Four Long-Term Inflationary Energy Trends

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Here's a look at the seasonally adjusted energy index on a log chart. Constant exponential growth shows up as a straight line. My eye sees 4 trends, but this last trend's data is extremely volatile. The pain, on the other hand, is unmistakable. We are in the pain cycle and there's no telling when it will end.

Some of us believe that stimulus is somewhat of a free lunch concept. We bring future demand into the present and we take on debt to do it. Over the long haul, how does that actually help us? I'm not saying that it is necessarily the worst thing to do, and for temporary shocks it would seem like a really good idea. For structural problems it can't really do much though, and that's what I think we have. There is also absolutely no denying what stimulus has done to energy prices.

In any event, I am not a believer in commodity and/or debt driven stock markets. It's why I call myself Stagflationary Mark and run an Illusion of Prosperity blog.

On March 6, 2009 the S&P 500 closed at 666.79. That was the bottom. It closed today at 1,138.50. That's a 71% gain.

On December 23, 2008 WTI crude traded at $30.28. That was the bottom. It traded today at $81.87. That's a 170% gain. Ouch.

We are clearly still in a commodity and/or debt driven stock market. I therefore continue to embrace the illusion of prosperity, just like I did when I first turned bearish back in 2004.

There is some hope though. I do not think it is guaranteed that the "pain" cycle will last forever. There's even some hope that this pain cycle is getting a bit long in the tooth. It's already been 10 years. Maybe we're halfway done. Who knows?

See Also:
Three Long-Term Inflationary Food Trends

Source Data:
St. Louis Fed: CPI-U: Energy