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The more things change, the more they remain the same.
Americans are currently getting hit with inflation and energy price increases, together with disappointing employment numbers that feel retro in a decidedly uncool way.
Gerald Celente has memorably referred to it as “Dragflation.”
The Bureau of Economic Analysis announced Friday that a key gauge of inflation reached a record 30-year high in August.
To give some annualized and semi-annualized numbers as reported by Zerohedge:
- oil up 55%,
- natural gas up 122%,
- food up 33%,
- shipping costs up 225% in ‘21;
- past 6-months US CPI up 7.6% (annualized),
- core CPI up 6.8%,
- wages 4.9%
The PCE price index, which tracks consumer expenditure, increased by 4.3 percent in the 12 months ended in August, outpacing July’s 4.2 figure.
Meanwhile, an energy squeeze is driving up fuel prices not only stateside, but in Europe and Asia as well. There are shortages and gas lines in the UK, and China’s electric grid has experienced outages as well, due in part to reductions in coal usage.
A good part of the problem today, as in the 70’s, or early 90’s, for that matter, revolves around energy.
But the root of the energy squeeze is different now, than in former times. Geopolitics in the Middle East isn’t the real factor in the current crunch.
Pandemic policies have created supply chain nightmares, and depressed economic growth generally, especially outside of Asia.
But the green energy agenda may be an even bigger factor.
A recent Asia Times article noted that U.S. investment in hydrocarbons has experienced a major pullback from the period between 2015 and 2019.
According to the Times:
“Energy investment in the United States has dwindled as large institutional investors boycott fossil fuel investments. China’s critical electricity shortage is the result of draconian regulation of coal mining, exacerbated by Beijing’s punitive ban on Australian coal imports.”
Exploration and development spending in the United States in 2021 (and predicted for 2022) will be a fifth of what it was in 2015, when it peaked at $150 billion. In 2015, the sector actually had a negative free cash flow, because they were investing and borrowing heavily to increase output.
Now, they’re sitting on cash, paying down debt, otherwise constricted and dis-incentivised by green policies.
And what, meanwhile, are green initiatives producing? Obviously, not nearly enough.
A Global Reset can demand all it wants, regarding redirecting a hundred trillion in capital investments to reduce Carbon Emissions “to zero” by 2050, as the International Energy Agency has proposed.
But not only are those numbers pie in the sky in themselves, there is no green energy technology existent that can power economies to produce those trillions along the way.
To put it another way, if green energy were cheaper and more abundant than hydrocarbons, the whole scheme would work perfectly.
The extremeness of the green agenda, ironically, may end up sabotaging more modest, achievable goals.
As a result, average citizens around the world may be enduring a lot more 70’s redux in the near future, as countries clamp down to meet carbon targets, and fiddle with Fed interest rates to try to keep the whole mess from totally imploding.