Monday, May 5, 2008

Spinning up

Just getting back into the swing of things. It's interesting to me to see how people are reacting to the high food and energy prices. Folks like to blame the housing credit crunch for all the problems they are having today. I suppose, in an indirect manner, the housing crunch is causing the problem.

It's primarily caused by the devaluation of the US dollar. Bernanke has been lowering interest rates for about 9 month now. It's 2%. You can't get much lower than that. That is causing the US dollar to be worth less, and because of that, oil prices are going up, and food prices (basic supply and demand) are going up at a similar pace.

So, when you fill up your tank, instead of cursing the poor station owner or the oil companies, you should curse that Bernanke jerk who keeps shoveling our money into a ravenous hole of greed and sin. He's just feeding the beast, and starving us of our hard work.

So, I'm just spinning up. I'll get back into the swing of things pretty soon.

Glad to be back!
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3 comments:

bocanot said...

The high price oil has actually kept the value of the dollar from falling TOO low. Since OPEC is mandated to only sell oil in USD, the higher the price of oil, the more dollars are needed to purchase it. As a result, central banks around the world have to buy dollars in order to purchase the oil that their growing economies need. True, there were a lot of people (and currency traders shorting) worldwide selling dollars, but now they have been offset by central banks buying. It seems that this has now reached a max and the market is now rebounding in the dollar's favor. The equilibrium point is suggested to be around the US $1.25 to 1 euro. The only wild card is Iran and it's bourse which will sell oil in Euros and any other currency except the dollar. And THAT may be the precursor to WWIII. Let's hope the Iranians see the light.

May 5, 2008 10:42 PM
Anonymous said...

bocanot, your ideas about oil are sadly very correct in the sense that it is the main pillar holding up the United States economy since the greenback is really just paper and not really worth anything if people decide it is worthless. I find it intriguing that you would put blame on the Iranians for their choice of currency for exchange of their own goods.

With all of the worlds currencies pegged to the greenback, these countries are witnessing double digit inflation exported by the United States. If the US dollar has lost 40% of it's worth in the last decade...then what happens to these other economies..they are paying th e price for the U.S. economic folly.

Iran and any other country that holds resources has the right to sell their goods in whatever manner and currency they choose. Why should they get screwed by inflation by holding onto depreciating dollars and importing inflation making their people poorer? Would this be a good deal for the people of the United States if it was the other way around?

The US economic system today is dependent on a resource which they do not own (oil) instead of a truly sustainable economic model (pay off debts, asset backed currency and frugality).

This is the folly. It seems like everyone likes to externalize the problems as if the US problems are all because of oil or Iran or some other country instead of taking an internal look at the unlimited and unchecked spending of the Federal Government.

Why should the world pay for the unsustainable and insatiable spending and greed of the west?

"As the Roman Empire rose to greatness, it no doubt assumed that its power would last for centuries to come. But even while its citizens were living in prosperity, the empire was crumbling from the inside. You will find this true of any civilization that has ultimately collapsed or has been overcome by a foreign power. It first fell apart on the inside. The landscape of history is strewn with the remains of once-great nations that let moral decay from within bring them to ruin."

If the United States chooses the Path of Rome (hubris, ignorance and arrogance) than it will continue it's spiral of decline will hasten. It could be said that the enemy is already at the gates ( they are just masked as sovereign wealth funds and foreign investors ) today and the future looks even less bright for our children.

If we decide to take a step back and realize that our governments through inaction of the people have created this crisis in the economic system through brutal economic policies and actually put the blame where it is due, there may be time to save our children from the horrors of war and occupation and the collapse of such a great nation.

my 2 cents

May 7, 2008 9:21 AM
Anonymous said...

AMEN, well said!

May 7, 2008 7:28 PM

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