Is OPEC A Toothless Tiger?

[d***@agent.com]

Is OPEC A Toothless Tiger?
by Steve Forbes, 11/29/2014 @ 1:36PM 18,960 views

OPEC MET THIS WEEK and decided not to cut the oil production quotas of
its members. Petroleum prices took a hit. But don’t be deceived.
OPEC’s impact on prices is grossly exaggerated. Speculators believed
OPEC would magically pull a rabbit out of the hat. But OPEC doesn’t
even have a hat, much less a rabbit.

OPEC controls little more than one-third of the global output of oil.
Production is surging in the U.S., to the consternation of the Obama
Administration, which hates all carbon sources of energy. Fracking has
made ultra-cheap natural gas plentiful, which is an alternative in
some uses of oil. Once we elect a new President, the process for
obtaining licenses to build terminals for exporting natural gas will
speed up, which, in turn, will spur more natural gas output. Moreover,
Obama’s foot-dragging in issuing permits for oil and gas exploration
on federal lands will also be reversed. All this will spell more
output and more downward pressure on oil prices.

Another downer OPEC is powerless to affect is the sluggish global
economy—which means less energy demand.

But the biggest factor in the pummeling of petroleum prices—as of now,
down 30% this year—is the strengthening dollar. For decades the ratio
between the price of oil and that of gold was relatively stable:
roughly 12-to-14 barrels of oil to one ounce of gold. This could vary,
but didn’t for long.

However, when the U.S. began undermining the gold standard in the late
1960s, which weakened the dollar, oil prices began moving up.
Washington torpedoed the gold-based Bretton Woods international
monetary system in 1971. The 1970s were a miserable decade of
inflation, with the price of gold soaring from $35 an ounce to over
$500 (it peaked briefly in 1980 at $870). Concurrently, the price of
oil surged from $3 a barrel to nearly $40. Experts believed a climb to
$100 or more was inevitable.

Then President Ronald Reagan and Federal Reserve Chairman Paul Volcker
decided to kill inflation—and succeeded. The price of oil plunged to
almost $10 a barrel before stabilizing in the $20-to-$25 range. From
the mid-1980s until the early part of the last decade the price of a
barrel of oil averaged a little more than $21.

Alas, in the early 2000s the Fed, with the connivance of the Treasury
Department, began devaluing the dollar in the mistaken belief that
this would help pull the U.S. economy out of recession and, at the
same time, boost exports. Gold began a massive upward surge, as did
other commodities, including oil.

LESSONS

–Unstable money corrupts prices. Prices are supposed to tell us what
consumers want and don’t want. When the price of oil went up in the
1970s, people thought this meant we were running out of the stuff.
After all, don’t surging prices indicate there’s a shortage? In normal
markets, yes; but when a country’s currency is weak, no. We saw the
same phenomenon after 2002. Worries about resource shortages,
especially oil and—until the fracking revolution—natural gas, led to,
literally, hundreds of billions of dollars being forcefully directed
by government into energy alternatives, such as windmills.

–The Federal Reserve and other central banks don’t know what they’re
doing. The Fed doesn’t want a strong dollar. One purpose of
quantitative easing (QE) was to create inflation. Too many economists,
including those at the Fed, still cling to the myth that inflation
stimulates growth. Now policymakers are aflutter over deflation. This
must be the first time in the long history of currency debasement that
governments couldn’t engineer a period of inflation, a perverse low in
government incompetence!

What this means is that the strong dollar may not last and that the
Fed will eventually blunder into a new disaster.

–OPEC’s growing impotence won’t stop its members from meeting or the
media from taking OPEC’s pronouncements with the utmost seriousness.
Wise observers will ignore the charade and instead focus on the dollar
price of gold.

[jim <""sjedgingN0Sp\"@">]

–Unstable money corrupts prices. Prices are supposed to tell us what
consumers want and don’t want. When the price of oil went up in the
1970s, people thought this meant we were running out of the stuff.

Prices did go up in the 1970's because the world
would be running out of oil at the existing rate of
growth in oil consumption.

Before 1970 the rate of consumption of oil was
an exponential growth that doubled every 10 years.
If consumption had continued to double every 10
years all the oil in the world would have been
completely consumed by now.

The increase in price of oil was a market
response to runaway growth in consumption.
The market response to high prices was a
huge reduction in the rate of growth of
consumption. By the late 70's the growth in
consumption of oil turned negative and by
1985 world oil consumption was back down to
where it was in the early 70's when prices
started to go up.

After consumption came down prices leveled off and
for the next 15 years prices and consumption grew at
a snails pace. Then from 2001-2004 consumption shot
up again and the market response was another round
of price raising which ended in a collapse of
both consumption and prices in 2008.

There is zero evidence that the price of oil has
anything to do with gold or fiat money. That is
fictional story that snake oil salesman like to
tell.
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

–The Federal Reserve and other central banks don’t know what they’re
doing. The Fed doesn’t want a strong dollar.

Let's hope that is true. A weak dollar is good
for American workers. A weak dollar means
the goods and services from foreign sources
cost more and that means more of those goods and
services will be produced inside the US borders.

The only people who benefit from a strong dollar
are the crony capitalists. If you want American
workers to have jobs and good pay then you too
would support a weaker dollar.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.stlouisfed.org/publications/itv/articles/?id=1199
Inside the Vault | Spring 2005
What Is Driving Oil Prices? Real-world Demand and Supply

If your wallet felt a lot lighter every time you filled up your car
with gasoline in 2004, it's not surprising. During the second half of
2004, the futures and spot prices of oil reached record levels in
today's dollars, not adjusted for the effects of inflation. To what
extent are higher prices the result of supply and demand factors? How
much has speculation affected oil prices?

As news reports often say, oil prices are "notoriously volatile." As
figure one indicates, spot prices (indicated by the solid line) ranged
from a low of about $10 per barrel of oil in the 1990s to more than
$50 per barrel of oil in 2004. Just as dramatic, however, is the
change in futures prices. In November 2003, the futures market
expected prices to be approximately $27 by December 2004, but in
November 2004, the futures market predicted oil prices of almost $48
by December 2004 and remaining around $40 through 2008. The ongoing
conflict in Iraq undoubtedly was a factor in the change in the futures
market between November 2003 and November 2004. Nonetheless, the
reaction of the futures market suggests that the recent spot price
increase is not viewed as a purely temporary shock.

