White Lightning Axiom: Redux: Inflation Up? Blame the PRC and the Ivory Tower Speculators

Wednesday, August 17, 2005


Inflation Up? Blame the PRC and the Ivory Tower Speculators

Well, all those halcyon years of a nearly level inflation rate (anything below 5% is friggen spectacular) are coming to a close. China has been sucking up oil to bolster their reserves for some time now. Speculators, not noticing that this is ending are pushing oil futures higher and higher. This ever increasing price per barrel of crude is starting to show in the economy.

So why is inflation not just blasting through the roof like it did in the first two Oil Crisis Years? Well, because Oil is not the maker of the world, just the maker of empires.Oddly enough, even though food is grown, shipped and consumed through the use of oil, it seems that we are getting more efficient at shipping or producing it. That, and we consume much more food than oil to make the balance sheets work out. This applies to computers too. The are made with oil (plastic, energy to run the machines that make the machines), delivered with oil (trucks, trains, ships and planes) and run on oil (powerplants). There will be a breaking point though where the cost of oil will finally start flushing out even these saving graces. This is when the 401K investments and savings accounts will start to decline in value. Perhaps, now would be a good time to nip this in the bud and 1) Diversify energy production, 2) Optimize energy consumption, 3) Shoot all the damned speculators.


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