“High oil prices start to apply the brake on drivers,” says a headline in The Financial Times.
As predicted, the feds’ easy money policies are turning into hard times for the middle and lower classes. Oil prices have gone up with the Fed’s balance sheet. For every dollar the Fed added, the price of oil ticked up too.
Now, the Fed has three times the monetary base it had before the crisis. And oil is three times as expensive.
Of course, you’d be hard-pressed to prove a direct cause and effect linkage. We wouldn’t even try.
But here’s something else. Where’s the price of gold? It hit a new record yesterday. $1,458. That’s up about 3 times too? What a coincidence!
Yeah, just a coincidence. No real connection between the feds pumping up the supply of money and prices going up….
Yeah…just a coincidence.
And not a happy one for consumers. The FT article tells us that drivers are driving less. Especially those who are looking for work.
They’re “home-bound.” They’re stuck with houses they can’t afford to leave. And they’re stuck in places where they can’t find jobs – distant suburbs built for a different world. America was built on cheap energy. Now that energy is no longer so cheap, a lot of what was built no longer makes sense.
That leaves a lot of people in a fix. Many have been unemployed for so long they’ve stopped looking and the government has stopped counting them. They’ve disappeared into the vast mortgaged suburbs…the vast edifice of late, degenerate capitalism.
Uh oh…but what’s this…there’s trouble in Zombie City too. Yes Dear Reader, the zombies are getting nervous. They’re worried….
“Washington Braced for a shutdown,” says another headline in the FT.
Experts say a shutdown of the federal government would cost the economy $8 billion per week – much of it in the Washington, DC area.
Business leaders have expressed alarm. They’re coming up with emergency plans. Zombies are in a state of “high alert,” says the news report.
While they’re worried about a temporary government shutdown, the bigger worry for the zombie world is that well-meaning budget cutters might actually succeed in cutting zombies off from their food supplies. Rep. Paul Ryan, looking either like presidential lumber…or easy-to-burn kindling… has proposed to take $5.8 trillion out of the deficit total over the next 10 years.
This is the first serious discussion of reforming federal finances. Could it have serious consequences?
The zombies are concerned. But they can sleep comfortably. According to our Daily Reckoning theory of How the World Works, once a system becomes degenerate it will continue to become more and more degenerate until it finally falls apart. Clear thinking, earnest reformers can try to put it right. But can they do it? Can they cut the zombies off the payrolls? Or are they only volunteering for martyrdom and taking their places on the scaffold?
And more thoughts…
If it comes to that, Paul Ryan won’t be the first reformer to sacrifice himself in vain.
The Gracchi brothers set the pace in the 2nd century BC. Born into a good family at a bad time, the Gracchis tried to reform the Roman economy in 123, which they must have thought was in as bad shape as the US in 2011.
They were actually the great grandchildren of Scipio Africanus, hero of the war against Carthage.
Older brother Tiberius began by reforming the system of landholdings, so small landowners could earn more money and employ laborers. But a mob caught up with him and killed him. Then, his brother Gaius took over. He was elected Tribune and tried to reform the judiciary…as well as continue his brother’s land reforms. He didn’t last long either. In 121 BC he was set upon by his enemies…he fled and then committed suicide. Three thousand of his supporters were rounded up and killed.
for The Daily Reckoning Australia