[wisconsin_cur]

What do you say Mr. Bill?

Let me flesh out the idea.

Mr. Bill raises and guides a discussion among "experts" and we all try to stay civil and keep the discussion on track, regardless if we think the whole thing is an intellectual exercise or not (because it might not be). Would it then be possible to copy those pages as "read only" into wider circulation (ie in the non-expert only) web site say once a week?

Just a thought

Cur

[Aaron]

Actually I can make this forum visible to the public, without allowing non-experts to post.

[MrBill]

I would agree, naturally, so long as it is seen as no one post can adequately address all issues, and many cause-effect relationships are complicated by a matrix of knock-on effects and feedback loops where traditionally we use the caveat 'all other things being equal' which they never are.

And, of course, while trying to solve one problem with a public policy - or the market's - response it might create another. So the question might arise, 'How does the market deal with resource depletion?' But if the answer is that 'it makes those resources more expensive and therefore less available', it may be politically or socially unacceptable that prices rise beyond the reach of what some may be able or willing to pay?

That is no longer an economic problem, but one of social policy and how to protect the most vulnerable, while ensuring markets remain effective allocators of scarce resources. There is no magic economic policy that ensures efficient allocation of resources while making sure no one loses either through their own fault or through no fault of their own.

Public policy is by its very nature always a trade-off between different interest groups. Economics is more of a cost-benefit analysis of those trade-offs. Whereas politics is about finding out which choice is more popular? Economics is about which option makes the most financial sense? But usually in the fight between politics and economics the politicians win because they represent the votes and can veto economics and pander to populism.

If every contract involves a buyer and a seller - regardless of the underlying - then when the government or central bank intervenes to protect one class of asset holder - be they house owners or stock buyers - then they do this at the expense of renters and would be investors that are waiting for stocks to become less expensive and/or investors in bonds.

I fail to see how a public policy choice is a failure of the market? However, the market will by its nature respond to that fiscal stimulus and/or easing in monetary policy because that is what markets do. They adust!

So if post peak oil resource depletion is a physical reality then that reality will have economic consequences. Those consequences will lead to a social response to that new economic reality - i.e. falling living standards for example. And that new social reality will lead to a public policy response. That will effect the market's new perception of reality, and therefore its own response in allocating capital in reaction to that physical reality and the government's policy response.

To divorce an effect from its cause is to skip an important link, and then we start to address the symptoms of resource depletion - and their unwanted social consequences - and not their causes. The cause, of course, which is that the demand for petroleum, for example, is in excess of available supply. And, of course, if demand is in excess of supply, we need to destroy demand through higher prices.

So higher prices are not the problem for those that cannot afford to pay them - the social consequence - but because total demand is in excess of available supply! The high price is the signal to switch to alternatives and/or find ways to do without.

Just like I do not advise anyone to run marathons on a broken ankle even if they take painkillers while they run because the painkillers will mask the discomfort, but will not address the underlying problem. But no doubt running on a broken ankle - a physical reality - can be made worse by doing so on painkillers - a response.

If you tell me there are no - zero - alternatives to petroleum products - especially as a liquid transport fuel - then indeed there are serious economic consequences to continue to invest in infrastructure - like the 15+ million passenger vehicles that will be built this year with internal combustion engines. That is not a market failure. That is not a failure of economics. There will be an economic cost for that misallocation of resources. And it is perfectly predictable.

Bad choices are not a failure of the market or economics. They are bad choices. Period! Just like the government's decision to back corn-based ethanol even though the evidence suggests it is not only uneconomical, but a waste of resources. Especially as the government in question also levies taxes on imported sugarcane-based ethanol. Another political decision. Not a failure of the market. If you add-up enough cumulative public policy mistakes it turns into a monumental failure. To then blame that colossal failure on the market is to put the cart before the horse!

My two kilojoules worth in any case! ; - )

[wisconsin_cur]

Mr. Bill,

Your explanation is great and straight forward.

The problem I see with the public policy debate is that we (in the US anyway) have been told for almost 30 years that the market can solve the problem and that the very act of government creating a policy derails the solution that the market would otherwise provide. I recognize that this is an idealogical construct but often what becomes policy is not what is most popular but what is the most congruent with the idealogical construct of either the silent majority or the loud minority.

