Oil Crisis: Blame It on the Fed?

[Vendico]

http://www.youtube.com/watch?v=yvCcBILF7ow

Must watch

and a new one: http://www.youtube.com/watch?v=jqz9J4hxh3k

[Vendico]

The guy makes it so clear, they look like fools.

[Vendico]

This really needs to get out. Will someone get RP to watch this? He needs to push this concept.

[Vendico]

Paul van Eeden website. We need him and RP to get in touch. http://www.paulvaneeden.com/pebble.asp?relid=11

[robert4rp08]

Hotness. On a side note, not too long ago I'd be scratching my head saying "WTF is he talking about."

[CurtisLow]

This really needs to get out. Will someone get RP to watch this? He needs to push this concept.

RGR THAT!

[MozoVote]

Oil is spiking in all the other paper currencies. It's been rising against gold too, although not as dramatically.

It's both a paper money problem and a supply problem. Countires like Indonesia and Mexico have growing needs for their own oil, so they export less, and the price rises since there is less oil available internationally.

[cska80]

There is an energy crisis because of many different reasons, especially the dollar. Ironically, everything that is causing this problem is a direct result of the government having too much control.

[RSLudlum]

Very nice clip. I LOL'd when 'steve' pounded the stack of papers on the desk, as to say 'for the viewers sake' that he was the true soothsayer!!! :rolleyes:

[AisA1787]

Good video, I agree with much of what Paul said. However, I disagree with his desire for a fixed money supply because it will only lead to deflation assuming the economy continues to grow.

How would you like the dollars you use to pay your fixed monthly mortgage payment, for example, to rise in purchasing power? If you're paying $1000/month right now, and deflation doubles the purchasing power of the dollar, you'll be paying twice as much even though the dollar amount of your payment hasn't changed. The same thing happens to businesses in a deflationary period, and they have to lay off workers as a result.

The money supply needs to be expandable for the economy to function best, but there should be much more oversight than there is now.

[kigol]

eek

[Mini-Me]

Good video, I agree with much of what Paul said. However, I disagree with his desire for a fixed money supply because it will only lead to deflation assuming the economy continues to grow.

How would you like the dollars you use to pay your fixed monthly mortgage payment, for example, to rise in purchasing power? If you're paying $1000/month right now, and deflation doubles the purchasing power of the dollar, you'll be paying twice as much even though the dollar amount of your payment hasn't changed. The same thing happens to businesses in a deflationary period, and they have to lay off workers as a result.

The money supply needs to be expandable for the economy to function best, but there should be much more oversight than there is now.

I think you're not considering all of the factors here. I'm not an expert on economics and there are probably a few things I'm missing as well, but there are several blind spots in your argument:

First of all, you're considering a very sharp and drastic deflationary scenario in which the purchasing power of the dollar increases twofold very quickly and thus puts undue pressure on debtors. In reality, it would only increase by 3 or 4% annually, meaning people would adjust a lot better to slowly declining prices - which in and of themselves are good things!
When price deflation occurs because of an increase in economic productivity, that means more wealth is being created in the economy and more/better goods/services are being circulated. Let's assume the demand exists for this increased supply - after all, if it didn't, the increase in productivity wouldn't last long enough to create a deflationary trend in the first place. In that case, although companies are selling their goods for cheaper, they will be selling more of them, meaning their nominal revenue wouldn't decrease (on average). That means they won't have problems paying off fixed-dollar loans. Furthermore, their operating costs will decrease, since they're buying materials for less and, depending on the scenario, possibly paying lower nominal wages.
I mentioned that nominal wages might go down. This depends on a few factors, but as far as I can tell, a critical one is population growth. Is the population increasing as quickly as the economy is expanding, or quicker? If so, wages might fall as much as (or even more than) prices - after all, the pie isn't growing as fast as the number of people taking a piece. In that case, ordinary people would have the same amount of trouble paying for most items as they would if the monetary supply was increasing, but I do agree they'd be feeling a bit more of a pinch from mortgages and the like.
Otherwise, if the population isn't growing as fast as the economy, prices will probably fall faster than wages, meaning the cost of living would decrease faster than people's means, offsetting the extra squeeze from repaying fixed-dollar loans like mortgages.
You're stuck in the mindset of our modern economy, rife with easy money, excessive borrowing, and rampant inflation. Our current economic culture discourages saving encourages people to borrow money (since they'll pay it back cheaper) and spend it as quickly as possible. However, an economy with slow and gradual deflation would encourage people to save money, since every dollar they save will be worth more tomorrow. As such, borrowing money would not be as much of a necessity as it is today. People would already know going into a loan that they'll be repaying the money in slightly more valuable dollars - the market would factor in that knowledge to adjust interest rates accordingly.
Furthermore, under a fiat monetary system, you need to look at money like stock. It's kind of like owning stock in a company, except instead, you own stock in the economy as a whole. The number of dollars you own represents your share of the money in the economy, and you can "sell the shares back" for any good or service in the economy. The key point to take away is this: When a company becomes more and more valuable, it oftentimes does a stock split. When that happens, the value of every share decreases by a certain ratio, but each and every shareholder is compensated accordingly by being given more shares, proportional to the number they already owned. However, when the economy becomes more valuable and the money masters decide to do a split, it does not happen with such fairness - instead of the shares being distributed proportionally, pretty much ALL of the new shares are given to the largest shareholders, diluting everyone else's current stake in the economy. This is part of the reason why inflation is theft (and the other part is something I won't get into, but it has to do with prices typically rising faster than wages under inflation). Whenever you DO increase the monetary supply, regardless of whether it's to maintain price stability or to compensate for fiscal irresponsibility (which causes inflation), you're unfairly redistributing wealth.*


