http://www.cnbc.com/id/42551209

Just a bit for discussion...

__________________
All it takes for evil to prevail is for good men to stand by and do nothing.

Too many people tip toe through life, never attempting or doing anything great, hoping to make it safely to death... Bob Proctor

'95 S320 LWB
'87 300SDL
'04 E500 wagon 4matic

I'm only responding to your initial remark but have quoted everything you said because some people complain if their comments are edited.

Ultimately money must have some basis for its value. Historically the piece of paper (money) was in essence a contract that stated, "it's too cumbersome for me to carry around a physical asset so this paper is a lien or a claim on that asset. This has been true for over twenty five hundred years when Croesus, the King of Lydia issued the first known currency. Initially Croesus minted coins that were 100% backed by a tangible asset. However, Croesus quickly learned that he could mint more coins then he had assets. This allowed Croesus to live beyond his means for the short term but ultimately weakened his nation.

This same pattern has recurred every time a nation abandons monetary discipline and attempts to solve short-term problems at the expense of long-term prosperity. And I cannot be the only one on this board that observes that our nation (US) has been living in that manner at least since 1970, if not earlier.

The point of my comment about pre-'64 quarters was not to suggest that we should or should not revert to a gold and/or silver standard because, frankly, I am an engineer and not an economist and I'm not knowledgeable enough about economics to know the best basis for currency valuation.

My comment was illustrating the profound debasement of our currency and that it is much less that gas has gone up then it is that our currency has gone down.

In my home when I run out of money I either stop spending or go into debt which I am obliged to repay. Governments have a third option, print paper money, knowing that it weakens the economy in the long run but allows the current leaders to avoid dealing with unpleasant choices.

Now central banks are suppose to be isolated from political considerations and only make decisions based upon the best interests of the economy. If there is a need to temporarily issue excess currency than the bank is suppose to, as quickly as possible, take the excess money out of circulation as soon as possible. But that, like many ideals, is not what actually happens.

Finally, while completing acknowledging my limited grasp of economics I have to ask why should one limit their thinking to the current paradigms offered by contemporary economists and governments.

Ultimately I want the dollar in my wallet to be based on more than the integrity of my government because frankly I do not trust the electorate or the elected leaders to make wise decisions. Humans are flawed creatures. Our fore-fathers seemed to understand this and design their institutions with this in mind much more so then we do today.

So when Hatterasguy states that currency cannot be based upon specific tangible assets because no modern economy does so he is expressing what is conventional wisdom. And it may be correct. But if that is the case then a nation's central bank must exercise great restraint and wisdom in maintaining the value of the currency. Clearly we have not done so.

PS -

If you wish to quote my comments please feel free to use only the parts of interest and not quote the entire remarks as long as you do not distort the meaning. Thanks.

I believe that you may have read some of my posts... lol

That being said, in democracy, many if not all decisions are based on psychology, and not sound economics. The reason being is that politicians cannot line their pockets at the expense of the public purse, or whatever set of words you use to describe it...
In the future, the changes will be happening more or less by the consent of the people, but the premise used to get that consent will be fabricated. It's a typical Hegelian thesis antithesis type of thing.
My belief is that they'll devalue currencies so much that the people will demand a gold backed currency or currencies worldwide... Or at least the appearance of gold backing. May the cycle begin again.......

__________________
All it takes for evil to prevail is for good men to stand by and do nothing.

Too many people tip toe through life, never attempting or doing anything great, hoping to make it safely to death... Bob Proctor

'95 S320 LWB
'87 300SDL
'04 E500 wagon 4matic

The Wall Street Hedge Fund Wankers and Mortgage Bankers are tied to.

ANYONE who's had a hand in De-Strengthening/De-Regulating ANY portion of
the U.S. Financial System should be:
1.Hung upside down and Flayed,Alive.
2.Then Drawn and Quartered.

I like AmosFella's interpretation of upcoming monetary events.

(The Question is WHEN will the Fed set the Fiat Money's value at 0)
[This will,of course, leave the PRC "Holding the Bag" (EMPTY) ]

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'84 300SD sold
124.128

Something I wrote for another forum on money:


Let me try to make it simpler for you. Let's pretend a guy is a salt merchant. All he does is mine, grind, process, and sell salt.
The last 2 years he mined and processed more salt than he needed, and he was running out of space to store the processed salt out of the rain, and people were buying a bit less. To move the excess salt, he'd have to discount the salt. And he has to move the salt, as his machinery is highly succeptable to corrosion if it's not moving all the time. He will be offering the salt to merchants for less and less silver just to keep things moving. As the market floods, the demand is less.
He must keep lowering the amount of silver a fixed volume of salt will buy to keep the salt going out the door. Soon, he will have to give the salt away to keep it moving. At some point, it could get to the point that he couldn't give the salt away. No one will take it, even if you offer to deliver it to their house for them.
To put this in perspective, salt was used as money in Roman Empire times. (that's where th saying, 'Not worth his salt', comes from) If you watched the Starz program Spartacus, they talked about selling the unfit to the salt mines. Those were the same as gold and silver mines. They were mining product to be used as money with other side uses like gold and silver had.
Now, as the salt bought less silver, that's a period of inflation. The point where his salt couldn't buy silver and he was giving it away to keep it going out the door was a period of hyperinflation. The period where he couldn't even give it away was the period of collapse.
Salt is an excellent example. (I'm going to toot my own horn here a bit) It could deflate by being consumed with food. Same as a bank can take paper out of existence, or the notes get wrecked by fire or other destructive force. (Washing machine won't do the trick. Put a few $5 notes through by accident the other day)
Most men and women don't understand what a purchase transaction actually is. Not only do you buy an item from the merchant, the merchant buys your cash from you. It is the same as a barter. Now, if the cash you hand him isn't worth as much, or the market was flooded with cash, he may ask for more cash to make an equal transaction.
My grandpa told a story about Russia in 1917. The czar had just been overthrown, and his dad went to buy a loaf of bread with a wheelbarrow full of paper money. A thief came along, dumped the cash out of the wheelbarrow, and ran off with the wheelbarrow and left the cash on the ground.

