What is America’s Economic Breaking Point?
April 29th, 2012
If there exists a single factor that can put enough pressure on the whole of the American economy and force it to crumble under its own weight, it’s the price the average American pays for gas. Extreme up-side gas price swings have preceded seven of the last eight American recessions, most recently in the summer of 2008 when drivers were forced to pay an all time high in excess of $4.50 per gallon at the pumps. What followed this spike – caused in part by tightening supplies, rising demand, easy money and a health dose of financial propaganda – was nothing short of the most severe financial and economic crisis since the Great Depression.
Nearly four years on the country finds itself in the midst of difficult times that havetaken their toll on millions of Americans through job losses, home foreclosures, un-servicable debt, and ever dwindling retirement savings. By all accounts, Americans are worse off today than they were ten years ago, and the state of our nation, despite what Washington’s media masters report, is fiscally, economically, and socially dire.
With an estimated national debt that will approach $20 trillion in just a couple of years, some $200 trillion in unfunded liabilities over the next twenty five years, scores of millions of Americans dependent on overburdened government safety nets to survive, and a rapidly shrinking domestic economy, the key question becomes,”what is America’s economic breaking point?”
The answer to this question becomes apparent in a recent documentary from Future Money Trends, which suggests that the breaking point for the U.S. economy comes when the cheap energy we have enjoyed for the better part of a century finally dries up.
Future Money Trends is expecting the U.S. to face the perfect storm of events that, when combined, will send gas prices past the breaking point for the average American.
There are three major catalysts that will cause gas prices to reach this breaking point.
Number one, the dollar is in a state of collapse caused by a continuous increase of the money supply by America’s central bank.
Two, instability in the middle east and a potential war with Iran would great disrupt the supply of oil.
Three, the supply of cheap, recoverable oil is dwindling along with a major increase in demand.
America is built for $50 oil and $2 a gallon gasoline. The seriousness of our situation should not be overlooked. We have multiple forces that will drive gas prices past America’s $5 per gallon breaking point… Rising gas prices caused by these three catalysts will break the backs of the American consumer, spiking prices to the point where present day normalcy is no longer the reality.
Though there is evidence that the peak oil theory of physical shortages is accurate, it’s not even so much that the world will run out of oil per se, as it is that we simply don’t have the technology to extract that oil at a cheap enough cost to maintain our current way of life.
If you consider the significant pressures currently facing the United States financial and economically, it’s not too much of a stretch to suggest that even a minimal rise in the price of gas could seriously hamper the consumption habits of the majority of our population, which in turn will further reduce economic growth. As Future Money Trends‘ Daniel Ameduri notes in the above documentary, even a $1 gas price move has a significant impact with the potential to extract $100 billion from the broader economy.
With gas prices at or above $4 in most parts of the country, we’re quickly approaching 2008?s breaking point. And for those who don’t think prices could exceed those historic highs of 2008, consider that most Europeans are already paying nearly $10 per gallon.
With rising demand from BRIC nations like China and India, tensions in the middle east and unprecedented monetary expansion, ten dollars may very well become a reality. Such a swing in prices would immediately shave some $600 billion in direct consumer consumption and shrink our economy by 5% almost instantly. And that doesn’t even include the consequences that will inevitably hit small businesses and their employees in the months following.