“Is the economy going to collapse soon? What about gas prices?”

  • Here Comes Trouble: Stories from My Life

    Here Comes Trouble: Stories from My Life (Photo credit: Wikipedia)

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  • Daniel Fritschler

    Daniel Fritschler

    So when is the economy going to collapse? When is the government and its trouble going to become more clear? You said awhile ago a big shift in wealth in this country (the US) is coming soon…what did this mean?

    • J R Fibonacci Hunn

      Japan has already been “in a deflation” since 1989. In the US, it started to be obvious closer to 2007.

    • Daniel Fritschler

      Daniel Fritschler

      Ok so the collapse is near?

    • J R Fibonacci Hunn

      J R Fibonacci Hunn

      First, do you know what deflation is?

    • Daniel Fritschler

      Daniel Fritschler

      Well yes…generally speaking

      History of inflation in the US from Jan 1914 -...

      History of inflation in the US from Jan 1914 – Mar 2009. Year-over-year data calculated for each month using (This year-last year)/last year (Photo credit: Wikipedia)

    • J R Fibonacci Hunn

      J R Fibonacci Hunn

      Ok, so a very simple way of referencing an “economic contraction” would be “reduced consumption of energy/fuel/electricity.” so, here is a chart of regional oil consumption in recent years:

    • Daniel Fritschler

      Daniel Fritschler

      Yes

      J R Fibonacci Hunn:

      oil consumption of US vs EU vs Asia

      Here is a similar image broken in to 2 groups not 3:

      oil CONSUMPTION of

      Generally speaking, those two charts could be interpreted to say that there is a shift of global economic power, and that it was already present close to 10 years ago. However, because of massive propaganda in the US (in public schools and the mainstream media), the simple realities like what I just showed you are not what most people are thinking about. They are distracted with other “very important information.”

      • Daniel Fritschler

        Daniel Fritschler

        Yes…I definitely understand and have been aware of that information for some time.

      • J R Fibonacci Hunn

        J R Fibonacci Hunn

        The info about global energy trends? really!?!?!

      • Daniel Fritschler

        Daniel Fritschler

        Haha…yes isn’t that common knowledge in other countries that aren’t hiding the truth? Well they have their own truth to hide but not this.

        • J R Fibonacci Hunn

          J R Fibonacci Hunn

          Regarding other country’s news, I do not know.

        • Daniel Fritschler

          Daniel Fritschler

          Ahh…where did you find those charts…foxnews? Bahhaha

          English: Hot air balloon, Hook, Wiltshire (4) ...

          English: Hot air balloon, Hook, Wiltshire (4) Deflation of the balloon is well underway. It is being carried out in a controlled manner. The hot air is being exhausted via an opening in the top of the balloon. Time now 17.35 hours. Next image: http://www.geograph.org.uk/photo/579468 (Photo credit: Wikipedia)

          • J R Fibonacci Hunn

            J R Fibonacci Hunn

            found the charts on google of course! Back to “what did I mean re economic shift soon,” I meant a collapse of credit markets (a dramatic decrease in the behaviors of lending and borrowing and a big increase in insistence on bigger deposits and “pre-paid services only”).

            I did not mean a government regime change or something that radical, though such a thing is not impossible. I meant that consumers will change their behavior, including perhaps because of changes to institutional policy and to propaganda.

            • One of the things that I comment on occasionally by very consistently is gasoline prices.

              Gas prices reflect demand. Supply does not change 40% across a year, but prices can. I assert that not only does demand for gasoline lead to changes in price, but both are predictable: demand changes and price changes.

              To me, gas prices being down (perhaps 25% this year so far?) means the overall economy is slowing. I expected it.

              I contrast US gas prices with global oil prices and various other things (bond market prices, stock market prices) to assess where is the “missing” demand going. In deflation, the demand goes to cash. In other words, the prior demand for borrowing can plunge as borrowers panic and scramble for cash.

