inflation-house wins 2

INFLATION-HOUSE WINS 2

China is probably a great place. If you discount the knee jerk reaction to “communism”, and do not buy the Color Revolution folks trying to smear and discount them at every turn ( because, they are winning as we lose, which we cannot admit to ), and realize that the vast majority of people everywhere have ZERO problem with authoritarianism as long as they are doing well economically ( why immigrants still come to this Orwellian fascist dictatorship with the bureaucracy held hostage to the legions of rabid Politically Correct short bus riders, and why White Boys are moving to the Orient-it isn't JUST the diseased Bangkok ho's ).

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But China has a slight problem. They are growing at 5%, and that is with a tremendous amount of inflation ( the US used to get a dollar of growth for every $2 in credit/inflation. Now it is $6 in debt ). Great, you say! Better than our true minus one percent ( probably even greater, but I don't want to panic the herd ). But China was growing at 15% a year, some time ago. Back when they were Hoovering in the globes manufacturing ( the West traded coal for oil, militarily and industrially. That bit them in the ass. China got a huge boost at first from powering its industry from dirty domestic coal. As that is largely depleted, they must expand trade for energy-a big bite in profit and growth ).

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Now, not only must China buy its energy from abroad, they are running up against the problem of global economic slowdown. The world, after Global Peak Conventional Oil, after EROI tanked, inflated mightily to continue the illusion of growth oil use had given them. Inflation was global, and that leveled the playing field for consumers, who ONLY saw a doubling of prices since the 2008 meltdown.

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It should have been much worse, except that other countries devalued their currency quicker than we did ours. And yes, Fracking Fuel helped immensely. That literally bought us another decade before collapse. I love fracking oil, it is literally free oil for debt that will never be paid back. For once, free money from the central bank helped out the Little People. What fracking is NOT, is a long term solution. It is entirely dependent on a fully functioning banking industry.

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It is also a quickly depleting resource, much quicker than China's soft coal. We either run out of the stuff first, or the collapsing bank sector stops supporting it. Either way, that miracle is almost done. As is China's. The rest of the world spent its way into recession, and is no longer able to buy as much from China, even as China overbuilt factories AND must now import its fuel ( how well did importing oil work out for us, long term? ). How does this add to inflation here in the US? Remember, China only sends about 20% of its factory output to the US-and that was prior to the Trade War.

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China is no longer dependent on the US, and might not have been for some time. It is going to follow Russia in dumping its Treasuries, completely. It will just take China longer, as it must still buy oil from PetroDollar countries. Of which there are less of every year. Eventually it won't need the US dollar. As their economy also contracts, they will be less inclined to prop up our failing system. They must prioritize elsewhere. The only reason it hasn't gotten worse is that, hey, we are still talking five percent growth. Great for anybody else except China.

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And China, like Iran, has little love for the US, and for very good reason ( and why, exactly, would a country forgive us screwing them recently? ). We are so busy demonizing the country that we forget we have been using them like a cheap $2 rental mule. As we fall all over ourselves preaching the Hillary Sermon of Evil Russia, we conveniently forget we supported the '91 Crash there. Anyone remember us bombing the Chinese embassy as we intervened in Eastern Europe?

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Of COURSE China is going to sucker punch screw us every chance she gets, as long as we are helpless on the mat. We sure as Hell did it ( remember how we supported the other side while Mao came to power? ). We have the hubris to believe we are hurting China by withholding agricultural products ( you know, the ones we couldn't plant ), when food is our primary export ( no, it isn't oil, fracking humps. Other countries with insufficient refining capability send us crude, we turn it into useful products and send it back. Which conveniently is counted as exports ).

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If we don't export anything, we need to, to some degree, create the Monopoly money to buy what we need. Which is a LOT, except food and gasoline. Which I grant you, go a long way towards independence. If it wasn't for the need to import fertilizer to grow those crops and computer chips to run the automated SkyNet farm machinery. So, we are looking at the PetroDollar death, the slowdown in China necessitating their withdrawing economic support of us, and the bank bail out program jacking the economy. What could go wrong?

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All these body blows could crash our system. Higher oil prices-possibly MUCH higher depending on many factors- and another bank bailout are exactly what we do NOT need now. But the system will not be allowed to fall and correct. That is NOT how bankers stay in hookers and blow. The digital printing presses must be cranked up to Super Speed. Ten, on the blender scale. In the mind of the federal reserve, any amount of debt is permissible to continue the illusion of growth. Any amount of inflation is okay as long as the government can continue paying the people who keep the bankers in power and profitable.

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When the alternative to hyperinflation is Mad Max, money printing wins every time. Now, there are those who preach we have been in a deflation. Their support comes from reduced factory goods prices. Of course, that was due to overproduction, and the Chinese subsidizing our economy as a strategic move. That premise was from oil coming down from $150 a barrel. That was food prices coming down from 2009 high prices. Or, most of the inflation staying in the stock market. Pretty darn flimsy pieces of evidence, if you ask me.

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What saved the economy in the 80's? Alaskan oil. Why were the 90's so inexpensive? Siberian oil. The '00's? Defeating the enemies of the PetroDollar, but that was really only a short time effect. By '06, global Peak Oil was breaking the US economy, unnoticed in the housing frenzy. The Teens, fracking oil. Inflation was, mostly, defeated in all these decades with supply increases of oil. Without that oil, backing money creation, inflation would have stayed at 70's levels, if not worse. But we really are running out of oil this time.

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I won't belabor that, as I understand few share my absolute fear and loathing of Peak Oil. Just beware that the 70's economic contraction was from not a lack of oil, but a lack of GROWTH in the oil supply. What we have coming soon to an economy near you, is a 70's Redux mated to the Convenience Store Prices Model, added to Spicy Times and the Derivatives Market failing. Failing HARD. It is probably already started. I'll take a break from this, then continue on the micro effect of inflation. How you are screwed, more than how you can do much about it. The good news is, hyperinflation NEVER lasts very long. It can't.

( .Y. )

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