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

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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 Daily Reckoning, 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
The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

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