Sunday, May 20, 2007


As anyone who is a regular reader knows, I'm pessimistic about the long term American economy. It seems to me that the continued growth of credit and easy money cannot continue indefinitely and the longer it continues, the harder the fall.

Well, today on The Oil Drum they're having an interesting conversation on the subject. I found these comments to be particularly interesting and as representative of the two schools of thought that I've ever seen. Comment number one:

"I'm so tired of waiting for this impending implosion."

What a great sentence!

I don't know how long you've been waiting, but some of us have been waiting since the 1970's....gas lines, hyper inflation, double digit interest rates and unemployment...of course, the era of "growth" was over, the book "Limits Of Growth" was written then, so was Treasury Secretary William Simmons book "A Time For Truth" that said if the U.S. ever went more than 1 trillion in the red, that was pretty much the end of the nation....

Of course, many who kept waiting for the "impending implosion" missed out on the biggest personal wealth building era in world history. And I have to love those who say, "well it's all fiat money, not the REAL thing". These folks are living in giant homes (REAL), on dozens of acres of paid for land (REAL), with big luxury cars (REAL), and their kids are by now graduated from REAL colleges and making nice incomes....., they have spent their lives eating REAL food at nice restuarants, going to REAL vacation spots, wearing REAL clothes and jewelry.....what wasn't REAL about it?

Oh, fuel costs....I'll give an example...I know a guy who just bought a big sport ute (I tried to talk him into one of the Diesel Benzes, but he said, "I'm not listening to that racket...(referring not to me, but to the Diesel engine clatter! :-) When I pressed him on the issue of fuel costs, he said, "let it go up, I can pay for the gas out of my energy investment dividends alone...."

I recently heard one of the "coming doom" debunkers say he didn't have time for it, he was going to enjoy life....the person speaking to him said, "but just you wait", to which he replied, "NO, you wait, I'll live.."
Then there was this response:
You know, you don't have to wait any longer for the disaster, you are allready right in it. You have to grasp the larger picture. Your rich friend, he eats supermarket-food, so even when he choses only the alleged healthy stuff (fruits and vegetables), he gets a lot less for his health as twenty or thirty years ago, because it is all produced industrially and so the healthy things (vitamins etc...) in it are almost gone (REAL). [and are much more expensive]

He works in a hyper-clean office and therefore has all kinds of allergies (REAL).

To displace himself, he uses his nice climatised car instead of walking or cycling, he doesn't know the weather, he doesn't meet someone accidentally, he gets fat (REAL).

To not get fat, he works out in a fittnes-club and pays 50€ a month (REAL).

In fact, he lives a complete sterile life. He follows the fashion and the offers he sees in the advertisement at 20:00, just when he comes home, he eats what they tell him, he wears what they tell him, he looks how they tell him, his girlfriend also, his flat or house, his insurrances, his „friends“, his opinion about everything, even his freetime, where he is supposed to be free, is stuffed to fulfill the wishes of the system. He is a slave to this system, that he is so happy that it functions so great. This is all REAL.

Your friend doesn't live while you wait, he is desperate (REAL) while you live, because you know what is going on (you read the oildrum), you can decide, he doesn't have a choice, until he in turn begins to wait, as he calls it.
Both have very good points and yet are somewhat discussing apples and oranges. Each are measuring "success" and "happiness" in far different terms. Personally, I'm trying to make positive choices for myself that mirror the second perspective, particularly in terms of quality of life. Financially, I'm doing some investing consistent with the first commentor (I do own a home and have some stocks) but I'm also investing consistent with the second commentor (highly rated bonds, commodities, oil, gold, silver). I guess I could be considered a classic hedger. My intelligence tells me it can't go on forever, but my experience says it's been going on a loooong time. So I live, and invest, according to both.

Whether we have a major implosion or not, the thrust of the second commentor I think is worth considering. Maybe there won't be a major disaster, but rather a slow dripping away of civil liberties, value of money and things, quality of life, and the deteroriation of the U.S. as a leading economic power. I think the case can be made that that certainly has happened in my lifetime despite all the material successes.

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