Jack,

Thanks for your work on the Survival Podcast. I particularly appreciate your notion of “everyday preparedness,” rather than an excessive focus on low-probability, high-impact events.

Kudos on a nice economic analysis of cap and trade. It will be interesting to see what happens.

I think your answer to whether massive inflation helps a debtor was mostly correct, but I’d suggest clarifying your explanation a bit. One of the first things economics teaches is that inflation is the debtor’s friend (and saver’s enemy).

You said that “money is harder to make.” It may seem that way from the reports we hear about unemployment, but it’s not actually the case for anyone who is employed and has seen their wages rise with inflation over the years. If I borrowed a fixed amount in 1980, and my wages have increased since then due to inflation, I am actually better off repaying 1980 dollars with 2009 dollars. Put another way, a widget that cost $10,000 in 1980 would cost about $25,800 in 2008. Because each 2008 dollar is worth less, it would be to my benefit to have obtained the widget in 1980 for $10,000, and repay that dollar-for-dollar with a 2008 salary. (For the sake of simplicity, this analysis obviously excludes the cost of any interest).

I am not necessarily advocating that people take on debt, only that people understand how economics and inflation affect your borrowing and saving decisions.

Thanks again for your great work.

I know this is a late comment, but I listen on podcast :).

The most damaging part of Cap and Tax is actually the unnecessary and artificial burden it puts on our economy.

They may very well reduce the cap to the degree that it becomes difficult for things like coal fired power generation to run. At first it will probably only bring prices up a bit. That’s all well and good for awhile. However, as soon as you get a hot summer in the northeast, where it’s mostly coal fired generation (And I believe you emit more carbon per MW at that time too), those emissions credits are going to start getting expensive as the coal gens start trying to out bid each other to buy them.

Or maybe they invest early in sequestration technology, and THAT drives up the cost per MW. It really doesn’t matter, cap and trade introduces artificial inefficiencies and will drive up energy prices, and that’s always bad for economies.

Now add in to that it’s absolutely useless to sequester carbon and it just gets ridiculous.

Tin foil hat time:
You know, I got to thinking about it a little more. The govt basically get’s a dial for how many tax dollars they take in. -IF- there is a percentage based tax on these, say 5%, then all congress has to do is vote to decrease the quota and the value goes up, people start trading them because there is a new number and tax dollars start flowing in. Hell, they could increase the number of permits and ppl would trade them and dollars would roll in.

That’s only if there is that % based tax per tonne, but interesting thought.