Question News From Traditional Sources

Greetings from Sedona…

This past year is more evidence that just about everyone with normal lives will be better off by refraining from daily, or even weekly intake of economic and political news from all traditional sources. We have been inundated with daily doses of hypertensive headlines heralding one “crisis” after another. Everything is a crisis or emergency demanding you immediate and full attention. Yet, as 2011 closes, has anything really changed since the last New Year’s Day? No!

The economy is clearly a little better, especially for the top 20%, but not so much for the bottom 60%. The stock market gyrated wildly but is about unchanged. Your home is worth a bit less unless you live in Shale Oil-ville. Congress continues arguing over minutiae, pretending it is doing something significant. Most important, government debt again increased at a much faster rate than all estimates of a few years ago and will surely continue increasing faster than all mainstream economists estimate today.

Key to understanding the predicament we are in is that printing press, debt financed growth is no longer possible.

Even modest, stimulus induced, sugar high growth will trigger significant increases in consumer prices. Yet, we are told that consumer price inflation is not a major problem. Of course, inflation is under control for things we do not need, but out of control for the things we need, use and consume every day. What baffles me is why Wall St. traders swallow the official line. The chart below shows what the CPI would look like if it were still calculated the same way as it was the last time we experienced severe stagflation:

Click to enlarge image

None of this is new to any of the regular readers of this site.

Looking overseas we find Europe in chaos and on the edge of collapse. With only a couple of unimportant exceptions, Europe is in far worse condition than we are, and with a far gloomier outlook.

This includes the critical factors of demographics, especially as aging populations relate to national pension and health care entitlements, and total debt to GDP ratios as illustrated below:

Click to enlarge image

Click to enlarge image

Again, none of this is news to regular readers of this site. Only the exact timing of the coming deluge is unknown.

Then there is China, the perennial savior of the world economy. Unfortunately, the Chinese real estate bubble is blowing up now. Yet the lame stream media gives it miniscule mention. Only that the bubble is popping right now is news to regular readers of this site.

The recurring theme of this post is that lots of stuff happens every day but the world economy remains on the same debt ridden, relentlessly downward path it has been on for years, with no end in sight. Only the timing of the next paroxysm of panic is unknown, though likely to happen within the next five years.

The primary focus of this site has been sustainability and globalization. While my posts have dealt primarily with economics, I have made a few forays into these topics, my favorite being “Gold Is Green.” Each of these posts repeats the fundamental idea that the best path to sustainability, world peace and prosperity is an unhampered market economy and free trade. At least for now, I have run out of new ways of expressing these ideas.

We can look forward to an exciting new direction here at Sedona Cyber Link with analysis of the field of cyber security and its undeniably huge impact on all of our lives. Unfortunately, I have little to contribute to this area other than my nagging suspicion that the field of cyber security will be the graveyard of the few remaining liberties we enjoy in our current National Socialist economy and police state.

Over the past year or so I have posted about once a week. With the realization (as described above) that I do not have anything really new and original to say that often, I will be posting only sporadically in the future as long as our gracious host will accept posts from this radical really free market, free trade libertarian. Having purchased a Kindle, I hope an increased intake of books will uncover new and original insights that I can review here.

I hope you all had a merry Christmas and will have a happy new year!

Stephen Reiss
steve@SedonaCyberLink.com