Energy, Inflation, Growth, Interest Rates, Exchange Rates, and the Fed

LONDON UNDERGROUND SEAT

After a very long period when inflation seemed to be very much under control in the United States and the UK, we had better than average bursts of trading-up in the stock and property markets. The US dollar lost ground to the Euro, the Canadian dollar and the Pound. United States, the UK and Canada were economies to watch despite their seeming success at restraining inflation. All three were involved in fighting foreign wars which still are costly, and which seem to have no end.

Background as I see it

You would think that the financial districts of these countries would be thinking longer term than they were. We had the experience of money financed wars in the past. The weaknesses of the currencies used to finance them resulted in more US dollars in the international system than people wished to hold.

Ross Perot and his campaign in the United States got the people there aware of the dangers of money supply growth spillovers into debt financing of Government spending for the purpose of arma ment building or war waging. In his period, it was the effort by Reagan to dominate the surge in military protectionism that would bring Russia and the Solviet Union to the bargaining table on their military ambitions. The end to the cold war resulted. One wonders whether the existing administration has the common sense to see Russia as one of the key players for peace in our time.

The problem as I see it

The story is very different now. The United States is very much in hock to Asian economies, which have adjusted to previous excesses using US dollars for growth. Now they have a better mix of borrowings to finance development at a pace that Europe and America cannot match. What the Fed did was monitor inflation rates in the US and try to jump start the US economy through lower interst rates and cheaper money. This worked as long as the American consumer was willing to pile on additional debt to keep the economy and GDP bouyant. The problem has been that it worked so well that many had their wardrobe and housing needs met only to find that the economy has soured in the short term and does not look to good in the long term either.

When modern day economists want 'cheap high' growth numbers they tend to push the housing market and keep the price of houses outside of the inflation index. What they are doing is pushing consumption forward in time and creating the subsequent economic downswing. Their saving grace is that people do not adjust to a slowdown in consumption but persist by getting further and further into debt. The banks take risks and feed the persistence of consumption habit extending the period over which excessive consumption occurs without adjustment. The economy figures in this period look good because real consumption the figure that banks and businesses watch is reasonably high. The economists realize that the economy is growing too fast, but the political cycle just happens to sway them to take a political line and not an economic one. They pray for what's called a soft landing.

What we have in America is a very long term problem because we have a country that has burned its real economy out. Consumers are hocked up to the nine jars. Things may be partially saved by financial innovation as it adjusts to the present cycle of boom and bust. It will not have long term recovery until a huge group of innovations come down the pipe line. These are likely to be associated with energy production and distribution as well as cut backs by consumers of products that are energy inefficient.

Gratuitously, the American economy is telling its people that the way to end the present severe recession is by falling behind efforts to make the economy far more energy efficient that it has in the past self-identified with. To sum up, what is needed now is a brilliant effort on the part of the Fed to reexamine its approach to inflation by including inflationary pressures in energy and housing into its mathematics more forcefully than in the past.

This does not mean higher interest rates once people have had a chance to lock into fixed interest rate loans, but higher rates may want to happen if only to give the dollar some credibility.

Economics is now about adjusting the balances of energy use.

What is going to bring about the long term balance in America needs to be an innovation push. The resulting domestic growth arising in the real US economy productive sectors would save matters rather than money growth and imports. It's neither one thing nor the other, it is both. This means that both the forces underlying supply and demand have to be understood as part of the energy resource equation. The supply thing is that America needs to get alternatives to oil. It cannot go on importing the Texan way and letting oil run the economy. If it does not find the alternatives, then everyone will see and inflationary economy, no economic growth to speak of, and much higher interest rates.

Moreover, the alternatives can come from many sources: a tougher stance with the automobile companies to bring the efficiency of new cars over 50 miles to the gallon. The best thing would be for consumers not to by anything less, even if it meant that a severe adjustment resulted. The second is for a wave of investments into making all homes and appliances far more energy efficient. Widely published standards of efficiency are needed and every appliance should be graded by the standards. In effect, the economy needs to trade up its products to ones that are about ten times more efficient than existing products.