Demand

Many factors affect the price of oil in the world market. Recently,
the rapid increase in world oil demand has been a major factor. In
August 2004, the International Energy Agency reported that world oil
demand was increasing faster than at any other point in the past 16
years. The agency attributes the increase in demand to rapid economic
expansion in several countries, particularly China.

In 2003, China became the second-largest consumer of petroleum
products behind the United States, which consumed approximately 20
million barrels per day (bbl/d). According to the U.S. Energy
Information Administration (EIA), China accounts for about 40 percent
of world oil-demand growth over the past four years and consumes
approximately 5.56 million bbl/d. The EIA forecasts continued growth
in oil demand by China, expecting China's demand for oil to more than
double in the next 20 years.

India also has fueled increased oil demand. The EIA predicts India's
future consumption will likely increase 75 percent in the next 15
years from its 1995 level of 1.6 million bbl/d. As other developing
countries continue to expand, they are likely to follow the same
pattern of sharply rising demand for energy.

Supply

Meanwhile, several oil-producing countries have undergone turmoil that
has affected their abilities to produce at full capacity. Two such
countries are Iraq and Venezuela.

Since the start of the second Iraq war, Iraq's oil production has been
uncertain. Not only have violence and sabotage of facilities
contributed to production problems, but also sub-standard production
methods during Saddam Hussein's regime have damaged some reserves so
severely that fully recovering pre-war production levels is
questionable.

Venezuela has been plagued by political problems exacerbated by a
nationwide strike from December 2002 through early 2003. The strike
significantly reduced oil production and, although pre-strike
production levels are returning, political problems continue to
threaten the stability of this country's oil production.

Speculation

"Speculation" refers to engaging in financial transactions that
involve a high degree of risk. Speculative activities in the oil
industry might include holding oil inventories for future sales or
increased trading in the oil futures market. Many people, including
Acting OPEC Secretary General Maizar Rahman and Federal Reserve
Chairman Alan Greenspan, believe that speculation has driven up the
cost of oil by $10 to $15. Greenspan stated during September 2004
House Budget Committee testimony that one possible source of higher
prices was speculators, who influenced prices by taking larger
positions in crude oil futures. This theory suggests that more active
trading was taking place before and during the period when oil prices
were reaching record nominal levels. A cursory examination of
petroleum futures volume data from the Wall Street Journal
demonstrates that the volume of trades was up during this time period,
which indicates that enhanced speculation did contribute to increasing
oil prices.

Other Factors

Because oil prices are so volatile, pinpointing only one or two
factors that cause the price to change doesn't give a complete
picture. Besides market supply and demand factors, other variables
also influence the price of oil. For example, the series of hurricanes
experienced in Florida and other Southern states in 2004 disrupted the
flow of oil into the United States and damaged oil facilities. Another
factor is the sporadic shutdown of oil refineries for maintenance,
regulatory changes and other reasons. Although all of these factors
can affect oil prices in the short run, significant trends in oil
supply and demand behavior can have long-run implications for the
price of oil.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.stlouisfed.org/publications/itv/articles/?id=1199
Inside the Vault | Spring 2005
What Is Driving Oil Prices? Real-world Demand and Supply

Once again you demonstrate that you can't think
for yourself. You copy and paste stuff that
contradicts your previous copy and paste.

The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.

All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.stlouisfed.org/publications/itv/articles/?id=1199
Inside the Vault | Spring 2005
What Is Driving Oil Prices? Real-world Demand and Supply

The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

http://www.quora.com/How-are-crude-oil-prices-evaluated

How are crude oil prices evaluated?
by Pascal Briod, 27 Jan, 2013.

There have been successive price regimes since
the beginnings of the 20th Century:

Between 1930 and 1970, it was the so called “seven sisters pricing
regime”, where the prices where controlled and posted by oil
companies.
Then, until 1985, the prices were controlled by the producing
countries, a period known as the Organization of Petroleum Exporting
Countries (OPEC) pricing regime.
After a short period of netback pricing regime (crude oil price
was tied to the price of refined products), the reference pricing
regime was adopted, this is the system that we still use today.

In this system, only a very small proportion of crude oil is freely
traded and serves as a benchmark, while the price of the crude oil
which is not freely traded is tied by some formula to these
benchmarks, hence the “reference” pricing regime.

Depending on the quality of each type of crude oil, its price would be
higher or lower in comparision with the benchmark. Those formulas are
adapted from time to time, but are generally stable.

There are two mains benchmarks, the WTI and the Brent, which are
traded on several layers, building a quite complicated market. For the
Brent market for example, there is a spot market, a physical forward
market and a futures market.

The spot market is a non-standardized market (different quantities
of oil are traded), the transactions are bilateral and “over the
counter”.
The forward market (also called the 21-day Brent), is a
standardized market (a standard parcel is 600,000 barrels), where the
seller will make the oil available on an unspecified day of the
relevant month (the loading date must be announced 21 days in advance
to the buyer).
The futures market is also a standardized market (contract on
1,000 barrels), but it is not a “physical market”, which means that
the contracts are based on cash settlement and not on physical
delivery, those barrels are thus named “paper barrels”. You can buy
“call options” that give you the right to buy the underlying futures
contract of “put options” that give you the right to sell the
contracts. The idea here is that the producers and the consumers can
manage risks. A producer can sell futures or buy put options to ensure
a certain level of prices; a large consumer can buy futures or call
options to limit the risks of very high prices. Buying and selling
Brent futures and options make sense only because the other crude
prices follow the evolution of Brent.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

[Rudy Canoza]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

You don't think for yourself, "jim". You're a tool.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

You are admitting that you have no clue.

The info on world oil consumption is widely available.

Here is a graph showing per capita consumption.
Loading Image...
Notice how before 1970 consumption was growing much
faster that population growth.

Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.

The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.

If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

Here is a graph showing per capita consumption.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png
Notice how before 1970 consumption was growing much
faster that population growth.
Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.
The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.
If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

Why don't you send a letter to Forbes magazine
and see if they publish your rebuttal?

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

Here is a graph showing per capita consumption.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png
Notice how before 1970 consumption was growing much
faster that population growth.
Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.
The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.
If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

Why don't you send a letter to Forbes magazine
and see if they publish your rebuttal?

HA HA HA Is what Forbes tell you to think,
all that you know?

