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The Big Inflation Is Finally Here
#21
What I don't see anyone taking away from the disaster in Japan is the fact that our #2 credit donor is going to need cash now for it's own needs instead of buying more U.S. debt. The "Budget Battle" in Washington has much less to do with a 'budget' and much, much more to do with raising the debt ceiling. The problem is that regardless of whether or not new debt is authorized, we still need someone to lend it (Bill Gross is completely out of the game). At some point arguments over raising debt levels make about as much sense as arguing over how many hot dogs Bobby Sands might have eaten if he really wanted to eat hot dogs. Without wealth to borrow, it comes down to how much and how quickly can we dilute the dollar ... and that's gonna be a very ugly show.

Here's a little glimmer of hope. A bunch of people are mad at UNG* because it has tanked so much, so consistently over the past couple of years. Natural gas is at a multi-decade low because there is soooo much of it that is being produced right now ... more than we can use ... more than can be stored without losing your shirt. The cost per BTU between oil and NG has been diverging rapidly. Now we see the knee jerk hysteria over nuclear energy ... suddenly gas is starting to look like viable 'clean' energy ... maybe Pickens is/was on to something. Wink1

*In the name of full disclosure, I currently have a position in this turkey.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#22
mr_yak Wrote:What I don't see anyone taking away from the disaster in Japan is the fact that our #2 credit donor is going to need cash now for it's own needs instead of buying more U.S. debt. The "Budget Battle" in Washington has much less to do with a 'budget' and much, much more to do with raising the debt ceiling. The problem is that regardless of whether or not new debt is authorized, we still need someone to lend it (Bill Gross is completely out of the game). At some point arguments over raising debt levels make about as much sense as arguing over how many hot dogs Bobby Sands might have eaten if he really wanted to eat hot dogs. Without wealth to borrow, it comes down to how much and how quickly can we dilute the dollar ... and that's gonna be a very ugly show.

Here's a little glimmer of hope. A bunch of people are mad at UNG* because it has tanked so much, so consistently over the past couple of years. Natural gas is at a multi-decade low because there is soooo much of it that is being produced right now ... more than we can use ... more than can be stored without losing your shirt. The cost per BTU between oil and NG has been diverging rapidly. Now we see the knee jerk hysteria over nuclear energy ... suddenly gas is starting to look like viable 'clean' energy ... maybe Pickens is/was on to something. Wink1

*In the name of full disclosure, I currently have a position in this turkey.

Can't we just create our own credit? Do we really need Japan for that?

Lending for energy efficient home improvements could really help us out right now IMO. The construction industry is hurting, home prices are hurting. I think one thing that would really help them both out would be improvements in energy efficiency. Part of the problem of affording a home is energy costs. No one wants to lend money to anything that is not going to be a solid investment, energy efficiency improvements are that solid investment opportunity. The only one losing there is the energy companies. But with opportunity for growth in electric cars market this could offset than reduction in energy usage and take money going to oil and bringing back to our domestic energy producers.


I am still not convinced that NG is the way to go, though nuke plants take a long time to build and maybe won't be able to quench our immediate energy needs. I would rather see solar thermal plants and wind power plants go up. The initial costs are low compared to both nukes and NG and don't require fuel for either. There are no sunlight and wind speculators out there either and the costs of sun and wind are not going to go up. If government took away farming subsidies, that land could be used for both solar and wind power production since it would become a more profitable use of the land. Farming could then become a growing industry in more populated areas. Less trucks on the road delivering food. More high quality produce could be found locally.


Another thing about NG is that wood is actually cheaper as far as BTUs available. The problem is low efficiency wood stoves. I think that is something that could be harnessed on a local level in homes for heating rather than using NG. Maybe that would create less demand for NG so that it could be used for more power production cheaper? Maybe, just thought I would throw that out there. I still really doubt there is even a chance that this country isn't going down. There has been so much government intervention in the market and in money for so long that it is comparable to taking a wild animal and domesticating it. Release that animal into the wild and it will probably die. We have to ever so carefully reintroduce ourselves into the wild -so to speak. Because our economy has become dependant on government, it will be difficult to re-adjust. The GOP budget takes away a lot of government jobs and limits government spending- except on "defense" spending...of course. If these people don't have an employment opportunity to fall back on it will hurt our economy even worse by increasing demand for jobs in the area, lowering wages. More importantly it will hurt the businesses in the area because of the hit to consumer spending. This will cause more layoffs and foreclosures and the consumer economy downward spiral will continue. The Dems budget looks even worse. I am really thinking that we are just going to have to prepare ourselves for economic disaster and start over. That probably won't work out either. If our politicians got a clue and there was a nationwide epiphany then maybe we would be ok, but I don't see that happening. I really need some hope and change right now...or... some hopeful change...that would be nice to see.
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#23
BillPrestonEsq Wrote:Can't we just create our own credit?

