Vigilant Investor

That liberal (Maixine Waters) is all about wrecking the U.S. economy. Goes to show how politicians act like spoiled little children, and with very little understanding of economics.

Needless to say, if Maxine has her way, we may as well get into the rickshaw business.

If we said it once, we’ve said it a thousand times: Inflation ain’t the price of things going up. Its the consequence of printing too many dollars and expanding too much credit out of thin air, which is all the Fed has ever done since its creation. Hence, while many can’t figure out why, we’ve predicted this for several years now:

Wholesale Prices Rise in 2007 by 6.3 Percent, Largest Amount in 26 Years

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

Meanwhile, retail sales fell by 0.4 percent in December, the worst showing in six months, the Commerce Department reported. Consumer confidence has plunged, reflecting the worsening housing slump and a lingering credit crisis.

Sure enough, the trade deficit gave the impression that we could enjoy the modern alchemy of printing money out of thin air while having prices drop. Well, that was during the honeymoon period of deficit inflation. As the fantasy gives way to reality, all those dollars circulating around the globe are being exchanged at an ever increasing pace for things that can’t be printed so effortless as they are. Folks also wake up to the reality that money supply expansion is being implicated in the housing bubble and subsequent collapse. And so the dollar is slowly repudiated for what it is: a worthless piece of paper backed by excessive amounts of debt that can only be paid if more pieces of these paper are printed to enables it.

And so, America — having paved over her factories for mega mall parking lots and golf course communities — has begun to sell herself to the world so she can pay her bills. As Patrick Buchanan so aptly observed of the United States’ self-indulgence and reckless leadership, “We are prodigal sons, and the day of reckoning approaches.”

I wish the story weren’t so dire for so many. But it doesn’t have to be. Perhaps the cheapest import you can get for China right now is a tiny bit of historic philosophy, which aptly translates to “chaos is opportunity.” And boy is there ever large doses of both at the moment.

Are you confidently making the most of it?

Those looking to protect themselves from massive currency inflations that are required to keep asset and credit bubbles afloat (a method that itself has limits before it theoretically collapses under the weight of its own fiction) were hit with a surprise announcement today: Alberta Panel Recommends Higher Oil, Gas Royalties

Notes Bloomberg’s Ian McKinnon:
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