Larry Lindsey is a brilliant economist. He has served two presidents and was the director of the National Economic Council. He’s also a great friend of mine and the author of a new book, Conspiracies of the Ruling Class: How to Break Their Grip Forever. Here are five of Larry’s insights you’ll gain from listening to our recent conversation for the Pickens Podcast:
One month of economic expansion is like one year of life. Our current expansion is in its seventh year. Age-wise, that means it’s in its eighties. So we’re due for a recession. It may not be tomorrow or next week … but it’s going to happen.
Recessions usually don’t happen because of a mistake in the marketplace. They usually happen because of a policy mistake in Washington. Washington never likes to blame itself for anything. But our huge money-funded expansion has to come to an end. At some point, you can’t keep printing money.
Don’t forget: Washington caused a good portion of the last three crises. We’re now in our third bubble. We printed money for the dot.com bubble in the 1990s. We printed money to fund the housing bubble. And now we’re printing money to fund the credit bubble.
When the recession hangover hit, the Fed gave us $4 trillion of hair of the dog. That can’t go on. Everyone loves the party. But no one wants the hangover, right? Since the Great Recession, we’ve been printing money and interest rates are near zero. But you can only postpone the hangover for so long.
People have a right to be angry. Conspiracies of the Ruling Class explores why people are angry. The reason is a simple one: People in power are taking plenty of taxes and doing a lousy job.
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Nearly 40 years ago, OPEC nations met and brought America to her knees overnight. Long gasoline lines. Gasoline prices skyrocketed. Crippling economic conditions. Nearly two generations have passed since then. That translates to 185 million Americans – more than half of all Americans – who have never experienced that hardship or challenge. But those of us who did will never forget it.
My, how times have changed. OPEC nations – and a few others – gathered in Doha, Qatar the other day to address the slide in oil prices that threaten their economic viability and their national security. Powerful gathering? Hardly. Laughable is more like it.
Led by the Saudi contingent, with their own resolution in hand, they met to approve a freeze on production at January levels. It would have been a meaningless gesture, but, still, the markets took note. Oil prices perked in advance of the confab in anticipation of “positive” news.
That gathering was as fractured as the Mid East itself. There was no agreement. It was a comical sideshow on the global energy stage that proves, yet again, just how irrelevant OPEC has become these days.
There are much more important issues playing out on that same energy stage that will move oil prices higher in the coming months. Consider these operational outages and challenges:
- U.S. rigs have fallen by 75 percent and 30 percent internationally. In the U.S. alone, that has led to a steeper and steeper decline of oil and natural gas production.
- We’re closing in on 300,000 lost jobs in the energy space in America.
- We are witnessing production declines in China, Brazil, Mexico, Kazakhstan, Latin America, Europe and many other nations.
- As if this is not enough, in the last month, we have seen production outages in Kuwait, Iraq, Nigeria and Venezuela.
And then there’s Russia. They have moved in and out of the Middle East, having been kicked out in the 1970s. They are back in now, and whether it’s for “diplomacy” or control of oil supplies, they are a growing factor. And, know this: Russia has never been a nation that’s fostered stability. Instability is more their game.
Thankfully, we’re now a nation with options. Credit stunning advances in horizontal drilling and fracking that position us rich in energy resources. We’re now the number one natural gas producer in the world, and in the top three for crude oil production.
America’s potential energy future has never been brighter. But there’s a challenge, and that’s whether we – as a nation – are willing to learn a lesson we should have learned 40 years ago, and that’s putting our own energy future in our own hands.
The best way to do that is to utilize free market principles and inject serious fuel competition in the transportation mix. Governments at all levels can and should lead the way. One way to start: Open their fleet vehicle and fuel purchasing to competing domestic fuels. Let the cleaner, cheaper, domestic option – and taxpayers – win. Let’s make OPEC and those other oil-producing nations irrelevant.
It will take an energy plan. It’s like planting a tree. The best time to plant one was 40 years ago. The second best time is today. Count on me to make that a key issue in the coming presidential election.
Rather than spending hour after hour feuding over delegate selection strategies in the Republican primaries, or the role of Super Delegates on the Democratic side, candidates for public office at all levels should be elbowing each other out of the way to present the best energy program for America.
T. Boone Pickens is architect of the Pickens Plan, an energy plan for America, and Chairman and CEO of BP Capital, a hedge fund that trades in energy equities and commodities.
Oklahoma, like other oil and gas producing states, has been hit hard by the steep decline in natural gas and oil prices. Hundreds of thousands of oil and gas jobs have been lost, and state budgets are being strained by the resulting declines in tax revenues. Tough choices are being made.
But we need your help in minimizing budget actions targeting alternative fuels in the state that would provide short-term relief, but long-term, major delays in the growth of these initiatives.
That’s why I’m calling on you to get involved and express opposition to moves that would deal a major blow to the development of alternative fuels in Oklahoma. And you need to act today if we have a chance at making a difference.
Oklahoma natural gas is a premium transportation fuel. It’s cleaner and cheaper than gasoline or diesel. It’s an abundant state resource. Its use as a transportation fuel in Oklahoma is growing. As producers begin to eye expanding exports of this premium fuel, now is the time to show you believe it is important not to disadvantage in-state production and consumption by altering existing tax language.
I need you to contact your key legislative officials to let them know you understand the hard budget choices, but for the long-term future of Oklahoma energy, let’s leave alternative fuels alone. That’s how we create jobs, make OPEC increasingly irrelevant and strengthen the state’s economy long term.
Take action on this issue today. Click here to send an email to your state legislators.