This question is the crux of Keynesian economics. And the answer is no. Currency devaluation isn't 'credit'. The real question is " ... can't we just create our own wealth?" to which the answer is yes. The problem is that it requires effort and capital. The Egyptians didn't just crap out the pyramids based on some slick government policy. It took lots and lots of blood, sweat and tears. The blood and tears are best avoided, but the sweat ... sooner or later is inevitable. We've bolstered our standard of living for years by exporting inflation ... that can't go on indefinitely.

We've seen inflation spikes in the past ... unfortunately, this one is becoming a good deal more painful. Back in the early '80s at least interest rates were tracking ... remember when you could get 16% on a CD? Remember when wages were tracking as well? Today 'permanent' near zero interest rates are part of the deceptive tale that Bernacke and Geithner are spinning. All that cheap government credit is coming at a price ... much of it in the form of contracting paychecks.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#24
BPESq Wrote:I would rather see solar thermal plants and wind power plants go up.
They must be connected to a grid that does not exist. So, that grid must be constructed. Also, the Greens don't want solar in deserts because it might impact the flora and fauna. Thirdly, the amount of solar and wind sources that are required are huge, and not trivial in price nor in time to finish construction.

Small nuclear plants exist on US navy ships, and have been operationally successfully, without incident, for years. All that is needed is to cut gummint red tape.

Large nuclear plants suffer from the specter of cost overruns, as happened when they were first built in the US. Thus, it is hard for private capital to take the risk of building them. A standardized safe gummint approved design would help. Much of the problem here is in the bureaucracy.
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#25
mr_yak Wrote:
BillPrestonEsq Wrote:Can't we just create our own credit?

This question is the crux of Keynesian economics. And the answer is no. Currency devaluation isn't 'credit'. The real question is " ... can't we just create our own wealth?" to which the answer is yes. The problem is that it requires effort and capital. The Egyptians didn't just crap out the pyramids based on some slick government policy. It took lots and lots of blood, sweat and tears. The blood and tears are best avoided, but the sweat ... sooner or later is inevitable. We've bolstered our standard of living for years by exporting inflation ... that can't go on indefinitely.

We've seen inflation spikes in the past ... unfortunately, this one is becoming a good deal more painful. Back in the early '80s at least interest rates were tracking ... remember when you could get 16% on a CD? Remember when wages were tracking as well? Today 'permanent' near zero interest rates are part of the deceptive tale that Bernacke and Geithner are spinning. All that cheap government credit is coming at a price ... much of it in the form of contracting paychecks.

I know, I guess what I was asking was what's the difference if we borrow from Japan or from ourselves? It has the same effect doesn't it? If we borrow from Japan we sell them bonds right? When they reach maturity they are cashed in for yen and the dollars return here. Not cashed in for yen but you know what I mean(after being exchanged). That interest payed on the bond creates inflation unless we raise taxes. Atleast that's how I think it works.
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#26
jt Wrote:
BPESq Wrote:I would rather see solar thermal plants and wind power plants go up.
They must be connected to a grid that does not exist. So, that grid must be constructed. Also, the Greens don't want solar in deserts because it might impact the flora and fauna. Thirdly, the amount of solar and wind sources that are required are huge, and not trivial in price nor in time to finish construction.

Small nuclear plants exist on US navy ships, and have been operationally successfully, without incident, for years. All that is needed is to cut gummint red tape.

Large nuclear plants suffer from the specter of cost overruns, as happened when they were first built in the US. Thus, it is hard for private capital to take the risk of building them. A standardized safe gummint approved design would help. Much of the problem here is in the bureaucracy.

