posted on Jan, 6 2011 @ 01:41 AM
We're watching the Fed trying to re-inflate the economic bubble with mini bubbles. It was caused by a real estate bubble, which was caused by a
credit bubble. The credit bubble exploited simple people, or handed out credit to the undeserving, depending on your opinion.
But that wasn't the start of the bubble. Some point to when Nixon decoupled the dollar from gold. From that point the market decided the value of
the paper dollar, and since the dollar was no longer coupled with Gold, the Fed could begin printing a massive amount of dollars (by issuing
Let's go a little farther back. The Boomer generation bubble was created by soldiers coming home from WW2. The boomers and their children needed
homes. The world saw the USA as the land of opportunity, and waves of immigrants came to the USA from their decimated countries at the end of WW2.
This population boom needed financial resources, which the Fed later supplied as credit.
What created the prior boom in population and productivity? It was the industrial revolution, mass production of everything including food. What
enabled the industrial revolution? Energy. What happens to production when energy production doesn't keep pace with the population growth? The pop
of the meta bubble?
I'm not talking about peak oil, or slow implementation of highly expensive green energy sources, or overconsumption of existing energy resources.
But just keeping up with population growth.
Nature has a way of taking care of itself. In economics, trend lines seek equilibrium. I wonder what will happen with these graphs? And how it will
happen? I'm thinking that the global meltdown is merely a small symptom of a much larger and slower moving event.
The first graph is from NOAA.gov, the second graph is from wikipedia.