slogonomics

Robert Rapier:

I am no economist, but bear with me while I try to explain why I think we are in for a very long and difficult economic period.

My thesis for ‘The Long Recession’ goes something like this: Historically, when oil prices rose quickly and remained high the economy struggled. High oil prices lead to recessions and depressions, because they suck so much money out of the economy.

A person whose energy bills go up by $100 or $200 per month has that much less to spend on other things. It is essentially like a tax applied to everyone that uses energy — with a large chunk of the money exiting the U.S. and contributing to our trade deficit.

Historically after a period of high oil prices, people start to modify behaviors, and at the same time producers rush in to take advantage of higher prices. This generally leads to a decline in oil prices and the economy recovers.

But I believe this time is different.

I believe we are looking at an extended period of (at best) no-growth or very little growth.