Signs of Decay

I wonder if a Pale Recession is like a Pale Ale, something with no real Kick or Taste, but will make you Sick in the Morning? Greenspan is beginning to sound as bad as myself, coming up with metaphor straight out of Dick Tracy. He says that the Recession (which no one can verify yet; it is all a Question of Inflation-scaling) is not producing high Unemployment numbers, and uses the Word to imply that the Recession will have a very shallow Impact. I do not worry about the Recession, which I believe is already over; my fears contain the long-term horror of Speculation-driven Inflation, based on the Expectation that the World may have reached its Peak economic performance–similar to the projected Oil Peak, it implies a lack of economic resources to devote to Production increases. I suppose I should discuss the theory behind my thesis, which simply states that the Wear and Tear on current Capital Assets (given their current Size and Degradation rates) can match or exceed current Capital Construction rates; all within the Scenario of a shrinking Labor Force (again Ageing Population).

Paul Collier presents Commentary fully in conformance with my thesis, and draws a great deal of Agreement from Others, but I have trouble with his proposed Solutions. The small Farmer is not the Solution, but neither is Agri-business, which drafts a huge Profits Return for Capital investment only with an inflation of Food prices far above adequate Rates of Return for Capital Investment. The key here remains a demanded Shift of Food Pricing to a higher Percentage of total Labor Income, a factor which can only adversely affect Standards of Living. Most Economists miss the essential consequence of absorption of Household discretionary funds; past a certain undetermined Point, a reduction of these discretionary funds will destroy the necessary supply of varied Consumption Products to the Households; a Spread necessary for maintenance of current living conditions. We can easily win the battle, yet still lose the War.

The New York Times gives Us a Graphic from which We can gather some comparison input. What happens when the Cost of Electricity in Size challenges half the magnitude of Recreation? What happens when expenditure on Gasoline exceeds the expenditure on Hotels and Vacation homes? What occurs when Car Insurance exceeds expenditure for College tuition and fees? What can be expected of economic performance, if the Cost of Food triples the amounts spent on Communication and Education, a factor which will apply within a short interval if Agri-business Food pricing is allowed free rein? The rate of growth of Energy charges will lead to expansion greater than the expenditure to Restaurants and Fast Food outlets within a Period of months, which will constitute a real Problem; it is a sad statement of human growth, to perforce state that Nutritional requirements will be lost if Restaurant provision of balanced Meals are canceled because of Price. It’s a sad life. lgl