            • J R Fibonacci Hunn

              J R Fibonacci Hunn

              Rather than increasing their exposure to mortgage debt, they start to want to pay EVERYTHING off in a panic. They dump real estate and stocks first (like in 2006-2008) and eventually they will even dump bonds, starting with the least credit-worthy bonds like municipal bonds from the City of Detroit.

            • J R Fibonacci Hunn

              J R Fibonacci Hunn

              Each large bankruptcy leads to new deflationary pressure. For instance, when the City of Detroit defaults on their municipal bonds, the lenders that get screwed include lots of European banks. So, those banks can suddenly re-account for their AA bonds as now being recognized to be “junk bonds” and that means they may be facing insolvency issues too.

            • J R Fibonacci Hunn

              J R Fibonacci Hunn

              It is a ripple effect of monstrous proportions. A few things happen typically in response.

              First, governments “rescue” select groups (like banks and homeowners), creating massive redistributions from the taxpaying public to the favored groups being rescued by the government. In the US, I predicted that many years ago when I predicted the deflationary down-turn, and by 2009 we had seen not only the downturn but also the standard, predictable reaction by governments, including the “TARP” bail-out in the US.

              English: Hot air balloon, Hook, Wiltshire (5) ...

              English: Hot air balloon, Hook, Wiltshire (5) Deflation of the balloon proceeds at a rapid rate now and approaches completion. Time now 17.35 hours. Next image: http://www.geograph.org.uk/photo/579470 (Photo credit: Wikipedia)

            • J R Fibonacci Hunn

              J R Fibonacci Hunn

              However, government bail-outs can end up reducing public confidence in the governments, plus governments may need to raise revenues (like tax rates) at the same time as the economy is slowing. In that case, we might expect to see things like the government raising fines for old violations (parking, speeding, late payment of IRS taxes, etc) and also creating new streams of revenue, like the Obamacare program which creates huge penalties for non-complying businesses and is also quite hard to comply with (expensive in time AKA reduced productivity).

            • J R Fibonacci Hunn

              J R Fibonacci Hunn

              The more that governments raise taxes, the more the demand for cash rockets. That “accelerates the slowdown” in terms of “the velocity of money,” which means people hold on to money longer with less willingness to spend it soon after they receive it. In other words, people start saving money (and businesses). That is horrible for a bubble of consumer speculation (borrowing-based consumerism) like we have in the US and Europe.

              So, governments (across many continents) are doing things to raise costs for businesses (by adding regulations and required payments to the government), which discourages investment and encourages people to look for other places like India or Taiwan or South Korea to invest (or even Mexico or Costa Rica). Governments also tend to raise taxes (or other revenues) in a bit of a panic (allegedly), and that rockets demand for cash (as already stated).

              As deflation of credit markets accelerates, selling panics mean that stock market prices tend to collapse (like 90% from 1929 to 1932 in the US) as well as real estate prices. When there are 20 sellers for every 1 buyer, that is not good for price stability. Buyers get conservative and then back off until prices stabilize. In the case of Japan, I like to say that the recession there has lasted there for 24 years, but how long before we call a recession “a depression?” (Below is an image that I made a few years ago….)

              how long is a recession
            • J R Fibonacci Hunn

              4:09pm

              So, folks that say “the US Dollar is collapsing” may be ignoring the point that the only source of demand for US dollars ultimately is for the payment of taxes to the US government. When tax rates go up, demand for cash rises. When tax rates go down (even “effective tax rates” by way of earned income tax credits and so on), then demand for cash drops. (Note that I am referencing the US Dollar here simply for convenience and the same thing is true of the Yen or the Euro or any other currency.)

              J R Fibonacci Hunn

              The “conspiracy nuts” (whom everyone knows are completely unreasonable and thus deserved to be ignored if not also ridiculed) say things like “we think that the kind of thing that happened in Cuba or Cambodia or Russia could happen in the Soviet Union as well,” but of course the kind of thing that happened in Russia could never happen in our country, because the Soviet Union as of today in 1918 is nothing like Russia in 1917.

              The above is a screenshot from this movie, which contains some interesting references to economics and politics:

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