Category Archives: News Related Post

The Fed Cannot Fix Today’s Energy Inflation Problem

Posted on April 5, 2023 by Gail Tverberg

I expect that the rich countries of the world, including the US, Europe, and Japan, are in line to be adversely affected by high interest rates this time. With their high levels of complexity, they are among the most vulnerable to disruption when there is not enough oil to go around.
The problem I see is that rich countries expect to maintain service economies that are fed by huge streams of manufactured goods and raw materials from poorer countries. This pattern appears unsustainable to me, in a world with falling exports because of energy problems.
Continue reading →

Posted in Financial Implications, News Related Post, oil shortages | Tagged , , , , | 4,007 Comments

Why financial approaches won’t fix the world’s economic problems this time

Posted on October 18, 2022 by Gail Tverberg

Time and time again, financial approaches have worked to fix economic problems. Raising interest rates has acted to slow the economy and lowering them has acted to speed up the economy. Governments overspending their incomes also acts to push the economy ahead; doing the reverse seems to slow economies down.

What could possibly go wrong? The issue is a physics problem. The economy doesn’t run simply on money and debt. It operates on resources of many kinds, including energy-related resources. As the population grows, the need for energy-related resources grows. The bottleneck that occurs is something that is hard to see in advance; it is an affordability bottleneck.

For a very long time, financial manipulations have been able to adjust affordability in a way that is optimal for most players. At some point, resources, especially energy resources, get stretched too thin, relative to the rising population and all the commitments that have been made, such as pension commitments. As a result, there is no way for the quantity of goods and services produced to grow sufficiently to match the promises that the financial system has made. This is the real bottleneck that the world economy reaches. Continue reading →

Posted in Energy policy, Financial Implications, News Related Post, oil shortages | Tagged , , , | 3,503 Comments

Why raising interest rates to reduce inflation may work out very badly

Posted on July 5, 2022 by Gail Tverberg

Are we headed for very high energy prices? Or, are we headed for a financial system that starts falling apart? The whole economic system may change remarkably. For example, what many people thought was money, or a promised pension plan, may not really be there when the time comes to get value from it. Shelves in stores may be empty when it comes time to make a purchase. Continue reading →

Posted in Energy policy, Financial Implications, News Related Post | Tagged , | 3,945 Comments

A Few Insights Based on CDC Data Regarding COVID and its Vaccines

Posted on June 9, 2022 by Gail Tverberg

Recent data show that COVID vaccines don’t really prevent a person from catching and passing along the virus that causes COVID. The CDC has recently changed its guidance to reflect the fact that the vaccines mostly reduce the chance of severe illness. Vaccines are still recommended by the CDC, not because they reduce transmission, but because they may reduce COVID-related healthcare costs. Continue reading →

Posted in Financial Implications, News Related Post | Tagged , , | 4,227 Comments

No one will win in the Russia-Ukraine conflict

Posted on March 28, 2022 by Gail Tverberg

Russia is in some ways like a heavily armed, suicidal old man, who can no longer earn an adequate living. The economic system of Russia is no longer working as it should. Russia is incredibly well-armed. The situation reminds a person of the story of Samson, in his old age, taking down the temple of the Philistines and losing his own life at the same time. Russia has no reason to back down in response to sanctions. Continue reading →

Posted in Energy policy, Financial Implications, News Related Post | Tagged , , , , | 4,785 Comments