We can get really excited about the US economy on the basis of its innovative capacity, but not under present leadership and administration. I am thinking that the only one that really would know how to bring about the changes needed is someone like Al Gore, but he is too unpopular. On the basis of experience and knowledge about which economists would do the best management job, Hilary Clinton would be my next choice, and she really wants to slow down the deficit spending on the external war efforts. Good for her! There are so many opportunities out there for Americans to enjoy, but they need to take a leadership role in innovation. I like Barack and maybe he would have the necessary insights, as well, but he needs to prove he understands energy economics and would take Americans into a more efficient energy future.

Researching on the Internet for News and Information

WALKING IS GOOD FOR YOUR HEALTH

The Internet is revolutionizing the way we see and gather information about our world. It is a very effective research tool. What follows is just a sampling of the better sites that you can use to find information:

Leading Search Sites

The most popular of the search sites is Google.

Leading Blog Search Sites

One that has great categories would seem to be Digg.
For general info there is also Reddit.
For IT and computer nerds there is Slashdot.
For media commentary there is NewAssignment.
For legal information there is Scotusblog.
To set up your own blog feeds and sources use Google Reader.

Personal networking sites

Very popular is Facebook.
There is Twitter.
Interestingly, there is Friendfeed.

Researching the Ancient Past

One of my favourite activities is researching the past. It is through an attempt to reach back in time that one gains a footing that allows one to move forward in time. What one realizes is how much the realm of time is akin to an enormous tree whose roots stretch down into the rotted past and whose branches reach upward into the light of the sun and speculations as to where one's future lies. In both cases the process is an active process in which time does not have an existence other than as a marker of the present moment in a very tiny space that one thinks of as one's present awareness.

A Forest of Life

The forest analogy applies and seems to fit very very well. The past is very much like the bedding and soil of a large forest in which the trees have a foundation and suffocate all but the longest living in a canopy of position and action. The taller the tree the greater the advantages conferred from its ability to drive roots deeper and deeper into the ground until they reach a well spring of water that feeds the present and future continuously lubricating and enabling the present and affording branches the liquid they need to stretch ever higher and higher into their future.

Being able to see both the forest and the trees is a challenge to an author that seeks to recreate elements of the past that form the mighty branches of the trees that form the present. In a world of human beings the past is literally the remains of ancestral trees that oft times live deep in the soil, unrecognizable in the present, the dust or soil of human remains has given life to a host of creatures that have been born of seeds, nurtured by sunlight, lived and acted within their relative spheres of action, died, possibly to be preserved or to become the food of subsequent generations. Hosted in libraries or eaten by life, the relics of the past become the food of the future.

Light is the Source of Life and Our Being

And, so the cycle of life, birth and death is repeated over and over again in its myriad of forms. Its manifestations ever being reborn, transformed and inspired by creations of light. Who can not revere the many ancient peoples for studying and worshipping light. It is the agent of all life and is the preserver of all things. For, within light there is information that is retained forever.

Talk about the infinite! Light is the great storage place of information about the past and future of all living things, animal, plant, mineral, gas, molecular, astronomic, cosmic. Yes, of everything that ever was and will be.

In the Time of Wim and Wuh

We are the transformation of light energy into action, literally. We move and have our being because of light. Light pervades everything we know. This is why the School of Light was created and why light is the focus of the lives of Wimbledum and Wuh Lax in my novels of ancient times.

The Importance of Finding What's down There in the Root Area

Obviously, our past is mostly something that is trodden on and has our least respect. The past is rotten in a literal sense. It represents a horrific dark stage in what otherwise would be a golden world of sunshine. From the past, emerge the demons and the unknown or esoteric challenges to present conventions. Best to keep the past hidden, eh! Something might reach up from the past to challenge our reality present and uncertain future. All our future, emerges from our shared and collective pasts. What do these pasts hide that might intervene in the present?

