A valley in peaks - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 28 June 2012
PRINTER FRIENDLY | ARCHIVES
A valley in peaks A  A  A

Paris, France

A valley in peaks...and the biggest fraud in economics.

Forget 'peak oil.' Or so they say. It has fracked its way to energy self-sufficiency.

Porter Stansberry:

... there are roughly 20 major shale oil plays in the U.S. The largest five of these new reservoirs have more than 20 billion barrels of recoverable oil... meaning that each of these new fields is not only the largest in U.S. history (by a wide margin), but that each of them, individually, would more than double the proven reserves of domestic oil...

That is why America is on track to be the world's leading producer of oil within the next five or six years... and why the most knowledgeable oil analysts are predicting a new all-time high of American oil production by 2017. In fact, we've already become a net energy exporter for the first time since 1949.

The Wall Street Journal tells us that the US will not import a single barrel of oil from the Middle East by 2035.

Hey, wait a minute. Wasn't that supposed to be why we're spending trillions on wars in Middle East...to keep vital supplies of black goo headed our way?

----------------------------------- Probably the best strategy for today's market... -----------------------------------

Today's Stock market requires shrewd investing.

Gone are the days when reading the newspaper in the morning or watching the news overnight gave you insights into the next day's market movements.

Now, such a market condition requires us to rethink our investment approach. And go back in time to find the investment strategies that have held their worth in gold over time.

And we're happy to share that we've found the perfect solution that could help you multiply your investments safely... even in this market!

In fact, this strategy has made more millionaires around the globe than any other investment approach.

Read on to know all about it and why we think that this dark cloud could actually have a Golden lining...

------------------------------------------------------------------------------------------------------------------------------


Of course, the numbers never really made any sense. Neither did the logic of it. It would have been a whole lot cheaper just to buy the oil on the open market. Trillions cheaper.

But money isn't everything. The US needs to guarantee access to oil...or its whole economy might be brought to its knees.

Which is probably a good place to introduce a new idea:

The biggest fraud in economics is economics itself.

What's the point of having an economy? It is so that people will get the stuff they need and want. The more efficient the economy, the more stuff people get with the least effort and expense of resources.

It makes no sense to waste trillions of dollars worth of resources just to "protect the economy." The whole point of an economy is to create more stuff...not to waste it. You might just as well try to protect your health by committing suicide.

Most economists are fools or knaves. The knaves among want to get prestigious jobs and Nobel prizes by offering crackpot advice. The fools think it will work.

A few months ago, they were concerned with peaks. There was a peak in oil production. There was a peak in food production. There was a peak in available water coming. Then, a peak in peaks must have been hit.

Now there is a peak in valleys. All of a sudden, the peaks are far away. Commodity prices are falling, not rising. Deflation is economists' worry, not inflation. Deflation is an impediment to growth; everyone believes it.

The European debate is largely a dispute over which fraudulent solution will cause 'growth.' The austerity crowd believes it has to clamp down on government spending. This will give investors confidence in government bonds. The feds will be able to borrow again. The economy will grow. All will be well.

The stimulus crowd targets growth directly. It wants the feds to spend...creating jobs, incomes, spending and so forth.

Paul Krugman is in the Financial Times today.

"At a time when the private sector is engaged in a collective effort to spend less, public policy should act as a stabilizing force, attempting to sustain spending."

Krugman says the real problem is a lack of demand. People just don't want to spend their money. This is something that needs to be fixed!

Why? Why not let people decide for themselves when they want to spend and when they want to save? Why let the government do for them what they do not want done? Krugman doesn't bother to think about it.

He is worried only about growth. He is afraid that the economy will collapse completely before austerity measures lead to growth. The austerity group worries that government-led 'growth' will blow up the economy before it has a chance to turn into real, private sector growth.

Neither side doubts that growth is the key. Almost everybody agrees: we have to pursue growth. "The Hero," Ben Bernanke does it by printing money. Congress and the administration do it by running trillion-dollar deficits.

Nobody doubts that 'growth' is the key to progress, happiness, and maybe even Heaven. But there's the foundation of the great flim-flam right there.

Why do economists think 'growth' is such hot stuff? Because they can measure it...

Economists can measure GDP. They can tell when it goes up...or when it goes down. Generally, more is better...because it means the economy is creating more stuff. So, economists tailor their policy recommendations...their theories...and their editorial page blah-blahs to the goal of stimulating growth.

But is growth a good thing? Is it the same as progress and prosperity? Is more stuff what the world really needs?

Just 5 years ago, TIME magazine thought the US needed more stuff...in the form of houses. Seventy years ago, the US needed more stuff...in the form of tanks and fighter planes.

Forty years ago, US economists - notably Samuelson - were convinced that the Soviet economy would soon be larger than the US economy. Why? It could produce more stuff. They had charts to show how stuff production in the Soviet Union was increasing....and how it would surpass the US in just a few years.

And what happened? It didn't matter. The stuff was worthless.

More tomorrow.

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

Disclaimer:
The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Get The Daily Reckoning directly
in your mail box.
Just enter your e-mail address » 

Read our Privacy Policy and Terms Of Use.

Equitymaster requests your view! Post a comment on "A valley in peaks". Click here!

1 Responses to "A valley in peaks"

R S Das

Jun 28, 2012

informative

Like 
  
Equitymaster requests your view! Post a comment on "A valley in peaks". Click here!

Recent Articles:
Trump Takes a Beating
August 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Which Gods Will Bring Down the US Empire?
August 17, 2017
Mr Trump is in the White House and the gods are in their heavens; what's not to like?
Will They Haul Off Trump's Statue, Too?
August 16, 2017
All across the country, the old gods become devils. New, gluten-free gods take their places...
Farm Loan Waivers: Why Bad Economics Makes for Good Politics
August 14, 2017
It is because the negative effects of the waivers aren't clearly visible.