It's too late to save the USA. Why waste money trying?

The real currency of the world is energy - that is what keeps things moving. Within a decade there may be NO oil on the world export market. We, and the USA, will only have what we produce ourselves. See:

http://www.energybulletin.net/38948.html

Where will we be then?

yep, we're going to hell in a handcart. so what?

as usual, cassandra doesn't have any ideas about what to do about it. that's because anyone not in parliament has no power to participate in national policy. there is literally nothing cassandra can do, nor i, nor you.

i have gradually come to realize that there can be a 'kingdom of the blind', and oz is one of them. indeed, it is the common human condition. but the one-eyed man is not king. he's "crazy".

Well of course. We've got the ironic situation of having house prices that are too high for people to afford in a country where there is virtually endless space and simultaneously a shortage of rental accommodation for people who can't afford to buy a house even though we've had a so-called housing boom. Well up go rents and would you believe, we have the real irony of interest rate rises.

When the Reserve Bank sees increasing interest rates as a way of controlling inflation it would know for a fact that the biggest contributor to inflation recently has been the increase in rental costs. So how does it make any sense to be putting up interest rates to control something that's going to become more expensive?

The tipping point? Well try an explosion of credit and its seemingly camouflaged derivatives giving us this transient, floating world.

The decline of the US Empire economically has been an on-going process and will continue. The ruling US elite uses military power to bolster their economic power. It won't in the long run work but makes the world a very dangerous place indeed.

On the nature of economic crisis, Marx identified both the boom and bust cycle - overproduction followed by decline - and the flaw at the heart of capitalism - the tendency of the rate of profit to decline.

Passy is right, as was Marx so long ago. The problem James Cumes discusses is inherent in Capitalism. It's the way capitalism works and cannot be cured (although somewhat ameliorated) by any adjustments while retaining that form of economics.

The only solution will be when enough people understand the basic nature of the problem to form a political party with the aim of fundamentally changing capitalism. It's a big ask, since capitalism has been running for 400 years or so, but there are some encouraging signs in various parts of the world, unfortunately not Australia.

As is usual with economic articles the posts fail to recognise the real reason for inflation (and the so-called business cycle), the pumping of money into the economy by the FED, Reserve Bank and the like. Governments could stop inflation tomorrow by stopping the printing of money (including credit). This would also stop the money manipulators in their tracks.

I am glad that the so-called economic boom of the last 10 years is being revealed for the bubble it truly was.
I hope also the radical version of capitalism is seen to be as flawed as radical communism.
Perhaps we can proceed with Progressive economics again?

Dear Dr. Cumes,

Gibson's Paradox identified that when central banks set interest rates below the rate of inflation (i.e. a negative real interest rate) the price of gold will rise. If the real rate of interest is negative enough, the price of gold will explode as investors seek protection against the effective dilution of their buying power.

A rising gold price forces the interest rates higher after a period of excessive creation of money by our central banks.

Interest rates can potentially be forced to a very high level to prevent the collapse of paper (fiat) money if the abuse of savers by central banks occurs through running excessively negative real interest rates.

We currently have a U.S. real interest rate of more that -7% virtually dictating the explosion of the price of gold and the failure of paper currency. Australia, Canada, and the Euro zone have all been running similar abusive monetary policy but deliberately understating their inflation calcuations and intervening in the gold market to distort perception of their actions.

Inflation is not caused by high interest rates. Inflation is caused by the creation of too much money (diluting its buying power) which initially appears to stimulate economic activity but really results in speculative bubbles (want to buy a house?) and economic distortion followed by rising consumer goods prices.

After a period, the price of all goods starts to rise and the strongly rising price of gold forces interest rates higher until the inflation or dilution of the currency is abandoned - or until the currency is abandoned.

Sincerely,

David Jensen.

info[@]jensenstrategic.com

Please see:

http://www.safehaven.com/article-9183.htm

http://www.safehaven.com/article-9198.htm

I think there is a quite intellectual revolution in thinking going on concerning Herman E Daily`s book. Economics, Ecology, Ethics Essays toward a steady-state economy.
JC

Dear Dr Cumes
This is my first post and this is way I see what is happening to the global economy through the eyes of an average Australian.
Breif background,Electrician working in the mining industry,fly in fly out ,own my home,married one child.
I live on the south coast NSW high unemployment and low wages.The amount of debt people are in in my small community is staggering.
The amount of debt the people I work with is even more staggering.Alot or if not all have had so called financial advice.
The debts are from 400K to 1.4million paying interest only.These are huge debts for the average punter
So I would believe this would be typical around Australia or close to it.
Adds in the media, no doc home loans , We will lend you 100% of the value of the property, The banks rejected you come to us we will give you the money for your new
car.Buy a new plasma tv no deposit no interest and no repayments till 2010.Lets borrow some money on the equity in our house and negitivley gear some shares or
even better lets get a margin loan.What about a line of credit.I would like to start a buisness, do you have any equity mate ? Yep, not a problem.Your asset rich cash
Cash poor,come and see us we will give it to you, reverse mortgage alright.What are the interest rates on all of these to people who probably can not afford it anyway.
Sorry almost forgot the credit card.
So when the economy slows and it will, unemploymemt rises,I suspect we will have our own sub prime crisis.
So what has driven this economic boom the world has been having? Credit in the west.
So are we about to experience economic armageddon? I believe so.
We are so lucky to have such good prudential regulators.

Sorry about the spelling,spell chech is missing Cabtrack.