
Aubrey McClendon and America's fracking boom - johnny313
https://www.theguardian.com/news/2018/aug/30/how-the-us-fracking-boom-almost-fell-apart
======
dopamean
The things said in this article about natural gas' reliance on massive amount
of cheap capital sound similar to what was being said about banks and
commercial paper in 2008.

~~~
adventured
US natural gas prices are 1/2 what you see in most other nations. Those prices
can move up further without causing much consumer harm, to offset an increase
in capital costs as necessary.

Cheap capital is going to continue to be normal however. The US Government
can't afford far higher Fed rates today, and it certainly won't be able to
afford high rates when the national debt hits $30 trillion in seven or eight
years (the next recession will produce at least a $1.5t deficit year). You're
better off assuming the Japan scenario of perma low rates, and all the
consequences that go with that in the US (eg corporations getting drunk on
debt, artificially inflated asset prices). Ultimately over time nobody is
going to buy a trillion in new treasury paper each year except for the Fed,
unless you're offering high rates of return on that (which the US Govt can't
afford). So the Fed will have to keep rates lower than it otherwise would to
keep the government solvent, and the private economy will continually be
doused with cheap capital as a result (likely in rolling cycles; when this one
runs out, the Fed will drop its rates back to zip and restart QE, and the
cycle will repeat; that will increase inequality due to the top 1/3 asset
holders primarily benefiting from the cycles, which will increase populism and
voter anger in all its forms).

