Tag Archives: gregor macdonald

A 20 year chart of the US 30 Year Treasury Bond vs. a broad commodity index is the occassion to make several macroeconomic observations. The comparison reveals how the purchasing power of the long-dated US Treasury Bond has fared against a basket of commodities over the period. Tracking the ability of the US Treasury bond, denominated in US Dollars, to maintain its viability as a capital storage unit is not arcane. Rather, it is central. All institutions and individuals eventually use financial assets to purchase energy, natural resources, and labor. | see: 30 Year Treasury Bond by Price vs. The Reuters CRB Index–CCI Continuous.

The recognition that paper assets derive(d) their worth from future industrial growth will unfold very slowly. Human society, intellectually, continues to operate in the Normal probabilistic regime. Accordingly, the economic system is trying to move forward on the belief that cheap energy, in real terms without losses from externalities, will return. Indeed, modern economic theory, the operation of governments, and risk models are all predicated on the restoration of available cheap energy.

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