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

Here is a graph showing per capita consumption.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png
Notice how before 1970 consumption was growing much
faster that population growth.
Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.
The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.
If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

Why don't you send a letter to Forbes magazine
and see if they publish your rebuttal?

HA HA HA Is what Forbes tell you to think,
all that you know?

If you can't get published, your argument is trash.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

Here is a graph showing per capita consumption.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png
Notice how before 1970 consumption was growing much
faster that population growth.
Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.
The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.
If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

Why don't you send a letter to Forbes magazine
and see if they publish your rebuttal?

HA HA HA Is what Forbes tell you to think,
all that you know?

If you can't get published, your argument is trash.

In other words, you believe the truth belongs to
those who have the power and wealth to make it so.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

Here is a graph showing per capita consumption.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png
Notice how before 1970 consumption was growing much
faster that population growth.
Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.
The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.
If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

Why don't you send a letter to Forbes magazine
and see if they publish your rebuttal?

HA HA HA Is what Forbes tell you to think,
all that you know?

Send your ideas to Huffington, Salon, Drudge,
send it to zerohedge. Send out some tweets,
maybe it'll go viral!

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

You are admitting that you have no clue.
The info on world oil consumption is widely available.
Here is a graph showing per capita consumption.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png
Notice how before 1970 consumption was growing much
faster that population growth.

Where's the production curve?

Post by jim <""sjedgingN0Sp\"@">
Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.
The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.
If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Where did you get your info from?
Cites?

You are admitting that you have no clue.
The info on world oil consumption is widely available.
Here is a graph showing per capita consumption.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png
Notice how before 1970 consumption was growing much
faster that population growth.

Where's the production curve?

Are you a baby that needs to be spoon fed?

It is more than obvious from this one graph that the
only thing that would prevent the approaching
disaster of runaway growth in a free
market economy was a healthy dose of price inflation.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png

There is no way consumption could continue to
grow at the rate it was growing prior to 1970.

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
Notice the exponential growth up to where prices
started to increase. Free market economics and
the laws of supply and demand guarantees that
the world will never run out of oil. If the
price of oil is high enough somebody will find
and produce more of it and as the price escalates
upward each person will use less and less of it.
There will always be more available at a higher price.
The price of oil has nothing to do with
monetary policy or the gold standard. The
price of oil is determined by the supply and
demand for a finite commodity.
If the price had not increased rapidly in the
1970's there would be no oil left today, but free
market economics guarantees that will never happen.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Sustained oil below $60 will create spike in defaults: Pro
Michelle Fox, @MFoxCNBC
8 Hours Ago

If oil falls below $60 for a prolonged period of time, it will create
the first substantial spike in the U.S. corporate default rate since
2009, Newedge USA's Larry McDonald told CNBC on Wednesday.

"The unthinkable can happen," McDonald, the firm's senior director &
head of U.S. strategy, said in an interview with "Street Signs."

"The Fed, because of their zero rate interest policy, has really
pumped up a tremendous amount of leverage into that space."

In fact, Newedge's research found that debt in the energy and
commodity space is $3.4 trillion globally, up from $900 billion 10
years ago.

While the problem isn't as large as the subprime mortgage crisis, it
is still the biggest risk to the market for 2015, McDonald said.

It has also left the Federal Reserve in a quandary, McDonald added.

"If the U.S. economy is as strong as people thinks, how can they
possibly raise rates with the global economy as weak as it is? Because
what is that going to do? That's going to strengthen the dollar,
that's going to push oil lower," he said.

"I know the Fed is concerned about this leverage in the oil space."

U.S. crude futures settled 50 cents higher Wednesday at $67.38 per
barrel, while Brent was last hovering under $70.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Another copy and paste that show
that you can't think for yourself.

Sustained oil below $60 will create spike in defaults: Pro
8 Hours Ago
If oil falls below $60 for a prolonged period of time,

[Snipped another copy and paste that shows you
can't think for yourself.]

The people financing oil industry expansion
have been funneling money out of the rest of
the economy for several years. Now the pendulum
is swinging the other way and the rest of the economy
will be funneling money out of their pockets.

Blaming decisions made by the private sector
on the Fed is just an attempt by
crony capitalists to get govt to once
again bail then out when those decisions
go sour.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by d***@agent.com
http://www.quora.com/How-are-crude-oil-prices-evaluated
How are crude oil prices evaluated?

Sustained oil below $60 will create spike in defaults: Pro
8 Hours Ago
If oil falls below $60 for a prolonged period of time,
[...]

The people financing oil industry expansion
have been funneling money out of the rest of
the economy for several years. Now the pendulum
is swinging the other way and the rest of the economy
will be funneling money out of their pockets.

We had an oil boom in the 70s, too, & housing, too,
because of inflation, you couldn't trust the value of
a dollar.

Post by jim <""sjedgingN0Sp\"@">
Blaming decisions made by the private sector
on the Fed is just an attempt by crony capitalists
to get govt to once again bail then out when
those decisions go sour.

The govt puts obstacles on capitalism, which become
politicized & taken advantage of by the well-connected
cronies. That's where the big bonuses & windfalls came
from on Wall Street in the housing bubble. Reduce the
corrupting govt roadblocks to get real growth from more competition!

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com
We had an oil boom in the 70s, too, & housing, too,
because of inflation, you couldn't trust the value of
a dollar.

It sure doesn't look like an oil boom.
The runaway growth in consumption of oil
clearly came to an end as the amount of oil each
person consumed stopped growing and then began shrinking.
http://gailtheactuary.files.wordpress.com/2012/03/per-capita-consumption-of-various-fuels_line.png

New houses were built to accommodate the millions
of baby boomers that were becoming adults and leaving home

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.stlouisfed.org/publications/itv/articles/?id=1199
Inside the Vault | Spring 2005
What Is Driving Oil Prices? Real-world Demand and Supply

The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

http://kr.mnsu.edu/~cu7296vs/supdem.htm

Supply and Demand: The Market Mechanism

Society needs to make choices about, what should be produced, how
should those goods and services be produced, and whom is allowed to
consumes those goods and services. For conventional economics the
market by way of the operation of supply and demand answer these
questions. Under conditions of competition, where no one has the power
to influence or set price, the market (everyone, producers and
consumers together) determines the price of a product, and the price
determines what is produced, and who can afford to consume it.
[...]
Alternative Viewpoints

There are alternative viewpoints, however, that question just how
efficient and natural the market mechanism is. They argue that actual
markets in any society is embedded within a set of institutional
rules, laws, and customs that determine how well the market works.
Only by looking at actual markets and their institutional rules can
efficiency be determined. They see a market as a game where the
underlying rules as well as the approaches of its participants
determine the outcome. The variables that matter are institutions and
not only prices. Some markets work better, than others, even within
the same society, but certainly they differ between countries with
different rules and values.

