Several of our clients have submitted queries on the significance of the profound rise in energy prices and what it means to them. Obviously, the US going from a net energy exporter to dependent on foreign oil in an unstable world (largely driven by the present communistic regime based on a false ideology) not only has economic but also large national security ramifications.
As Milton Friedman quite elegantly proved, there is no other entity than a government (or at least the branch of that government charged with currency stability) that can cause inflation. None. Inflation is ALWAYS a domestic issue which results from the entity charged with the currency creating more money. In the case of the US, it has been driven by monitizing debt to cover for massive governmental spending and borrowing while intentionally depressing interest rates. This burns wealth accumulated by citizens, and is a very evil form of tax which doesn’t have to be imposed but is simply levied by fiat. There IS no safe harbor from it. Tangibles and investments CAN help mitigate it, but eventually its evil fingers touch all sectors of an economy. Inflation punishes the economically responsible while rewarding bad economic behavior. Eventually, a nation can lose control of its currency (like a dog or cat chasing its tail). Being a private organization, the Fed is no more ‘Federal’ than ‘Federal Express’ save having its board members appointed by a governmental entity–however one must realize that this entity has no interest in maintaining a stable currency. And has basically gone into the hedge fund industry with your money (treating the dollar not unlike the CDOs and other vehicles causing the crash of 2008). We might suggest that the only thing to keep in a bank is debt in such a situation but obviously this isn’t practical and a bit extreme in that one needs liquid capital in order to function in a currency based economy. The point being that one needs to realize ones’ cash will be eroded over time (at an increasing rate) and have some way of dealing with this reality.
The current US issue of energy prices–other than reflecting massive inflation in other sectors–is a simple issue of supply and demand which has been complicated by governmental action. In an ideology to punish fossils, it’s chosen to restrict domestic oil, gas, and coal exploration and encumber its usage (without ANY form of suitable alternative being available). The answer to this, of course, is to get out of the way and not encumber these energy sources being produced and used. The current regime has no interest in this–indeed being quite happy in destroying an economy (and the exploitation of fossils) based on its false ‘climate change’ narrative (tying the use of fossils and CO2 to warming of the planet which has been debunked by science). One would think the energy and oil companies would be keen to reverse this trend; however, that won’t happen in this particular case. These energy companies now see the short term profit margin on their per unit oil and gas deliveries as dramatically increasing–while their long term supply is still available down the road. Eventually, all cartels fall apart due to the terrific incentive to cheat and sell oil or gas at slightly less than their competitors regardless of agreements they’ve made with these competitors (assuming an artificial restriction in supply) and this drives prices back down. These energy companies are ALSO involved in the corruption and kickbacks, and can exploit politicians to enact policies restricting supply and favorable to them. So it’s a vicious circle of corruption. And a ‘bubble’ created by governmental policy.
Which is why we see gas at north of 5 dollars a gallon; more than doubling in a little more than a year. It’s a self imposed economic crisis.
Rising energy prices will touch EVERYTHING in that significant amounts of it are used to deliver most all goods used by all citizens.
We can’t overstate that the present regime doesn’t care one whit about the pain faced by the individual citizen. It’s a power game where they will attempt to maximize THEIR sectors’ short term personal wealth and power. And all the actions taken BY this regime have been to further this agenda. While rhetoric and propaganda abound, there has been nothing done to increase domestic supply (indeed doing everything it can to restrict supply and inhibit its transportation efficiency–pipeline being the most efficient form of energy transportation).
We here at D-J dwell in solutions. The FIRST thing to do is realize why this situation is happening in developing strategies to mitigate impact on a clients life. We have been suggesting for quite some time that people go long on tangibles and maintain suitable reserves of spare parts, building materials, and all durables which don’t fall apart with age. It’s not optimal to have to sit on excess inventory but this is effectively the only way to hedge inflation (other than living the ‘high life’ while it’s happening maximizing standard of living and short term spending to live life and have some good years). One has to realize that bank savings have eroded around 15% from last year and there’s a very good chance this trend will continue (meaning that if an entity has $150,000 in cash it’s already lost $15,000 and by the end of CY 2022 will lose $30,000–all through no fault of its own). We suggest capitalizing on reasonably priced durable goods as much as possible and bracing for the economic storm. One positive thing is that investments likely will continue to appreciate (perhaps close to inflation) but one must realize these investments are also taxed. As such, we don’t believe cashing in or feckless switching of investments as a particularly good idea in the middle of a storm. Exploring alternative currencies may also be a good idea; problem being that there aren’t many of these which are NOT fiat in nature and most have the same problem the dollar has in terms of physical stability. Of course, we also suggest our clients do what they can to vote out of office any individual using the rhetoric of ‘climate change’ in an attempt to bridle energy exploration and usage–but this becomes difficult in that rhetoric abounds and getting the message out to voters isn’t always easy. Entities who echo the ‘climate change’ rhetoric in the private sector should also be avoided to the extent they can be.
Please know our agents remain available to help your organization deal with these events and welcome your business in developing a comprehensive strategy to deal with whatever situation your organization faces.
Diatomaceous-Johnson 