I approach this as a post-modern. It doesn't matter if the markets cannot solve the problem if everyone believes that the markets can solve the problem. In order to convince (again I am refering to Americans) the masses to embrace a policy change they need a new narrative, one that refutes the heresies of Reagan-omics.

Maybe Barak could do that, but I hate relying on one person to "save us." I would prefer to see Noble Laurete's (sp?) in Economics, investment bankers , and local university chairs getting up and saying exactly what you put forward. The market cannot save us, one politician cannot save us, only we have the power to confront and manage this decline together.

[Twilight]

$this->bbcode_second_pass_quote('MrBill', 'T')hat is not a market failure. That is not a failure of economics. There will be an economic cost for that misallocation of resources. And it is perfectly predictable.

Bad choices are not a failure of the market or economics. They are bad choices. Period!

[Aaron]

I didn't make it visible.

[BigTex]

I'm just sort of riding all the rides with my new master key to all the forums, but this is an interesting thread, and it's a shame that it's been forgotten.

The only point I would make about economics in general when discussing peak oil (and I've made this point in various ways before) is that economic analysis simply provides red flags in the form of high prices too late. I have no suggestion regarding a better system for determining prices and how to allocate resources, but this problem of providing dramatic market signals in the form of high prices 10-20 years after the market would have needed a signal in order to actually do anything about the problem is troubling.

I suspect that an economist would say that it is the job of government to correct a market failure like this by imposing the necessary taxes to provide the appropriate price signal (which is sort of what Europse has done, I suppose) if this is in fact a market failure, but I don't think the U.S. government is anywhere near that perceptive.

So we are sort of left with a good tool (economics) when we need a great one (enlightenment?). Or maybe human nature is the real problem, and so long as humans are the ones searching for a solution, one will never be found.

[MrBill]

Physical Reality > Economic Consequences > Social Reaction > Political Response > Feedback Loop > New Reality > Etc.

As I have said before the Left believes economics do not matter. The Right uses pseudo-economic arguments to justify their own political expediency. The voter just wants to get something for nothing. While banks and businesses are just arbitraging between political fantasy and economic reality.

We need to collectively solve our economic and environmental problems not invent a new way to describe them.

[wisconsin_cur]

$this->bbcode_second_pass_quote('MrBill', '[')b]Physical Reality > Economic Consequences > Social Reaction > Political Response > Feedback Loop > New Reality > Etc.

As I have said before the Left believes economics do not matter. The Right uses pseudo-economic arguments to justify their own political expediency. The voter just wants to get something for nothing. While banks and businesses are just arbitraging between political fantasy and economic reality.

We need to collectively solve our economic and environmental problems not invent a new way to describe them.

[BigTex]

MrBill, you know that I believe economics matters, but what do you make of this "late price signal" problem?

What is the remedy for that?

[MrBill]

$this->bbcode_second_pass_quote('BigTex', 'M')rBill, you know that I believe economics matters, but what do you make of this "late price signal" problem?

What is the remedy for that?

[BigTex]

$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('BigTex', 'M')rBill, you know that I believe economics matters, but what do you make of this "late price signal" problem?

What is the remedy for that?

[dmtu]

The most important thing to understand about money is how it is created therefore inflated. The Bankers and oilmen own this world with their misanthropic institutions like the Federal Reserve, International Monetary Fund and Bank of International Settlements along with underlying clubs like the CFR.

I start you off at chapter seven, but you can go to the beginning if you like by clicking the links at the top of the page. Would you care to comment on these slides if you have the time Bill?

http://www.chrismartenson.com/money_creation

[BigTex]

$this->bbcode_second_pass_quote('dmtu', 'T')he most important thing to understand about money is how it is created therefore inflated. The Bankers and oilmen own this world with their misanthropic institutions like the Federal Reserve, International Monetary Fund and Bank of International Settlements along with underlying clubs like the CFR.

I start you off at chapter seven, but you can go to the beginning if you like by clicking the links at the top of the page. Would you care to comment on these slides if you have the time Bill?

http://www.chrismartenson.com/money_creation

[dmtu]

I haven't been around for a long time. I probably popped off way too fast, and I should have started from the top and worked my way down rather than from the bottom up.

