Expect to pay more for juice as oil prices rise; too much paper money

We have come to the heart of Normandy for a conference. But the Internet is everywhere now. Wherever you go, not only are you there…so is the Internet…and so is your work.

It has become almost impossible to leave your troubles behind you. Wherever you go, if there is an Internet connection, your worries go with you. (In two weeks, we are going to try to escape the Internet – in the far outback of the Andes Mountains…stay tuned.)

Of course, here at the Markets and Money, we have no worries. We are sans soucis…happy to wait, watch and wonder what is going on.

Today, we wonder – briefly – about the big things…the big trends. Let’s recall our ‘Five Big Es’ and see if we’re still on track.

Energy – Our guess is that energy is generally becoming more expensive. Not that we have any inside information about it. We’re just putting two and two together. The modern world runs on oil, and every year that passes brings more of the modern world and less of the ancient fossil fuel that powers it. Unless there is some breakthrough in energy production…or some major break in the trend towards economic development worldwide…expect to pay more for juice.

Experimental Money – Money makes the world go round…but what makes money go round? In theory, it has to be limited in supply so that it mirrors the supplies of goods and services that it is used to buy. Historically, gold was used to ensure that the supply of ‘money’ did not outstrip supplies of goods and services. But since 1971, gold has been out of the system. People only have their faith that the people who control paper will control it well. Yet, history shows that they never do. The temptation to create too much ‘money’ has always been irresistible…which leads to a trend; paper money loses its value. Given how rapidly the quantity of “money” is increasing, we expect this trend to accelerate.

This is not to say there couldn’t be a period of deflation…in which currency actually gains value, for a time. But a deflationary period would probably only increase pressure on the financial authorities to increase the supply of currency. We would be surprised to see this experimental system survive for another 20 years.

Exodus – Economic power is shifting from West to East. Just look at the Forbes list of billionaires…just read the papers…just look at where your cars and gadgets were made. Most of the economies of Asia are growing two to three times faster than those of the United States.

Bill Bonner
Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

Bill Bonner

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