Finally, you actually forgot an argument that would aid your case: Price stickiness. Under deflationary pressure, especially in a culture otherwise accustomed to inflation, psychological and other factors tend to make prices "sticky" on the way down. This means that, for a constant amount of money in the economy, deflationary conditions would result in prices remaining too high at their previous values, which could reverse the economic upturn that caused increased productivity in the first place. I'm not sure exactly how to argue against this one except in two ways:
1.) I can downplay it and say that with slow, gradual deflation, it wouldn't be a huge problem. After all, it didn't really cause many problems when we were on a gold standard in the 1800's (although there were some economic troubles caused by other things).
2.) I can merely argue that the alternative danger of giving some group control over the money supply (like the Federal Reserve) is far worse anyway. After all, we're seeing today why money masters cannot be trusted to be responsible (and government also cannot be trusted to spend responsibly when it knows it essentially has an unlimited money supply).

Then again, the point is probably moot, because if we were on a gold standard or if we had competing currencies and gold emerged as a preference...the gold supply ironically tends to expand at approximately the same rate of the economy anyway. ;)

*There are other ways to create money under a fiat monetary system that would avoid this though, if you're really in the mood for some government meddling: Instead of creating money as debt through loans, the money masters could keep track of the number of dollars in existence on each date. When they increase the number of dollars in existence, everyone's bank account can be electronically augmented accordingly, thereby distributing the new money evenly and fairly. What about people with paper dollars? Well, those dollars have a year on them - so when you deposit a 2020 dollar in a bank in 2022, your account would be updated by the real dollar amount adjusted for inflation, not the nominal amount. This would be the optimal fiat money solution if we could trust government, but just like ALL fiat money solutions (and even more so in this case), it's just begging to be exploited by tyrants.

[Vendico]

bump

[Fox McCloud]

This one was just uploaded today:

http://www.youtube.com/watch?v=jqz9J4hxh3k&fmt=18

It's even better than the first one posted.

[Pauls' Revere]

This one was just uploaded today:

http://www.youtube.com/watch?v=jqz9J4hxh3k&fmt=18

It's even better than the first one posted.


Great clip! Thanks for posting.

[torchbearer]

:)

[Mini-Me]

Interestingly, it seems that my two comments have been deleted from the first video. :confused:

[Vendico]

bump

[DamianTV]

Wow! Wall of text. Too much for my brain to handle right now...

Quick Question: I remember there was a thread here about Ron Paul saying the price of Gas has not gone up when compared to other things of intrinsic value, such as gold. Basically the price of gas has stayed EXACTLY THE SAME. The reason gas price has gone up is that is how much the value of the dollar has gone DOWN. Not totally the feds fault, this is the market balancing itself.

Um, so can anyone link to that thread?

[Vendico]

up

[Matt Collins]

This book dispells Peak Oil Theory and is an EXCELLENT read!!!
I HIGHLY recommend it!

http://ecx.images-amazon.com/images/I/51831HTQZEL._SS500_.jpg


http://www.amazon.com/Black-Gold-Stranglehold-Jerome-Corsi/dp/1581824890/ref=pd_bbs_2?ie=UTF8&s=books&qid=1212527846&sr=8-2



Experts estimate that Americans consume more than 25 percent of the world's oil but have control over less than 3 percent of its proven oil supply. This unbalanced pattern of consumption makes it possible for foreign governments, corrupt political leaders, terrorist organizations, and oil conglomerates to hold the economy and the citizens of the United States in a virtual stranglehold. There is no greater proof of this than the direct relationship between skyrocketing gas prices and the explosion of wealth among those who control the world's supply of oil.

In Black Gold Stranglehold, Jerome Corsi and Craig Smith expose the fraudulent science that has made America so vulnerable: the belief that oil is a fossil fuel and that it is a finite resource. This book reveals the conclusions reached by Dr. Thomas Gold, a professor at Cornell University, in his seminal book The Deep Hot Biosphere: The Myth of Fossil Fuels (Copernicus Books, 1998) and accepted by many in the scientific community that oil is not a product of fossils and prehistoric forests but rather the bio-product of a continuing biochemical reaction below the earth's surface that is brought to attainable depths by the centrifugal forces of the earth's rotation.
Jerome Corsi explores the international and domestic politics of oil production and consumption, including the wealth and power of major oil conglomerates, the manipulation of world economies by oil-producing nations and rogue terrorist regimes, and the shortsightedness of those who endorse expensive conservation efforts while rejecting the use of the oil reserves currently controlled by the U.S. government.


As an expert in tangible assets, Craig Smith provides an understanding of the history of America's dangerous dissociation of the dollar with precious—and truly scarce—metals such as gold and the devastation that would be inflicted on the U.S. economy if Middle Eastern countries are able to follow through with current plans to make the euro the standard currency for oil instead of U.S. dollars.
Black Gold Stranglehold is a thoughtful work that is certain to dramatically change the debate on oil consumption, oil dependence, and oil availability.