This disagreement among economists is a matter of degree. Even Adam
Smith, the father of economic saw a role for government in the
economy. Lassize faire (government stay out) was never seen as
absolute. The Government was needed to provide some elements of the
following; law and order, enforcement of private contracts and
property rights, public goods such as roads and other public
infrastructure, and defense from external military threats. Most
economists believe these roles continue. Most economists also believe
that the market is a useful tool and has a place in the economy. The
real difference is the degree of faith in the efficiency of the
market, and whether society should take direction from the market, or
society should control and direct the market.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

Supply and Demand: The Market Mechanism

You just keep posting more
irrelevant copy and paste articles.

What we know for sure is that you lied when
you tried to claim prices went up because of the
monetary system. Prices have nothing to
do with whether money is backed by gold.

Prices went up because the economic growth is
tied to energy usage and energy consumption
could not possibly continue to grow at the rate
it was growing before 1970.

The consumption of petroleum before 1970
was increasing at
a rate that doubled every 10 years. It is
a mathematical certainty that growth in
consumption could not continue at that rate forever.
Prices had to go up to force the growth in consumption
down to a rate that was physically possible.

[Rudy Canoza]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

Supply and Demand: The Market Mechanism

You just keep posting more
irrelevant copy and paste articles.

No, he doesn't. Price *is* set by supply and demand forces.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

Supply and Demand: The Market Mechanism

What we know for sure is that you lied when
you tried to claim prices went up because of the
monetary system. Prices have nothing to
do with whether money is backed by gold.
Prices went up because the economic growth is
tied to energy usage and energy consumption
could not possibly continue to grow at the rate
it was growing before 1970.
The consumption of petroleum before 1970
was increasing at
a rate that doubled every 10 years. It is
a mathematical certainty that growth in
consumption could not continue at that rate forever.
Prices had to go up to force the growth in consumption
down to a rate that was physically possible.

Forbes Magazine was founded in 1917.
What were your ancestors doing at that time?

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.stlouisfed.org/publications/itv/articles/?id=1199
Inside the Vault | Spring 2005
What Is Driving Oil Prices? Real-world Demand and Supply

The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

Nixon likely came to regret the destructive forces that his policies
had unleashed. Between '73 & '74, the Dow Jones Industrial Average
lost 45% of its value. The Nixon Shock was responsible for the
disastrous economic malaise of the 70s, characterized by stagflation,
a toxic combination of inflation & economic stagnation.
Nixon's ending of the Bretton Woods system also helped give the U.S.
& other countries the energy crisis. After the '73 Yom Kippur War,
Arab oil producers raised prices by 70%, followed by the Arab oil
embargo. The rise in oil prices caused some people to insist that
the world was running out of oil. The cause, however, was the weak
dollar. Nixon's price controls on gasoline, meanwhile, resulted in
lines & rationing.

[BeamMeUpScotty]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.stlouisfed.org/publications/itv/articles/?id=1199
Inside the Vault | Spring 2005
What Is Driving Oil Prices? Real-world Demand and Supply

The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

Nixon likely came to regret the destructive forces that his policies
had unleashed. Between '73 & '74, the Dow Jones Industrial Average
lost 45% of its value. The Nixon Shock was responsible for the
disastrous economic malaise of the 70s, characterized by stagflation,
a toxic combination of inflation & economic stagnation.

Carter was unable to end it by redistributing wealth and probably made
anything that was given to him many times worse.

Obama has fallen into that same fate.


Obama made the government's money bubble so many times worse and has
fixed nothing.

Democrats are making it all worse and have been since they took power in
the house and Senate(congress) in 2007.

It's been down hill ever since.

[d***@agent.com]

Post by BeamMeUpScotty

Post by d***@agent.com
Nixon likely came to regret the destructive forces that his policies
had unleashed. Between '73 & '74, the Dow Jones Industrial Average
lost 45% of its value. The Nixon Shock was responsible for the
disastrous economic malaise of the 70s, characterized by stagflation,
a toxic combination of inflation & economic stagnation.

Carter was unable to end it by redistributing wealth and probably made
anything that was given to him many times worse.
Obama has fallen into that same fate.
Obama made the govt's money bubble so many times worse and has
fixed nothing.
Democrats are making it all worse & have been since they took power in
the house and Senate(congress) in 2007.
It's been down hill ever since.

Just because you're good at getting elected doesn't mean you're
good at solving problems. For one thing, you have to be HONEST
to solve problems!

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.stlouisfed.org/publications/itv/articles/?id=1199
Inside the Vault | Spring 2005
What Is Driving Oil Prices? Real-world Demand and Supply

The price of oil and supply and demand are all
connected in a feedback loop. When price is high
the demand for oil starts dropping and the supply
starts to increase. When the supply goes higher
and demand lower then the price starts to fall. When
price drops enough it causes the demand and supply
to change course and move in the opposite direction.
All such feedback mechanism have a tendency to
oscillate. That is why prices bounce up and down.

Nixon likely came to regret the destructive forces that his policies
had unleashed. Between '73 & '74, the Dow Jones Industrial Average
lost 45% of its value. The Nixon Shock was responsible for the
disastrous economic malaise of the 70s, characterized by stagflation,
a toxic combination of inflation & economic stagnation.

It looked more like the withdrawal symptoms of
an economy heavily addicted to petroleum that could
no longer get a bigger and bigger fix.

And yes there was a lot of denial and
pretending that something else was happening.
The denial and pretending still goes on. take
a look in the mirror for an example.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878

‘Perhaps 60% of today’s oil price is pure speculation’
By F. William Engdahl, May 02, 2008

The price of crude oil today is not made according to any traditional
relation of supply to demand. It’s controlled by an elaborate
financial market system as well as by the four major Anglo-American
oil companies. As much as 60% of today’s crude oil price is pure
speculation driven by large trader banks and hedge funds. It has
nothing to do with the convenient myths of Peak Oil. It has to do with
control of oil and its price. How?

