BIGGER than Hyperinflation?

[Anthony Halstead]

After the interesting discussions going on here at BP, thought I would share a parallel discussion which is ongoing amongst my circle of friends:

During the housing bubble, we were watching. We have some knowledge of Austrian Theory of Economics, still learning it at that time, so when the collapse came we were not surprised. After outrage about how large banks got bailouts, gave themselves bonuses, etc, I proposed that anger was like spinning wheels in the mud. Like fighting the weather. We, having identified what was going on, and identifying that we were basically powerless to effect any change in the system, should prepare our lives so that our family and friends would not be harmed by what was going on.

Thus some, along with me began to learn more about eating healthy, inflation, economics, etc. But the most interesting thing we found was that there is not enough of everything. We are using materials at a rapidly increasing rate, while the basic materials are not growing. Copper, iron, lead, etc are finite resources. A second item is that we tend to mine the easily recoverable chuncks first, thus leaving the hard to extract, low grade ores for our future. And this is as demand is increasing.

Resource shortage could have a bigger impact on our lives than any and all govt printing of money. In other words, the debt forced austerity measures will pale in comparison to what happens when oil is more expensive to extract from the ground, when copper, lead, aluminum, iron, etc are lower grade and deeper (higher price to extract, higher price to refine, oil is a huge component of their price), when aquifers decline (see India, OK panhandle, etc) and farming is not economic (also, oil is a huge constituent of food production via fertilizer, tillage, transportation, etc) and on and on. In short, our easy lives are about to become more expensive, and in the long term unsustainable.

We then said, ok, got it. Then what? It goes back to our basic needs first, food, water shelter, etc. When those needs are met, we can progress to the next level of Maslow's Pyramid. I mentioned farmland, prime farmland with a good water source, land that was not denuded by modern chemical farming, land that was near population centers (who are you going to sell to?) yet somewhat distant from the turmoil of the major cities. As far as where, the US midwest was our choice. Water, sun, great soil, not a ton of people compared to other parts...

And just in the last week I read an article which seems to dovetail with these assumptions, except the author has a research staff to help him with the evidence.

http://www.scribd.com/doc/53865070/GMO-April

It is an enlightening and well researched report on what is likely to come. And much more well written than this short post by myself. I think after reading it you may concur that it will have a bigger effect on our lives than hyperinflation.

Tony.