I was just comparing NG to solar or wind, I still think nuclear is our only option if we want to continue living the way we are now. The amount of power generated blows everything else away. Nuclear plants funded by our government would probably be the best investment we have ever made. I was thinking about this the other day. It would take 1 trill. roughly to build 100 plants. Those plants could generate around 1,000,000GWh a year. Over twenty years at $0.20KWh that is 4 trillion dollars. That is a pretty good investment, better than any other government investment I am aware of. I just think solar and wind would be better than NG in the long run and the costs have to be lower. You have to factor in grid construction costs no matter what you build I would imagine. Solar thermal is a big one. You need mirrors and a tower with a steam turbine in it that heats up molten salt and generates power even over night. And sunlight is free. And there are no emissions. I haven't done the math on that one though as far as construction costs vs. power generated over how long and all that. I think that it would take up the same space as a nuke plant but people around the area are more likely to welcome a solar plant over a nuclear one.

Ok just looked up a couple of things. In Kansas the amount of sunlight can generate 1750KWh/m2/year so one acre of mirrors could produce 7millionKWh in a year without factoring in losses. Efficiency would probably be around 20% so that is 1.4 millionKWh a year per acre of mirrors. One gigawatt equals 1,000,000 kilowatts so it would take 1 mill. arces to create 1.4 GWh per year. You can do the rest if you want. Either way it is not going to be enough but solar over NG would atleast make the green people happy before we build the real power source. I am going to try to spend some more time coming up with some ideas on this one. If each home had their own power source that say powered their electric car? Maybe something there, if it is spread out the numbers don't seem as daunting.
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#27
BillPrestonEsq Wrote:... I guess what I was asking was what's the difference if we borrow from Japan or from ourselves?

Again, people like Warren Buffet and Bill Gross are no longer playing the game. You need someone willing to loan actual capital ... not the imaginary stuff that Bernacke & Co. are pedaling. Without Japan or China, the folks doing the 'borrowing' are the same ones doing the 'loaning' ... namely the Fed. Loaning and 'borrowing' are based on faith and trust ... currency devaluation is based on deceit and fraud ... it has nothing to do with a debtor/creditor relationship ... it has everything to do with unaccountable seizure by fiat. Many governments have tried this in the past ... going all the way back to the Romans. But I'm not aware of any case in which it has ended well. It's generally considered a definitive marker of the real decline of a nation. Consider this for a moment. At the apex of Roman civilization the Denarius was worth more than the silver content in the coin. The faith and trust in the currency was worth more than the intrinsic value of the material from which it was minted. Compare and contrast to older Lincoln pennies that are worth three times more melted down than they are in the leave one/take one tray!
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#28
BPEsq: you said "1750KWh/m2/year"

The physical units don't make sense. Do you have a link? Solar insolation at the outer edge of the atmosphere is about 1750 W/m2, as I recall.

I think it would be good to pursue many avenues toward energy generation, at a sensible pace. Experience and experimentation is needed with solar and wind power, not so much with nuclear. A Trillion sensibly spent over a decade or two would leave us much better off than the (near?) trillion spent on the last inconsequential "stimulus".[/quote]
Jefferson: I place economy among the first and important virtues, and public debt as the greatest of dangers. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our choice between economy and liberty, or profusion and servitude. If we can prevent the government from wasting the labors of the people under the pretense of caring for them, they will be happy.
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#29
Central solar is the only thing that has a prayer of competing economically with fossil fuels. PV and windmills are economic non-starters. Coal is still king ... and we have megatons of it. NG too. A by-product of over production ... the kind that leads to exports, is that cheap domestic energy is constantly available. That's the sort of thing that might overcome our current "debtor nation" status. The primary ingredient in the recipe for wealth is energy. We can't run on debt forever, if we attempt it, eventually the lights will go out ... one by one ... and it will become very, very cold. Shock

... we haven't built a nuke plant in this country in going on four decades. Paranoia and ignorance will ensure that the single one scheduled to go on line probably never will. France is leading on Libya ... France is calling for a G-7 meeting on Japan as we dither and wring hands over their proposal ... France get's 80% of it's electricity from nuclear power and no one has even mentioned it ... or compared it to Japan ... or demanded that it begin to decommission it's plants. We are allowing France to take the lead in world affairs. The U.S. is in the mist of a leadership vacuum. Expecting a renaissance in energy policy under the current administration is a fools errand.

