Raise the Hammer

>> Third, spiking oil prices have already coincided with a collapsing economy.

According to the Bank of Canada...

http://www.bankofcanada.ca/rates/price-indexes/cpi/

total CPI (which includes energy and food) has increased by 1.95% since 2005 (March-March).

From 01/2000 to 01/2005, when Canada avoided a recession, total CPI averaged 2.41%/year.

Even if peak oil is real, it hasn't yet bled into higher overall inflation.

Moreover, recessions have nothing to do with high oil prices, they have to do with a lack of buying and selling relative to productivity. In the following chart...

http://pragcap.com/wp-content/uploads/2010/12/sb1.gif

you can see that private sector savings increased in the years

1970
1975
1980
1982
1991
2001
2008

Now compare those years to this table of U.S. recessions...

http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Great_Depression_onwards

You will see that they mesh nicely. In other words, recessions occur, NOT because oil prices increase, but because the private sector reduces spending and increases its savings.

Recessions are all about a switch from spending to savings, not about relative price increases.

Unlike households, federal governments have the ability to run infinite deficits, because they print money...

http://www.youtube.com/watch?v=-_N0Cwg5iN4

Not only that, but printing money NOW is very unlikely to create any inflation, because nominal GDP is growing extremely slow...

Nominal GDP growth by decade

1970's - 10.38%
1980's - 7.60%
1990's - 5.54%
2000's - 3.86%
First quarter 2008 to the last quarter of 2011 - 1.86%.

If peak oil is about anything, it's just a transfer of western dollars to oil rich nations. Assuming they spend those dollars eventually, this is simply delayed production in the west.