First, the crucial role of the international oil exchanges in London
and New York is crucial to the game. Nymex in New York and the ICE
Futures in London today control global benchmark oil prices which in
turn set most of the freely traded oil cargo. They do so via oil
futures contracts on two grades of crude oil—West Texas Intermediate
and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME),
trading Dubai crude, is more or less a daughter of Nymex, with Nymex
President, James Newsome, sitting on the board of DME and most key
personnel British or American citizens.

Brent is used in spot and long-term contracts to value as much of
crude oil produced in global oil markets each day. The Brent price is
published by a private oil industry publication, Platt’s. Major oil
producers including Russia and Nigeria use Brent as a benchmark for
pricing the crude they produce. Brent is a key crude blend for the
European market and, to some extent, for Asia. [...]

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com
http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878
‘Perhaps 60% of today’s oil price is pure speculation’

You copy and paste more crap that you don't comprehend.

Speculators can influence prices only for a while.
If speculators drive prices up, then
demand falls further than it naturally would go and
supply increases more than it would otherwise.
Eventually the falling demand and increased supply
force prices down lower than they naturally would go
and the speculators lose their shirts.

What is certain is that the price changes have
nothing to do with whether the gold bugs are
successful in convincing voters to get governments
to
subsidize their favorite metal.

[Rudy Canoza]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878
‘Perhaps 60% of today’s oil price is pure speculation’

You copy and paste more crap that you don't comprehend.
Speculators can influence prices only for a while.
If speculators drive prices up, then
demand falls further than it naturally would go and
supply increases more than it would otherwise.
Eventually the falling demand and increased supply
force prices down lower than they naturally would go
and the speculators lose their shirts.

You copy and paste a lot of crap that you don't understand.

The action of speculators dampens price swings. Speculation reduces
price volatility.

[nickname unavailable]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878
'Perhaps 60% of today's oil price is pure speculation'

You copy and paste more crap that you don't comprehend.
Speculators can influence prices only for a while.
If speculators drive prices up, then
demand falls further than it naturally would go and
supply increases more than it would otherwise.
Eventually the falling demand and increased supply
force prices down lower than they naturally would go
and the speculators lose their shirts.

and that sure looks like what is happening. the manipulation has created a glut. and the glut is still building, prices may fall even further.

Post by jim <""sjedgingN0Sp\"@">
What is certain is that the price changes have
nothing to do with whether the gold bugs are
successful in convincing voters to get governments
to
subsidize their favorite metal.

[jim <""sjedgingN0Sp\"@">]

Post by nickname unavailable

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878
'Perhaps 60% of today's oil price is pure speculation'

You copy and paste more crap that you don't comprehend.
Speculators can influence prices only for a while.
If speculators drive prices up, then
demand falls further than it naturally would go and
supply increases more than it would otherwise.
Eventually the falling demand and increased supply
force prices down lower than they naturally would go
and the speculators lose their shirts.

and that sure looks like what is happening. the manipulation has
created a glut. and the glut is still building, prices may fall even further.

It has looked like that is what is happening
for several years.
But
There is no oil glut. Oil will quickly run out if
price inflation were not there to rein in
consumption...

The glut the world really has is a savings glut.
Savers are hoarding money in record numbers.
Savers financed the current temporary oil glut and
savers will be the ones who suffer the losses. Every
mal-investment by savers has the effect of driving
down the general rate of return on savings.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by nickname unavailable

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878
'Perhaps 60% of today's oil price is pure speculation'

Speculators can influence prices only for a while.
If speculators drive prices up, then
demand falls further than it naturally would go and
supply increases more than it would otherwise.
Eventually the falling demand and increased supply
force prices down lower than they naturally would go
and the speculators lose their shirts.

and that sure looks like what is happening. the manipulation has
created a glut. and the glut is still building, prices may fall even further.

It has looked like that is what is happening
for several years.
But
There is no oil glut. Oil will quickly run out if
price inflation were not there to rein in
consumption...
The glut the world really has is a savings glut.
Savers are hoarding money in record numbers.
Savers financed the current temporary oil glut and
savers will be the ones who suffer the losses. Every
mal-investment by savers has the effect of driving
down the general rate of return on savings.

This 40-plus year experiment in debasing the value of
money has distorted & corrupted markets everywhere.
It ALLOWS crony capitalism and the politicizing of
monetary policy. A return to the Gold Standard would
make the Fed no more important than the Bureau of
Weights & Measures in the Commerce Dept. Just
maintain the gold price, and deal with the occasional
panics--that's it. Investors go into hard assets or
sit on the sidelines when they're uncertain about
the value of the return they'll get on more productive
assets, because they have no idea what the Fed
will do in the future. The Fed operates on whim,
not on rules.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by nickname unavailable

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878
'Perhaps 60% of today's oil price is pure speculation'

Speculators can influence prices only for a while.
If speculators drive prices up, then
demand falls further than it naturally would go and
supply increases more than it would otherwise.
Eventually the falling demand and increased supply
force prices down lower than they naturally would go
and the speculators lose their shirts.

and that sure looks like what is happening. the manipulation has
created a glut. and the glut is still building, prices may fall even further.

It has looked like that is what is happening
for several years.
But
There is no oil glut. Oil will quickly run out if
price inflation were not there to rein in
consumption...
The glut the world really has is a savings glut.
Savers are hoarding money in record numbers.
Savers financed the current temporary oil glut and
savers will be the ones who suffer the losses. Every
mal-investment by savers has the effect of driving
down the general rate of return on savings.

This 40-plus year experiment in debasing the value of
money has distorted & corrupted markets everywhere.

There is no 40 year experiment in debasing
money. That is simply a fiction that you expect
others to accept even though you have not provided
a shred of evidence to back it up.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
This 40-plus year experiment in debasing the value of
money has distorted & corrupted markets everywhere.

There is no 40 year experiment in debasing
money. That is simply a fiction that you expect
others to accept even though you have not provided
a shred of evidence to back it up.

http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100.00&year1=1971&year2=2014

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
This 40-plus year experiment in debasing the value of
money has distorted & corrupted markets everywhere.

There is no 40 year experiment in debasing
money. That is simply a fiction that you expect
others to accept even though you have not provided
a shred of evidence to back it up.

http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100.00&year1=1971&year2=2014

Everyone is well aware that inflation in prices
exist.

