I couldn't agree more that high energy cost is fueling inflation (rather that the other way around) If gas prices were to suddenly drop back to $2 a gallon, the economy would suddenly start to boom. But the prices won't be dropping.
I read somewhere that the "average joe" in middle America is now spending $4400 more per year than 16 months ago as a result of increased energy cost. And that is expected to rise another $2000 by years end. That estimate includes gas, home heating, groceries, consumer products, ect. If those numbers are anything like accurate, that's over $6000 out of the spending hands of each of us. Our Federal Government seems to have thought at one point $600 per person would STIMULATE the economy. Imagine how 10X that much would boost the economy.
As far as a break point goes, I suppose that depends on what you consider a collapse of the economy. Try telling millions of Americans who've already lost their homes it HASN'T collapsed already. Some of us are better than others at building a strong personal financial base. This economy has already taken out many who were at the low end of that totum pole. It's slowly eroding that "Average Joe", and beginning to cause even the hardiest of souls to fear what's ahead.
In my eyes, the collapse has already begun. It just hasn't reached terminal velocity just yet.
The American people are in for some really big changes in lifestyle. We've been through 230+ years of growth with a few ups and downs, but essentially a continued long term upward economy. Now the pendulum is swinging back the other way.
Once upon a time, the US economy was based on a gold standard. Like it or not, today it's based on a petroleum standard. And it's NOT our petroleum. We're now at the mercy of a part of the world that doesn't like us. The only way to reverse this trend is to shed our dependency upon foriegn oil. And that will take a generation or two at the current pace.
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Today's Featured Article - History of the Nuffield Tractor - by Anthony West. The Nuffield tractor story started in early 1945. The British government still reeling from the effects of the war on the economy, approached the Nuffield organization to see if they would design and build an "ALL NEW" British built wheeled tractor, suitable for both British and world farming.
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