Tuesday, June 05, 2007

Aged Malt

Edward Charles Ponzi Jr. functionally matches my Thoughts about Inflation and the Aggregation of Wealth in the American economy. This connects and extends my previous Post on Debt. Ponzi witnesses the Appreciation Boom, finding no real gain in Construction value, little real gain in actual Land or Lot value; Property separates from Wine which does appreciate in value with Age (Straight Whiskey man myself, but even more relevant). Here is the Rub: the real gain in GDP has come from Consumption financed by Debt generated by higher Property Evaluations, or by Capital Investment funded by Debt generated by higher Property appreciation. Can a pattern be discerned here?

Potential Scenario Trace Lines (Future Forecasting):

1) Property value up, Production up, Imports down, Import Prices up, Exports up
2) Property value down, Production up, Imports down, Import Prices down, Exports down
3) Property value up, Production down, Imports up, Import Prices up, Exports up
4) Property value down, Production down, Imports up, Imports Prices up, Exports down

Line 4 is obvious as a Recession format. We can be considered to be in Line 3. Line 2 may be considered optimum Boom condition, except for the methodology to finance our necessary Imports, currently handled by selling American Debt overseas; this venue, though, may be considered a limited access format. Line 1 could be considered a potential Recovery vane, except for again the financing of necessary Imports.

The real Problem, here, comes in which Trace Line the American economy will evolve into; I will not bore Reader with the infinite discussion of why these are the only viable Outcomes which the economy can generate. It will be sufficient to state all other Scenarios have contradictory canceling factors which eliminate alternate economic futures (I will definitely not provide my Work). We could continue in Line 3, but it is doubtful. Line 2 would require a Global decrease in Energy draft at the current time, but certain exterior factors may create this Condition in the near future (that a harder explanation than the rest of this garbage). Line 1 cannot be perpetuated for any durative time, due to current Energy consumption rates which would have to continue. This leaves Line 4 as the likely spectrum, though a disappointing one for our new Millionaires; this countered by greater Joy for the Working classes whose Living Expenses will begin to match their Income. lgl

No comments: