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152 comments on Peak Oil: The inflationary case

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Todd on April 12, 2006 - 11:43am Permalink | Subthread | Parent | Comments top
I've argued in the past on other boards that what we are likely to see is what I call depressionflation and some have called biflation, that is, high prices in the energy sector coupled with increasing home ownership costs due to ARMs significantly reducing consumer spending.  The result will be extremely high energy inflation rates coincident to deflation in consumer products as retailers attempt to generate sales by reducing prices.

The question in my mind is whether it is possible for the US economy to survive as consumer spending drops - regardless of price cuts.

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MUDLOGGER on April 12, 2006 - 11:57am Permalink | Subthread | Parent | Comments top
We call it 'Stagflation': Inflation in a stagnant or reducing economy. But yes, the inflation is due to an external source such as energy costs. Increased energy costs act as tax on discretionary spending. At the same time, 'inflation' appears to be going up, so the traditional government response is to hike up interest rates
The assumption being that the interest hikes will 'cool the inflation'. So joe public takes it in the nuts twice.

Also, re further up this thread, I too am sure that true inflation is in fact nothing like the posted official rate.

This is a neat way for TPTB can extract wealth.

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Todd on April 12, 2006 - 12:51pm Permalink | Subthread | Parent | Comments top
Mudlogger,

I am well aware of stagflation since I lived through it. FWIW, I also lived through rationing during WWII.  Although I wasn't that old, I saw how it impacted my family.

I believe that we will have hyper increases in costs (therby avoiding the debate about the definition of inflation) in all areas that involve energy with a true depression in most other areas.  This is nothing like stagflation.

In very simplified terms, the service industries will die and the result will be massive unemployment, the financial sector will tank due to defaults and government activities will shrink dramaticly due to a lack of tax funds.

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MUDLOGGER on April 12, 2006 - 1:06pm Permalink | Subthread | Parent | Comments top
I agree and sorry, I wasnt trying to be clever. I did not know if you had the term 'stagflation' in your part of the world at the time.
If you lived through rationing then you must be from this side of the pond.

What is your take on the current method on the measure of UK inflation? I assume you got the same kind of council tax bill I just got...

 

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Todd on April 12, 2006 - 3:34pm Permalink | Subthread | Parent | Comments top
Mudlogger,

Actually, I'm in the US so I can't comment on the UK. The US had significant rationing during the war.  Besides the booklet of stamps for various foods and gasoline, one of my "fondest" rememberances is "margarine" (which by the way was also rationed).  You got this brick of white grease sort of stuff with a little packet of coloring that you mixed into it to make it not look like white grease but rather, yellow grease.

In driving, my dad tried to coast down any hill (in neutral) to save gas.  At home, we heated with coal but I don't remember whether it was rationed - probably was.  We were never short of food but we never had much food in the house.

During the stagflation period, I was the manager of a process development group and wages and prices were controlled.  The only way to get a "raise" was for the company to offer rationales for additional reponsibilities or a title change.  It was a strange time.  My only real rememberance of that period was President Jerry Ford trying to intoduce his WIN program - Whip Inflation Now.

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MUDLOGGER on April 12, 2006 - 3:46pm Permalink | Subthread | Parent | Comments top
I didnt know you guys had rationing!

You learn something new everyday!

My Mum says thanks for the Spam. You can keep the margerine though

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Todd on April 12, 2006 - 8:04pm Permalink | Subthread | Parent | Comments top
Mudlogger,

US society went through a significant change during WWII.  My mom who had been an elementary school teacher had to quit when she got married because schools did not permit married teachers to, well, teach.  She got a call after the war started from a principal saying she had to go back to teaching because it was her patriotic duty (since men teachers had been drafted)!

This kind of historical perspective is why I'm pretty gloomy about the future.  My maternal grandmother grew up in a cabin in Ohio in the late 1800's.  The local Indians came in after they went to bed to sleep by the fire - and this is a story by itself.  My parents had no electricty as kids; only gas lights and "real" ice boxes.  Electricity was a big deal.  One of the things that speaks toward the future was something my great grandmother used to tell my mom and her sisters once they got "radio", "Watch what you say because they'll hear your comments."

My point regarding WWII and the past is that people accepted life as it was.  You couldn't over consume because you were lucky to have food and a roof over your head.  During WWII, there was a shared societal consciousness to do whatever it took to "bring the boys home."

I cannot conceive of this kind of, I'm at a loss for words here, action in a post peak energy world.  Especially one with rampant financial problems.  The real issue as I indicated in a post above, is whether this is still possible,

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phineas gage on April 12, 2006 - 8:16pm Permalink | Subthread | Parent | Comments top
Another more recent change along those lines is clotheslines.  As recently as my childhood (1970's) most Amercians still hung their laundry out to dry (at least where I grew up).  I think my family even had an automatic dryer and we probably could have afforded the electricity, but hanging clothes out to dry was just normal back then.  Now the practice is all but completely forgotten.
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Leanan on April 13, 2006 - 8:52am Permalink | Subthread | Parent | Comments top
Not only that, it's often illegal.  People think it looks tacky to see underwear hanging on a line, so communities pass rules banning hanging clothing outside, at least if it's in view.

My mom still prefers to line-dry her clothes, but she has a sort of hideaway clothesline in a courtyard of the house...so the neighbors can't complain.

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wimsey on April 13, 2006 - 12:21pm Permalink | Subthread | Parent | Comments top
doonesbury on this:
http://www.californiasolarcenter.org/solardryer.html
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BOP on April 13, 2006 - 12:54am Permalink | Subthread | Parent | Comments top

 Todd:

 The historian Christopher Lasch wrote a book The Culture of Narcissism which explores in depth the point you make about the contrast between the WWII era and the present.

 I agree that from WWII up to the 1960s there was a strong sense of community cohesion. That has now been replaced by a "Me" mentality that is incomprehensible and will likely increase the social breakdown associated with PO.

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fleam on April 12, 2006 - 5:15pm Permalink | Subthread | Parent | Comments top
Goddamn margerine. That stuff is teh shit and not in a good way. We could not afford butter in the 70s. And fucking powdered milk, YUK! Teeny tiny portions, chicken maybe once a month. I still can't look macaroni and cheese er, "cheese" in the eye.

When I saw myself in the mirror and saw a kid with a bulging stomach (NOT because it had food in it) and skinny arms/legs I knew I had to do something, I'd seen that in National Geographic. And I started working on foraging skills.

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152 comments on Peak Oil: The inflationary case

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