It’s All About Renewable Energy

this post is in response to Stern: Credit ‘Headwinds’ to Weigh on Economy Beyond 2008 on Wall Street Journal, Real Time Economics Blog - posted May 14, 2008

As the Fed continues to “print” more money what is the effect on the economy. Can they “print” their way out of this economic slide by lending more and more money to their friendly financial institutions? “Printing” more money against the same asset base is like an alcoholic having “just one more drink”. Such an attitude eventually leads to another and another…it is a bad idea and only works to “inflate” the existing problem.

Although you can physically “print” more and more money, you are only adding supply to an already dwindling demand for it. Does America realize that their own government is being totally irresponsible? There is no sensible economic argument for their current actions except for DENIAL. I can assure you that the “printing” of more and more money will not end, until it is too late…

The most fundamental law of economics is the Economic Law of Land Scarcity. This law dictates supply and demand, inflation, rent levels, and energy stability of our economy. The Economic Law of Land Scarcity says that 1.) there is only so much land available on earth and that 2.) not all land is created equal. For example, there is only so much oil on earth and getting oil from Alaska or the middle of the Atlantic Ocean is a lot more costly than from the Gulf of Mexico. So the price of oil perpetually increases as we dig for more and more oil from less valuable oil resources, creating inflation. It is also this law of Land Scarcity that gives landlords the ability to increase rent and is scientifically the root cause of inflation. And the worst thing about inflation is that it inevitably creates more inflation. Without a disciplined acceptance of the Economic Law of Land Scarcity, any economic strategy is undoubtedly foiled.

It is this basic understanding that the Federal Reserve is so blatantly ignoring as they attempt to “print” more and more money, yet their land is fixed or scarce. Such is the reason that way back when, the Fed was at one time logically forced to fix their currency level to a scarce asset such as gold. Such an economic discipline required the Fed to earn their money prior to “printing” more of it, by forcing them to purchase gold. So in conclusion, when the Fed decides to “print” more land, I mean money (you can’t “print” more land, stupid!) it is ignoring the Economic Law of Land Scarcity.

As a result, their alcohol addiction is only getting worse, and we all know that denial certainly does not help.So what is the Fed to do? Scientifically, there is really only ONE way around the Economic Law of Land Scarcity and it is renewable energy. You see, renewable energy gets its economic value from air (windmills), water (hydro) and light (solar). Such resources as air, water and light, in contrast to land, are not scarce resources, but rather infinite in their potential value; as the more you have of them, the more you are able to make of them. Again, renewable energy scientifically counteracts inflation as it neuters the inflationary influence of land’s scarce nature by deriving its value from “free” or infinite value resources.

So if the Fed is truly looking for both a short-term and a long-term solution to its alcohol problem, it needs to first admit it has a problem, it is called inflation. Second, it needs to stop “printing more money”. Third, it needs to invest everything it has in renewable energy in order to naturally stabilize the inflationary environment that we have been in since the rise of housing prices started approximately 10 years ago.

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