Your fictional story blames inflation on going
off the gold standard. That story is bogus and
not supported by the facts.

The evidence is that most of the inflation was a
direct result
of the fact that the US economy was addicted to
consuming an ever increasing amount of oil.
When that exponential growth in consumption
could no longer be sustained by a similar growth in
production, inflation was and still is
the only free market response available.

You choose to simply ignore the facts and make
up a fictional story instead.

[nickname unavailable]

Post by jim <""sjedgingN0Sp\"@">

Post by nickname unavailable

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
http://www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878
'Perhaps 60% of today's oil price is pure speculation'

You copy and paste more crap that you don't comprehend.
Speculators can influence prices only for a while.
If speculators drive prices up, then
demand falls further than it naturally would go and
supply increases more than it would otherwise.
Eventually the falling demand and increased supply
force prices down lower than they naturally would go
and the speculators lose their shirts.

and that sure looks like what is happening. the manipulation has
created a glut. and the glut is still building, prices may fall even further.

It has looked like that is what is happening
for several years.
But
There is no oil glut. Oil will quickly run out if
price inflation were not there to rein in
consumption...

but there is a glut, it was brought on by price manipulation of commodities. the price was manipulated up, which allowed many unprofitable at this moment oil plays to come to market, that would not have been in play if the price was lower.
those marginal plays, or plays that require a much higher price, would have come on naturally, as the older cheaper ones declined, and the price increased naturally because of that.
the glut right now from what i read, is around 100 million barrels per day, over and above current demand.
cheap prices will eventually dry up the glut, because many oil plays that never should have been in production, will simply lose so much money, they will be closed down.
then your observation will hold true. unless of course, the manipulation is allowed to resume.
keynes said it best, a well regulated economy works the best. a deregulated economy is boom and bust, gluts and shortages.

Post by jim <""sjedgingN0Sp\"@">
The glut the world really has is a savings glut.

that is true.

Post by jim <""sjedgingN0Sp\"@">
Savers are hoarding money in record numbers.

that is true.

Post by jim <""sjedgingN0Sp\"@">
Savers financed the current temporary oil glut and
savers will be the ones who suffer the losses.

that is true.

Every

Post by jim <""sjedgingN0Sp\"@">
mal-investment by savers has the effect of driving
down the general rate of return on savings.

that is true. the new deal rectified many of those problems. neo-liberalism has brought them back. they really no nothing about capitalism.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

http://www.mit.edu/~jparsons/publications/Reprint_228_WC.pdf

Black Gold and Fool’s Gold:
Speculation in the Oil Futures Market, by John E. Parsons

On its face, nothing looks more like a classic bubble than the
acceleratinginflation of the oil price between '03 & mid-'08, followed
by a sudden collapse in late '08. Starting from $30/bbl, the price
climbed fitfully but persistently to $100/bbl at the end of '07 & then
shot up above $140 by July '08, only to collapse below $40 by the end
of '08. Clearly the price spiked dramatically, but was it a bubble?

A large number of people have pointed their fingers at the growing
flow of money into financial instruments tied to the oil price. These
flows, they argue, pushed the oil price up & away from its fundamental
level. The bubble burst when the general financial market collapse put
an end to this dynamic. Some who make this argument speak with blanket
disapproval of “speculation” & “speculators” because they are not part
of the “real” oil business. Some go further still & suggest that
financiers specifically “manipulated” the oil market. But the theory
that the oil price spike was a speculative bubble driven by financial
flows requires neither disapproval of purely financial investments in
oil nor a judgment about motives. The thing about asset bubbles is
that they arise naturally, so to speak, in any economy sophisticated
enough to develop financial assets.

Among economists there is a prevailing skepticism toward the view that
the oil price spike was a bubble. They point to the fact that the
underlying fundamentals of supply & demand changed significantly in
this period. Economic growth was unexpectedly rapid & persistent in
several developing countries, like China & India, which increased the
demand for oil. Simultaneously, the supply of oil from some key
sources fell, despite the rising price, & new sources were slow to
appear. The only way to equilibrate this increasing demand & shortfall
in supply was with a sharply rising price.

The argument that demand was the fundamental factor driving the price
of oil up so sharply is bolstered by the fact that so many other
commodity prices were rising dramatically at the same time. Many of
these commodities are not traded on futures exchanges & are not assets
that can be the subject of a bubble. These include various types of
iron & steel & fabricated products, as well as cement. The price of
things like engineering services increased dramatically as well.

Rising global demand was clearly driving many prices sharply upward, &
this was probably a major factor for the price of oil. The only
question is whether changes in demand & supply curves for oil account
for all of the movement in the price. Since there is no widely
accepted measure of the global demand & supply curves for oil, it is
difficult for economists to clearly demonstratethat the spike in the
oil price is entirely determined by fundamentals.

A related source of skepticism among economists is the question of the
missing stockpiles of oil. This is the dog that did not bark in the
mystery of the oil price spike. If the price of oil were to be driven
above its fundamental level at which supply & demand were matched,
then consumers would cut back on use & producers would produce more.
The quantity supplied would therefore exceed the quantity demanded, &
the difference would have to go into a stockpile that someone (namely,
the financial speculators) would be holding in hopes of a higher price
in the future. Although the actual facts of supply & demand may be
difficult to pin down, barrels of oil in storage are easy to count. No
such stockpiles arose throughout the 2003–08 period, ergo financial
speculation was not the cause of the oil price spike. It must have
been supply and demand.

The economist’s skepticism is generally a healthy one, but in this
case, it is too dismissive. It overlooks how paper oil markets have
been transformed. [...]

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

–The Fed & other central banks don’t know what they’re
doing. The Fed doesn’t want a strong dollar.

Let's hope that is true. A weak dollar is good
for American workers. A weak dollar means
the goods and services from foreign sources
cost more and that means more of those goods and
services will be produced inside the US borders.
The only people who benefit from a strong dollar
are the crony capitalists. If you want American
workers to have jobs and good pay then you too
would support a weaker dollar.

You can't build a foundation for success on special interest;
it's gotta be built on GENERAL interest. When money has
a stable value you always get better outcomes for everyone.
Less inflation, less uncertainty, less opportunity for
corruption would mean a more peaceful world everywhere.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

–The Fed & other central banks don’t know what they’re
doing. The Fed doesn’t want a strong dollar.