NG is already being 'done' ... bigtime ... it's one of the few economic bright spots in this part of the country. I don't know how you guys heat your houses but mine is heated by gas (wood burning is restricted during most of the winter BTW) ... and we're still having snow storms here in Colorado. I'll take the cheap kinda gas ... cuz my fat *ss needs to be warmed right now ... not a decade or two from now ... and I'll continue to hope like hell the folks in Washington don't manage to f*ck this one little bit of good news up too much.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#30
jt Wrote:BPEsq: you said "1750KWh/m2/year"

The physical units don't make sense. Do you have a link? Solar insolation at the outer edge of the atmosphere is about 1750 W/m2, as I recall.

I think it would be good to pursue many avenues toward energy generation, at a sensible pace. Experience and experimentation is needed with solar and wind power, not so much with nuclear. A Trillion sensibly spent over a decade or two would leave us much better off than the (near?) trillion spent on the last inconsequential "stimulus".
[/quote]

Ok for some reason my right click isn't working. But I got that from solarreview.org. I searched "KWh in sunlight per meter". It said that the max amount of power that can be produced a day is 12KWh based on the possibility of 0-1000w of sunlight hitting one square meter for 12 hours. Apparently 1m2 can produce up to 1000w. So I guess that is how with some other data they got an average of 1750Kwh/m2 a year.
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#31
mr_yak Wrote:
BillPrestonEsq Wrote:... I guess what I was asking was what's the difference if we borrow from Japan or from ourselves?

Again, people like Warren Buffet and Bill Gross are no longer playing the game. You need someone willing to loan actual capital ... not the imaginary stuff that Bernacke & Co. are pedaling. Without Japan or China, the folks doing the 'borrowing' are the same ones doing the 'loaning' ... namely the Fed. Loaning and 'borrowing' are based on faith and trust ... currency devaluation is based on deceit and fraud ... it has nothing to do with a debtor/creditor relationship ... it has everything to do with unaccountable seizure by fiat. Many governments have tried this in the past ... going all the way back to the Romans. But I'm not aware of any case in which it has ended well. It's generally considered a definitive marker of the real decline of a nation. Consider this for a moment. At the apex of Roman civilization the Denarius was worth more than the silver content in the coin. The faith and trust in the currency was worth more than the intrinsic value of the material from which it was minted. Compare and contrast to older Lincoln pennies that are worth three times more melted down than they are in the leave one/take one tray!

Yeah, I have read a good amount on the subject. A couple years ago I read "The Creature on Jekyll Island" by Edward Griffin. It was a really good read. Before that I had done some reading on economics and since then I have read a lot online, but the only other paper book I read recently on it was "What has government done to our money?" and "The case for 100% gold dollar" by Murray Rothbard. That was a quick one but summarizes nicely. Anyways you don't have to convince me. What's crazy is that now it seems self evident but when I first started reading about that stuff it was overwhelming how bad it is and how few people even have the foggiest idea about something that is really the most important thing in their live's. I am still figuring out all the little inner workings of the system. There are so many details that really getting a full understanding does take a while.
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#32
BillPrestonEsq Wrote:There are so many details that really getting a full understanding does take a while.

Not possible to get a "full understanding" ... there are far too many "security issues" in getting any sort of full accounting via FOIA that extend back to WWII ... some back to WWI ... which was right about the time that the FED emerged from it's slimy pupal coverings. The only available 'raw' details have to do with the fact that at one point the value of a dollar was tied to something other than what the government 'thinks' a dollar ought to be worth. At one point it was a jailable offense to own certain types of U.S. currency ... things like government printed "silver certificates" were an embarrassment to the government that printed them ... namely because they were a symbol of it's own (unacknowledged) default. To those like Paul Krugman who find default unthinkable ... get over it. It wouldn't be the first time.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#33
[Image: kn041111dAPR20110407044536.jpg]
___________________________________________________________________________________________________
About Coronavirus - “Suddenly I begin to understand why Charlie gets so excited over taking a walk outside.”
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#34
[Image: ca042011dBP20110419104611.jpg]
___________________________________________________________________________________________________
About Coronavirus - “Suddenly I begin to understand why Charlie gets so excited over taking a walk outside.”
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#35
Professor Henke, over at CATO, revisits the problem with our weak dollar.
___________________________________________________________________________________________________
About Coronavirus - “Suddenly I begin to understand why Charlie gets so excited over taking a walk outside.”
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