involved, it's hard to see how any additional level of motivation would make a difference.

In other words, this is not a simple problem to solve, and it may in fact be the most difficult problem to solve that modern humans have yet faced, and there are no guarantees that we *will* solve it. In the current political and socio-economic climate, it certainly seems the odds are stacked quite heavily against us.

It seems possible that what we face is, in fact, not a problem in search of a solution, but a new condition to which we will need to adapt. Or not.

Which Inflation Is It Anyway?

Regarding this assertion:

"We expect continued heavy spending on infrastructure in many regions, and that they could be joined by the US itself post election. The US needs that spending anyway and infrastructure has been proven to be some of the most effective 'make work' money."

I am aware of no proof along these lines whatsoever. This is nothing but Keynesianism - an ideology which insists that economic stagnation and inflation can *never* exist side by side. And yet - we know it does. Thus, the underpinnings of this form of economics is fatally flawed.

Bastiat's 'Broken Window' parable is on target here. Money coercively extracted by the government and spent on 'make work' projects is money that is NOT being allocated by the market, thus represents a reduction in efficiency, and thus a reduction in net productivity, compared to a situation where government did *not* extract and spend that money. This is not a difficult concept, yet it is apparently not understood by those analysts who cheers government spending.

Which Inflation Is It Anyway?

JasonC: hilarious. Millenia of human history mean nothing to you it seems - hold no lessons whatsoever. Fiat money throughout history has served as the vehicle of inflation to serve the purposes of the printers and those regimes have invariably collapsed under the weight of their paper money (but they had VERY flexible banking - right up until the end).

In truth, this has nothing to do with entrepreneurship. It has to do with the fundamental soundness of the monetary system. Have you looked around lately? It is precisely this soundness that is crumbling even as we speak - and for the reasons Simon and other cite, among others - hard to imagine how more blatantly obvious this could be. But let's not bother YOU with facts, either from the daily news, or from history. Facts are, after all, inconvenient things when they get in the way of 'flexible banking'.