Archive for April, 2008

Federal Reserve may Want Inflation

Today www.gold-eagle.com published the article “Federal Reserve may Want Inflation“. So I’m not the only one who’s thinking about inflation… inflation… inflation… (see yesterday’s article 120 Years of American Real Estate).

Hell, US owes so many in foreign debt, does it want to make the Dollar more valuable (so they need pay more real services/goods), or make it less valuable so they can pay less. Or, just make it worthless so they owe nothing at all. Go countries – exchange your Dollar for Gold/Silver while you still can.

Here is what Fed itself has to say: Federal Reserve: U.S. headed for bankruptcy. Well, not Fed itself, but a researcher for the Fed. /shrug

Update on May 11th: The difference of now and the 80th, will the FED raise rate again to 20% to fight inflation? http://www.youtube.com/watch?v=q9tzUwfqvJY

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30 Years of Vancouver Housing Price Index

I can only say that it’s the great joint effect of inflation and the invention of mortgage, oh yes, the economic growth and nuclear bomb (which helped keep our planet free from big scale war for 60 years now)

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120 Years of American Real Estate

CPI Adjusted. Looks we’re having the highest valuation ever. Can the financial system withstand it if the valuation returns to normal? Doesn’t look like – a 5%-10% value decline has already triggered today’s sub-prime crisis. The solution? Inflation… Inflation… Inflation…

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Gold/Silver in a Bubble?

Gold is near its highest price ever, but is it in a bubble, yet?

Silver is in similar situation:

(Images from www.gold-eagle.com)

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Peak Oil & The World’s Future

Another evidence of Peak Oil: Suncor’s CEO said today that it requires $75 crude price just to break even due to increased difficulty in exploration and production. Guess what? A few years ago a typical oil sand project only costs about $30-$40 per barrel. It’s certainly getting harder and harder to extract the black gold out of the rigs.

World Oil Production, 1900-2080

Peak Oil is certainly coming. What does it mean to ordinary people like you and me? Not much to worry about except higher pump price? That’s what I thought too. What about Black out, Food Shortage? What about $400 Oil, 100% Unemployment Rate, 1000% Inflation? What about Civil Unrest, Global Resource Wars? What about Civilization as we know, may enter a new age that some calls PISA (Post Industrial Stone Age)?

A blip in the course of human history

I was threaten by the picture laid out by LATOC (Life After The Oil Crisis). Our food production, our construction sector, transportation sector, technology, highway, modern city, even financial system – everything is dependent on petroleum product. Dark age lies ahead, if we were not able to find alternative energy source, in time.

Wait a second – we already have Solar power, nuclear power, bio-fuel and etc. What about the fact that none of these scales up to a few million people, much less than the current 6.5 billion of our species? What if these ‘alternative’ energy source, is actually ‘derivative’ of oil? The fact is that we need oil in order to be able to set up the infrastructure of these energy source.

We’ve already passed discovery peak 40 years ago and are finding less and less new reserves. If we’re not able to find more and more, we’re certainly not able to produce more and more, it’s just as simple as that.

Peak Discovery leads to Peak Production

To me there’s no doubt that it’s coming. It’s just a problem of how mankind, as a whole, will maneuver it.  Deal with it, or it will deal with us. We have hope, we need to act. The next 50 – 100 years, mankind faces it’s biggest challenge ever. It’s up to us to save the cruise ship of the civilization, before we give it up for a few tiny lifeboat.

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Work hard, don’t save Money

Today an interesting table from http://www.dailywealth.com had my attention:

It has only been 40 years, and the chance is that the world is not going to end in another 40 years. Let’s do a calculation to see what these price will be, 40 years from now.

Yes please work hard, as a man we all need to. But save ‘money’? You gotta be kidding me. Instead, save in something valuable.

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M3 Continued

FED has discontinued reporting of M3 since April 2006. Many websites have been trying to publish the continuation of M3 since then:

http://www.nowandfutures.com/key_stats.html

http://www.shadowstats.com/alternate_data

From what we see, M3 is growing at an alarming rate. The money supply is considered an important instrument for controlling inflation by economists who say that growth in money supply will only lead to inflation if money demand is stable (see Money Supply wiki page).

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