I am making the prediction of biflation. Basically a reversal on what has happened in the last 15-20 years.
The percentage of income devoted to housing went from 25% to 40%, while the percentage of income devoted to food and energy went down.
The last few years, the housing value has gone down while food and energy has gone up. Other goods have stayed flat, or have gone down a little bit.
What this means is that we are in stagflation (as Rich has predicted), while our standard of living decreases. Cheap energy has increased our standard of living, allowing for more money to flow into other assets, but this gravy train has come to an end with the rise of China, Obama’s drilling moratorium and his war on oil, and the fact that solar energy production isn’t cheap *YET*.
Once solar technology reaches its renaissance, our standard of living will rise again, but this isn’t going to be for a while. We could have done this a while ago with nuclear, but there are enough nutjobs in this country that stymied the path that France took.
