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Baltic Dry Up

Why has the financial/economic press completely ignored the single most glaring indicator of 2012 thus far? It must be because of what it is saying. There are many ways that data can be fudged, but, ultimately, price is the only thing that matters.

The Baltic Dry Index has collapsed by 58.5% in the first four weeks of this year! That single fact should be front page news in the financial press as it represents the most current reading of global demand and trade. The fateful year of 2008 began with a 38% January decline in this same index, and we all know too well how that year ended. Despite the valiant efforts of central planners to mask the demise of the debt financed consumption economic model this index is revealing reality. Aggregate demand is collapsing under the weight of many trillions of dollars worth of never to be repaid borrowings that were used for consumption instead of self-liquidating endeavors that would have made the world a better place.

I am a believer that there is no free lunch anywhere, anytime for anybody. Keynesian economists would have you believe otherwise, and they will be, once and for all, proven wrong. You see, even if you are given lunch and not asked to pay for it the cost of the lunch is then the burden of whoever delivered it and he surely will not want to bear the burden and therefore will ask for payment from someone else who ultimately becomes society, and higher taxation and more regulation will be the result thus burdening the original consumer of the "free lunch". Some will say that the FED can "print" the money to pay for the lunch which may be true, but in that case everyone who trades in dollars ends up paying through inflation (higher prices for the same things).

With rates on savings accounts at approximately nothing people are being forced to spend their savings on essentials, and without the opportunity to earn interest on savings and very little economic opportunity many will run out of money and the ability to take care of themselves and their families. Maybe this year? Maybe the Mayans are right? It seems that most will ultimately become dependent on government for subsistence as many learned economic historians have predicted. Is this the plan of the elite class?

The spectacular decline in the Baltic Dry Index this month means that ports globally will be seeing empty containers being imported and exported above and beyond anything tangible and useful. And the latest read on inventories shows that shelves are stocked. Deflation thwarting tactics being employed by the US Federal Reserve are having the opposite effect and will, in my opinion, result in a longer than necessary depression. Free markets should be allowed to function which would clear existing imbalances and pave the way for sustainable economic progress, but authorities in the West believe that if market are falling that they somehow are not working when anyone with a modicum of economic understanding knows that price is a function of supply and demand and that markets whether priced at zero or infinity are telling the truth.

It seems to me that the truth will soon be upon us and will come as a shock to the masses who have been taught "what" to think as opposed to "how" to think. I advise everyone to get a fishing pole and learn how to use it as the Western world (and much of the East) are headed for what appears to be a long fishing trip.


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