When we examine the past we see that a lot of human blood was spilt, a lot of trees were felled and innumerable entities were sacrificed towards goals that we may presently regard as meaningless. The past is, however, anything but meaningless. Within the past is all the meaning that drives the present forward and gives credence to the goals of the future. As our children are born, we do not burden them with all the information of the 'sins' of the past, but we do water down relevant facts that we, as custodians of information about the past, regard as protective of their future.

Historical Secrets that Harm by Creating Ignorance

In the process of guarding information about the past, we deny our children the pain of experiencing the many strands of experience that have shaped the present. Cleansed and cleared of debris, we convey the impression that nothing was achieved and that the past is something that is not relevant.

We denigrate the past by say that it is history. It is valueless. It is gone. Why think about the past? Move on and deal with your future. In presenting and hiding our case for the past, we deny the soil that is relevant for building a taller structure in the future. We wonder why our kids are shallow, why they make so many mistakes, why they do not have respect, and why we see wars and conflict after so much was done to create the peace, that we and our ancestors fought for, our trees were cut done for, and which provide the shaky foundations of our many presents.

Our offspring are denied the information that they need to deal with issues that come from the past and impact our present in ways that we cannot imagine without a thorough understanding of our past. We tend to put the blinkers on our children thinking that this will protect them. Instead, we create the ditches that will lead them to their slaughter in wars and conflicts, errors and mistakes that we have created for them. We must tell them about the slaughters committed by Caesar to repay debt. We all need to be mindful of the atrocities of Hitler and his gangs to repay the debt of humiliation. We need to be aware of the future potential for crimes of Russia by inspired Putins who would reach into the past to avenge our arrogance and deceit.

We give our children a living hell, proclaim it to be paradise and wonder why they and those that emerge from our uneven past would destroy the foundations we have created for them as they realize that we are misleading them into their futures. We cannot succeed without building the bridges to understanding the past and coming to terms with its implications in our futures.

Our Biggest Mistakes are Our Lack of Understanding Historical Forces and Debt

The biggest mistake that we make is to believe in time when time does not really exist. We see time as our excuse to ignore our past. We say to ourselves that the past is not the present and that the future is not the past. In so doing, we lie to ourselves and we deny that which is our very salvation, which is that the past, present, and future are one and the same process.

When we should have our children understand the past, we make it unattractive and relegate it to the rubbish heap like so much that will pollute our futures. We hide our caustic dump sites in the landscape hoping that they will not poison our presents and our futures, but this is our biggest mistake. Pollution and debt coming from the past is something that we need to address on a continuing basis.

By revealing the past and opening it up, we can learn how to deal with it more effectively and our understanding will enable a stronger base on which to build the future. Our system of debt based capitalism needs to be understood in its historical sense and the models of Marx updated to show whether and how the processes of so-called free economic activity can hurt and destroy people.

We all need to work towards continuously healing and revising our systems before they create situations where the only change will be catastrophic. If we do not create a capitalist system that can deal effectively with the challenges of financial debt, we will see it destroy the futures of our children. Our governments are bankrupted in their neglect of the issues that bring about violence and conflict. They do not understand the perfidious nature of debt and how it provides the basis of war as in the past and into the future.

We need to continuously chip away at our failing systems so that they do not provide a landslide or tsunami of uncontrollable forces. Our denials of the past can and will be destructive if they are not dealt with in the most thorough way using our greatest intelligence and ingenuity. Without chipping away at our problems, we create the Middle East and East European crises that prevent a healing our relationships. Without a grounding of understanding that comes with an understanding of our histories, we move blindly to destroy our friends around the world and they us.

Russia, Cambodia, China need to understand what the idealism of communism did to hurt people. Germany needs to understand what the killing of innocents did to hurt people. America needs to understand what the killing of native peoples did to hurt people. Britain, France, Germany, Spain, Portugal, Japan, China and Italy, need to understand what the killing people in their colonies did to hurt people.

We need to heal our presents by having our children come to terms with the many atrocities of the past despite the pain and discomfort that this temporarily creates as we clear up the rubbish tips we would otherwise hide and which would fester under our feet. We need to teach history in ways that our children can see for themselves how to resolve difficult issues and heal the many wounds emerging from our pasts.