Let's hope that is true. A weak dollar is good
for American workers. A weak dollar means
the goods and services from foreign sources
cost more and that means more of those goods and
services will be produced inside the US borders.
The only people who benefit from a strong dollar
are the crony capitalists. If you want American
workers to have jobs and good pay then you too
would support a weaker dollar.

You can't build a foundation for success on special interest;
it's gotta be built on GENERAL interest. When money has
a stable value you always get better outcomes for everyone.

Gold is a special interest and you are the one advocating
for that special interest. Money under the current monetary
system does have a stable value. It is depleting resources
that have had unstable values.

Before 1970 the consumption of petroleum was
doubling every 10 years. If it were not for inflation
putting a stop to that unsustainable runaway
growth in consumption the oil would by now
have been consumed and there would be no oil left.

Post by d***@agent.com
Less inflation, less uncertainty, less opportunity for
corruption would mean a more peaceful world everywhere.

You are spouting rubbish. Inflation has nothing
to do with the monetary system or corruption.
Inflation in the last 40 years is the direct
result of a system that became heavily dependent
on consuming oil, and then in 1970 the point was reached
where demand outstripped supply. Inflation is the
only possible outcome. The only other alternative is
price controls and an end to free market economies.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
You can't build a foundation for success on special interest;
it's gotta be built on GENERAL interest. When money has
a stable value you always get better outcomes for everyone.

Gold is a special interest and you are the one advocating
for that special interest. Money under the current monetary
system does have a stable value. It is depleting resources
that have had unstable values.

http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100.00&year1=1971&year2=2014

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
Gold is a special interest and you are the one advocating

Post by jim <""sjedgingN0Sp\"@">
for that special interest. Money under the current monetary
system does have a stable value. It is depleting resources
that have had unstable values.

http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=100.00&year1=1971&year2=2014

There is no evidence that gold based money ever had
or ever will have any effect on inflation. The
gold bugs are just crony capitalists who want
the govt to subsidize their investments.

The inflation in the US economy since 1971 is mostly
the result of 2 things.
First, the dependence on ever expanding oil
consumption which could no longer be sustained
by ever expanding production.
Second, the huge increase in the proportion of
adults who joined the workforce. The swelling
in the size of the workforce was due to baby boomers
and women entering the workforce.

Today the trends are reversing. The consumption of
oil is falling and the baby boomers are starting to leave
the workforce and workforce participation is dropping.
You can expect to see inflation to shrink as those factors
that were driving inflation shrink.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">
There is no evidence that gold based money ever had
or ever will have any effect on inflation. The
gold bugs are just crony capitalists who want
the govt to subsidize their investments.

Yellen, Bernanke, & other Keynesians have forgotten the global
economic expansion that took place from the 1870s until 1914, during
the era of the worldwide gold standard. In a unique interlude of
monetary harmony, European nations, Japan, & the U.S. linked their
currencies to gold.
The move toward the worldwide gold standard era began in the late
1600s in Britain with the Great Recoinage debate of 1696. Britain's
currency had been debased by wear & tear, as well as by the age-old
practice of coin clipping favored by govts as well as counterfeiters.
They'd slice precious metal off the edges of coins, & the shavings
could then be melted down into bars or currency.
Almost 50% of the precious metal was missing from British coins by
the end of the 17th C. It was decided that, to avert a monetary
crisis, Britain would melt down & remint the damaged money.
Traditionally such an occasion was an opportunity for a devaluation.
British treasury secretary Wm. Lowndes wanted the coins reissued at
a far lower value. John Locke argued that such a devaluation was a
violation of natural law, equivalent to an arbitrary seizure of
property. Isaac Newton also opposed debasement, considering it an
affront to science, a moral transgression no different from counter-
feiting.
Parliament's eventual decision not to devalue was a victory for
advocates of sound money. Newton, as Master of the Mint, formally
fixed the pound to gold in 1717 at the once-famous rate of 3 pounds,
17 shillings, & 10.5 pence to an ounce (L3.89), a ratio that stood
unchanged until 1931.
When it tied the pound to gold, Britain was a 2nd-tier nation. Soon
all of that would change.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">
There is zero evidence that the price of oil has
anything to do with gold or fiat money. That is
fictional story that snake oil salesman like to
tell.
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

The use of a gold basis is actually about stability of value, not
“stability of prices.” This might seem like a subtle or even
nonsensical point, but let me make a very simple example: the
“purchasing power” of the dollar – for example, a $20 bill – changes
enormously if you go from Manhattan to Queens, or to Albany, or to
Quito, Ecuador. However, the value of the dollar didn’t change at all.
Prices are just different, depending on where you are.

Or, depending on the time. For example, the Japanese yen was worth
12,600/oz. of gold from 1950 to 1970. However, the “purchasing power”
of the yen changed dramatically during that time, because Japan
enjoyed an incredible economic expansion. The price of a rental
apartment, or a restaurant, or a taxi ride rose enormously from 1950
to 1970, but the value of the yen was unchanged. (The official
Japanese CPI rose 80% between January 1955 and January 1970.)

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
There is zero evidence that the price of oil has
anything to do with gold or fiat money. That is
fictional story that snake oil salesman like to
tell.
The price of oil is purely driven
by supply and demand. Anyone who says otherwise
is simply disregarding the factual evidence.

The use of a gold basis is actually about stability of value, not
“stability of prices.”

No it is about people who have invested in gold
wanting to get government welfare and protection
of their investments.

The rest is just rubbish arguments intended
to obfuscate that obvious fact.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
The use of a gold basis is actually about stability of value, not
“stability of prices.”

No it is about people who have invested in gold
wanting to get government welfare and protection
of their investments.

Gold takes decisions about the value & supply of money out of the
hands of bureaucrats whose judgment is too often in error or driven
by politics. Bureaucrats can no more guess the need for money than
central planners could run an economy in the days of the Soviets.
Seemingly sophisticated equations & various measures of money can
never anticipate what people actually do.
The job of a govt's central bank would simply be to maintain a stable
gold price. In a gold standard system, the price of gold acts as a
barometer. It indicates whether there is too much liquidity in the
economy & whether we're heading toward inflation or if there's too
little liquidity & possible deflation.
The demand of money reflects the ever-shifting actions & desires of
billions of people in global markets, mony of whom are reacting to
thoroughly unanticipated events. Gold prices convey these changing
needs better than anything else.
Opponents also believe a peg to gold opens up the U.S. & others to
runs on gold supplies. This isn't true either. The focus on gold's
supply (or the lack of it) is the same mistake made by mercantilist
monarchs who thought gold in & of itself constituted wealth. Gold's
power lies in its effectiveness as a /measure/. A gold-based system
can work even if a country doesn't own a single ounce of gold.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
The use of a gold basis is actually about stability of value, not
“stability of prices.”

