Energy both its production and use is a reflection of aggregate economic activity as very little occurs without the use of energy and usually lots of it particularly with developed economies. Given that natural gas prices have hit a 17-year low and oil prices have fallen some 70% from recent peaks and test 12-year lows this speaks volumes about the lack of end user demand for both individuals and businesses. As does the continued slashing of business capital expenditure plans because supply exceeds demand nearly across the board, the definition of deflation. This is why prices continue to drift lower,economic growth remains moribund and consumer spending week. Classic deflationary credit bust, additionally the zero interest rate polices of many developed economies are now rapidly moving towards negative interest rates and many are already there, something that will produce severe adverse effects over time. Yet again consumer spending, business spending and economic activity in general remains weak and refuses to pickup. When I wonder will the central banks acknowledge that which is painfully obvious, debt based growth, quantitative easing and negative interest rates are failures one only has to look around. What’s needed is a new paradigm that creates earned income through decent paying employment, that’s the key,not more reckless leveraged speculation that will only end in tears, bankruptcy and foreclosure.
This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG/ 888-742-4744.
You can catch me on the radio at noon each business day as well on California’s central coast. KPIG 107.5 FM in the Monterey Bay or KPYG 94.9 FM in San Luis Obispo.
Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.