Passenger rail travel is comatose – its virtually lifeless carcass subsidized by the taxpayer to the tune of billions each year with no hope of making inroads into the stranglehold of the automobile. Worse, localities like NYC were home to robust subway system enterprises until the statist decided the greedy capitalists were charging too much and took them over. Now the subways are wards of the state as well.

In the U.S. we see the results of consumerism as a lifestyle: the break-down of family structures, the rampant drug and alcohol use, the lack of support for quality education for our youth, the rise in violence in schools, the pressures for young people to ‘look’ adult at younger and younger ages, the reliance on prescription drugs for numbing the emptiness of lives, and the growing prevalence of obesity, even among the youth. Is this in store for the Chinese consumer?

Author argues that the current debate about the state of the economy is for entertainment purposes only. He believes this is because they assume we have seen the bottom of the cycle. A more relevant debate is whether we are in for serious inflation or deflation.

There is no place to hide from the effects of the US budget binge. But, these problems are global, and considerably worse in nearly all of the rest of the industrialized world than here. Even wonderkind China is in the throes of a credit and real estate bubble that dwarfs ours. Watch out!

Author reconstructs the relationship between Harry Dent’s ‘The Great Boom Ahead’ projections and demographic data within the context of the Austrian school of economics theory.

Notions about real estate and housing developed primarily as the result of radically different approaches and behavior by homeowners and investors compared to other asset classes like stocks and bonds. The key difference is the time horizon. People routinely own real estate for many, many years, while they rarely hold positions in a stock or mutual fund for more than a year or two.

This is the fifth in a series of posts putting together the major factors showing why we are in the early stages of the deepest economic contraction the western world has experienced since the beginning of the industrial revolution.

Author shows the historical interrelationship between the consumer price index (CPI) and monetary policy as another way of presenting the Austrian school logic in economic analysis.

Author believes the monetary authorities now find it necessary to cool things off to avoid public outcry over the increased cost of living. This is accomplished by attempting to reverse the artificial credit creation techniques used to create the boom in the first place. Interest rates head higher. Capital goods industries are the first to feel the pinch as projects are postponed and curtailed. Unemployment rises and the cycle starts anew. He concludes by arguing that we are in the early stages of the greatest economic contraction since the fall of Rome and the probable collapse of our fiat currency regime.

Since the great depression, each new economic cycle has increased in amplitude and required even larger doses of Federal Reserve largesse. Dropping short term interest rates to one per cent in the wake of the 2001 recession ignited the housing bubble. Today, even zero per cent short term interest rates have only minimal stimulative effects even when added to deficits measured in the $trillions.