Ike Kiefer - Comments

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Austerity Vs. Deficit Spending - Is There No Science In Economics?
5 years ago

The answer is energy. There is an energy economy that underpins the fiscal economy. Howard T. Odum figured out this energy economy in the 1970s and applied it to both ecology and economics. He invented the discipline of biophysical economics. The difference between the US and Europe is that Americans have been benefiting from a massive inflow of cheap energy from PBR long-wall coal and more recently from fracked gas and oil that is compensating for equally profligate deficit spending and a swelling money supply. This is due mainly to the fact that land and mineral rights are still privately owned in the USA, and our oil and gas and coal companies are still privately held as well. All the innovation resulting in massive, new, truly economical energy production is coming from the 10% of the major energy companies that have not yet been nationalized.

When the fiscal economy turns over faster than the energy economy, you have inflation. When the energy economy and the manufacturing and value-adding elements it powers cycle faster than the fiscal economy, you have deflation. We saw deflation and pressure to expand the money supply more frequently in the days of the gold and silver standards. If economists understood and applied Odum, they would have their grand unification theory and make a true science out of a dismal one.

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