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Olduvai III: Catacylsm
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Crisis of the 70s Compared to the 20s

COMMENT: Hi Marty,

Your post today on inflation(when people see it coming) reminds me how things have changed from the 1970s. Then, the inflation we saw came from oil rising(Opec raising prices), unions demanding wage increases, and currencies untethered to the abandoned Bretton Woods agreement. Governments then seemed clueless how to stem this rise, with interest rates rising relentlessly, pressuring bonds and eroding earnings of still largely manufacturing-based economies. Globalization was not an issue as half the world still lived under communism.

Today, it seems central banks have “learned” how to rig interest rates by flooding markets addicted to debt. What is different today is governments now, instead of fearing inflation, actually want it. In fact, desire it to bring about the Great Reset. They appear to want to drive oil prices higher to such levels that this makes Green Energy cheaper and helps to accelerate the conversion over to electric cars. All at the expense of the consumer. On top of this, taxing old tech, principally oil and gas, only helps to fuel shortages, since companies have cut back on oil exploration. When you force people to stay home, the demand for energy shifts from driving to people staying home, more demand for computers, more energy required to supply the grid, more companies delivering products to the home. What has been accomplished? People fleeing high tax states to ones that remain open, those with no state income taxes, those in the south. The burden shifts to northern states, the advantage gained by southern states.

Today, governments are deliberately fueling these shortages…encouraging them, to expedite the transition away from globalization to one centrally controlled. No longer do they need access to debt markets, they can supply guaranteed income without fear of inflation or failed bond auctions…

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inflation, martin armstrong, armstrong economics, 1970s, stagflation

What were the real origins of the great oil crisis of the 1970s? Politics or depletion?

What were the real origins of the great oil crisis of the 1970s? Politics or depletion? 

If you happen to be caught in a boat in a major storm, such as in this image by Hokusai, you’ll surely think you experiencing a major shock. However, it is also true that no storm changes the average water level of the oceans. So, the oil storms of the 1970s were perceived as major shocks, but did they change the average patterns of the world’s oil production? In this post, I argue that they didn’t. Just like a sea wave has to crash on a shore, sooner or later, so oil production had grown so fast in the 1950s and 1960s that it had to crash, sooner or later. And it did. 

The oil crisis that started in the early 1970s is still widely remembered today and much of the interest in the vagaries of the present oil market is derived from a comparison with the events of that time. Yet, it may also be that the crisis was widely misunderstood while it was taking place and that it remains misunderstood even today; often reduced to the work of a small group of evil Arab sheikhs, perhaps the ancestors of today’s Daesh. But, as it often happens, every question may have an explanation that is simple, obvious, and totally wrong.

Last week, there was a meeting at the University of Venice, Italy, dedicated to this issue: what were the origins of the oil shock and of the countershock of nearly half a century ago? The conference collected for two days experts in subjects such as political science, economics, communication science, history, and more and I won’t even try to summarize for you all what was said.
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Olduvai IV: Courage
In progress...

Olduvai II: Exodus
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