To answer you though, money growth has largely been out of step with GDP since Nixon was running the show. In 1964 three SILVER dimes would buy you a gallon of gas, three SILVER dimes would buy you a gallon of gas as late as two weeks ago, however silver will catch back up.

"We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds...[we will] have no time to think, no means of calling our miss-managers to account but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers... And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for[ another]... till the bulk of society is reduced to be mere automatons of misery... And the fore-horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression."

Thomas Jefferson

Of course another liability of this system is that there is never enough money created to pay back the interest incurred and owed to the PRIVATE banking cartel. Regardless the perfect storm is currently building off shore and I hope it washes the Rothschild's, their minions, and their insidious system into the ocean. I am no fan of of ill advised legislation. Can anyone say ethanol? If we were operating within free markets then ethanol would be scoffed at rather than preached from the pulpits of high government as well as being subsidized. Government has never been the answer and will not be the answer going forward. Wall Street has not been lazzie fair since the early 1920's, the monopolies, pseudo monopolies and multinationals are well in control and spewing consumption propaganda to the masses. That's all well and fine but the masses are tapped out and the growth must come to and end shortly because if there is no one to take loans, there is no soil for the corrupt system to plant more roots. If there is no oil then there is no fertilizer for the petro dollar.

You're right I'll run along to the other threads now.

[BigTex]

$this->bbcode_second_pass_quote('dmtu', 'I') haven't been around for a long time. I probably popped off way too fast, and I should have started from the top and worked my way down rather than from the bottom up.

To answer you though, money growth has largely been out of step with GDP since Nixon was running the show. In 1964 three SILVER dimes would buy you a gallon of gas, three SILVER dimes would buy you a gallon of gas as late as two weeks ago, however silver will catch back up.

"We must not let our rulers load us with perpetual debt. We must make our election between economy and liberty or profusion and servitude. If we run into such debt, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our calling and our creeds...[we will] have no time to think, no means of calling our miss-managers to account but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow-sufferers... And this is the tendency of all human governments. A departure from principle in one instance becomes a precedent for[ another]... till the bulk of society is reduced to be mere automatons of misery... And the fore-horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression."

Thomas Jefferson

Of course another liability of this system is that there is never enough money created to pay back the interest incurred and owed to the PRIVATE banking cartel. Regardless the perfect storm is currently building off shore and I hope it washes the Rothschild's, their minions, and their insidious system into the ocean. I am no fan of of ill advised legislation. Can anyone say ethanol? If we were operating within free markets then ethanol would be scoffed at rather than preached from the pulpits of high government as well as being subsidized. Government has never been the answer and will not be the answer going forward. Wall Street has not been lazzie fair since the early 1920's, the monopolies, pseudo monopolies and multinationals are well in control and spewing consumption propaganda to the masses. That's all well and fine but the masses are tapped out and the growth must come to and end shortly because if there is no one to take loans, there is no soil for the corrupt system to plant more roots. If there is no oil then there is no fertilizer for the petro dollar.

You're right I'll run along to the other threads now.

[MrBill]

BT, a follow-up post on your question about inflation and bond yields. Let me know if you cannot access the link. Thanks.



$this->bbcode_second_pass_quote('', 'R')ising inflation, like so much of the world economy in recent years, can be explained partly by the increasingly complex links between developed and emerging economies. Emerging economies shared some responsibility for America's housing and credit bubble. As Asian economies and Middle East oil exporters ran large current-account surpluses, they piled up foreign reserves (mostly in American Treasury securities) in order to prevent their currencies from rising. This pushed down bond yields. At the same time, cheap imports from China and elsewhere helped central banks in rich economies hold down inflation while keeping short-term interest rates lower than in the past. Cheap money fuelled America's bubble.

Now that this bubble has burst, the cross-border monetary stimulus has changed direction. As the Fed has cut interest rates, emerging economies that link their currencies to the dollar have been forced to run a looser monetary policy, even though their economies are overheating. Emerging economies with currencies most closely aligned to the dollar, notably in Asia and the Gulf, have seen the biggest price rises. Countries, such as Mexico, that have more flexible exchange rates and are more committed to inflation targets have done better.