__________________
All it takes for evil to prevail is for good men to stand by and do nothing.

Too many people tip toe through life, never attempting or doing anything great, hoping to make it safely to death... Bob Proctor

'95 S320 LWB
'87 300SDL
'04 E500 wagon 4matic

You can read the whole quote any time you wish. I have no need nor wish to waste space quoting the whole quote. It's actually childish to think a reader could not understand the whole quote- if they are literate enough to follow the conversation then they are literate enough to have seen the quote in it's entirety. If you don't like it then run to the moderators and say so.
So my opinion is .... is my opinion? Thanks for that tidbit of wisdom.

That's what everyone should be able to say.

Good story.

There's a term from the high-tech world; vaporware. I don't really need to connect the dots do I?

Probably around $5/bbl worth is from the dollar dropping a bit, but the rest is just speculation. I dunno why the author didn't mention this, but the STEO table browser has month by month data on oil supply and demand going back to 1994 or something. I think one out of the last five quarters have had a large gap between supply/demand. At least the 2008 price increase was preceded by something like 8 straight quarters of demand being greater than supply.

Let's see the dollar is off 20 + % so that 'quite' a bit, 120 to 148, $ to Euro.

Coming from 90 $ oil thats 18 bucks Oil is at ??

__________________
KLK, MCSE

1990 500SL

I was always taught to respect my elders.
I don't have to respect too many people anymore.

OPEC has a target price for oil (someplace around $80-100, as I recall from the last time I heard a number). I assume the is about where it will end up in the short term when it calms down. I do expect it to continue to trend upwards over the long term as demand increases and the dollar gets weaker; and I don't expect either of those factors to change soon.

The dollar was at ~78 when oil was at ~$75/bbl, and it's at ~74 now, so most of the increase is due to speculation.

Edit- Damn cats?

Youre right. Just up to it's chin.

- Peter.

__________________
2021 Chevrolet Spark
Formerly...
2000 GMC Sonoma
1981 240D 4spd stick. 347000 miles. Deceased Feb 14 2021
2002 Kia Rio. Worst crap on four wheels
1981 240D 4spd stick. 389000 miles.
1984 123 200
1979 116 280S
1972 Cadillac Sedan DeVille
1971 108 280S

As I understand it there are two forms off speculators.

The tradition speculator looks at an activity and says, "I believe they will succeed and I am willing stake my money upon their success or they say I believe they are going to fail and I will stake my money on their failure."

The classical economists I read (when it comes to liberal arts, outside of the physical sciences, I prefer using the teachings from pre-1950) this form off speculation leads to market discipline and ultimately lower prices.

The second form of speculation, which has greatly increased with computerized trading and world-wide, instant communication looks at the short-term, quasi-random fluctuations of prices and guesses what the price will be at some time in the future. This is similar to watching the wind blow the leaves and guessing whether there will be more leaves pointing left or right at any moment.

This form of speculation tends to increase market volatility and tends to destabilize markets. Markets, traditionally, have either prohibited or greatly curtailed this form of speculation.

So when comments are made on speculators or speculation it is necessary to define what one means.

When I say speculators are good for the market I refer to the first. When the gentlemen above criticizes speculators I think he is referring to the second.

It's so hard to have a discussion if we can't understand each other.

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Furthermore I have also read the articles that state that the oil price is only marginally due to the weakness of the $$.

Obviously any comparison of prices has to have 2 dates; what the price was once and what it is now. It is very easy, particularly with prices that have fluctuations to pick any two points and use them to argue whatever one wants.

People who work with numerical data as a profession (I'm talking about engineers, folks that build bridges and design struts to hold wings onto aircraft - where if they make a mistake people die) know how to work with data to find the truth it contains and not use it as a means of deception to win whatever argument one wants.

These people will clearly observe that between 1970 and today (as an example) the profound decline of the dollar.

Regardless of all of the causes of this immediate gas price increase the larger story is the dollar's decline. It means the money one has been putting away for retirement for the past 40 years, even if well invested is worth a fraction of what one thought it would be when they started saving.

Lets see the $ is up huge and Oil is down ??

Coincidence ??

Note the dollar is up 4 handles, 400ish pips in just over 24 hours.
That is a move that mormally takes weeks.

PS made me happy, I didn't do as well as I could of/should of but I had a good day.

__________________
KLK, MCSE

1990 500SL

I was always taught to respect my elders.
I don't have to respect too many people anymore.

Yes; a stronger dollar with reduce the cost of imported goods, including oil. I assume the price of other international commodities will also drop, as will the market index funds.