No it is about people who have invested in gold
wanting to get government welfare and protection
of their investments.

Gold takes decisions about the value & supply of money out of the
hands of bureaucrats.

No actually your argument states the opposite.
But then your argument is full of contradictions.
You want the bureaucrats to control the value of
money. Unfortunately, you think that goal can
be accomplished with smoke and mirrors.

The value of money in a market economy is determined
by the people and businesses in the economy that
participate in money transactions. You have presented
no evidence that you can control how participants
determine the value of exchanges and still carry
on market transactions in a free and open manner.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
Gold takes decisions about the value & supply of
money out of the hands of bureaucrats.

The value of money in a market economy is determined
by the people and businesses in the economy that
participate in money transactions. You have presented
no evidence that you can control how participants
determine the value of exchanges and still carry
on market transactions in a free and open manner.

Every alternative to a gold standard has been tried, including no
standard at all. If something were superior--another commodity or
a basket of commodities--we would have found it. And so the answer
to the question /Why gold?/ becomes self-evident; in 4,000 years of
experience human beings have found nothing better. History shows
that a gold-based monetary system is frequently abandoned, but it
always reemerges. Always.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
Gold takes decisions about the value & supply of
money out of the hands of bureaucrats.

The value of money in a market economy is determined
by the people and businesses in the economy that
participate in money transactions. You have presented
no evidence that you can control how participants
determine the value of exchanges and still carry
on market transactions in a free and open manner.

Every alternative to a gold standard has been tried, including no
standard at all. If something were superior--another commodity or
a basket of commodities--we would have found it.

The worshiping of gold may go back thousands
of years but that doesn't make gold standard superior.

[Clave]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
Gold takes decisions about the value & supply of
money out of the hands of bureaucrats.

The value of money in a market economy is determined
by the people and businesses in the economy that
participate in money transactions. You have presented
no evidence that you can control how participants
determine the value of exchanges and still carry
on market transactions in a free and open manner.

Every alternative to a gold standard has been tried, including no
standard at all. If something were superior--another commodity or
a basket of commodities--we would have found it.

The worshiping of gold may go back thousands
of years but that doesn't make gold standard superior.

No, but that's what you say when you want to sell gold.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
Gold takes decisions about the value & supply of
money out of the hands of bureaucrats.

The value of money in a market economy is determined
by the people and businesses in the economy that
participate in money transactions. You have presented
no evidence that you can control how participants
determine the value of exchanges and still carry
on market transactions in a free and open manner.

Every alternative to a gold standard has been tried, including no
standard at all. If something were superior--another commodity or
a basket of commodities--we would have found it.

The worshiping of gold may go back thousands
of years but that doesn't make gold standard superior.

The 2014 currency turmoil in emerging countries is
just the latest in a succession of needless crises that have
occurred over the past several decades as a consequence of
unstable money. Today's huge and often-violent global markets,
in which a nation's currency can come under attack, did not exist
before the dollar was taken off the gold standard. They are a
direct response to the risks created by floating exchange rates.
The crises for most of the Bretton Woods era were mild & infrequent.
It was the refusal of the U.S. to abide by the restrictions of
the system that brought it down.

[d***@agent.com]

Post by d***@agent.com
The 2014 currency turmoil in emerging countries is
just the latest in a succession of needless crises that have
occurred over the past several decades as a consequence of
unstable money. Today's huge and often-violent global markets,
in which a nation's currency can come under attack, did not exist
before the dollar was taken off the gold standard. They are a
direct response to the risks created by floating exchange rates.
The crises for most of the Bretton Woods era were mild & infrequent.
It was the refusal of the U.S. to abide by the restrictions of
the system that brought it down.

http://www.theguardian.com/business/2014/dec/04/us-dollar-growth-yen-euro

US dollar surges, leaving euro in the dust

Russia’s ruble is struggling, the euro is flirting with another
recession, but the US dollar is having a great year. But can it last?
by Kira Brecht, 4 Dec 2014

Just a few years ago, the US dollar was the Rodney Dangerfield of
currencies: it couldn’t get any respect.

How times have changed. Mark this moment: America has actually done
something right financially. The US dollar is a star, and it’s because
of billions of dollars of some of the most controversial stimulus
programs in history.

The dollar is surging in value while most of the world’s major
currencies are struggling – other nations, facing slower global
economic growth, have tripped, had missteps or hesitations. Through
early December, the dollar gained 11% versus the euro, and 13.2%
versus the Japanese yen.

It’s not just currencies. The dollar represents the health of the US
economy, and there’s a big gap between the US and other nations in
economic growth. The US is trending upward, while other major
economies are slowing. After a slow start to 2014, US gross domestic
product, or GDP, boomed 4.6% in the second quarter and 3.9% in the
third quarter.

That compares to two quarters of negative growth in Japan, inviting a
recession and slow growth. Meanwhile, the Eurozone saw only minor
blips of growth at 0.1% and 0.2% in the second and third quarter,
respectively.

“Essentially, the US economy is the best-looking house in an ugly
neighbourhood,” said Ryan Sweet, director of research at Moody’s
Analytics. “Europe is a mess, Japan is in a recession, China is
weakening and emerging markets are slowing.”

Who gets the credit?

It goes to the much-maligned Federal Reserve, say some experts.
Critics have leveled harsh criticism on the Federal Reserve in recent
years for its unorthodox, aggressive, and wide-reaching monetary
policies – from bailouts to cheap loans to billions in stimulus. There
has been a Tea Party-driven “end the Fed” movement championed by
former presidential candidate Ron Paul, who also wants the US to
return to backing the US dollar with gold. There’s also the lesser
known but no less vocal “audit the Fed” movement, which posits that
the central bank has meddled with the economy to disastrous results.

But, contrarians say, you can’t argue with results. Some experts are
holding up US economic growth now as proof that the Fed did the right
thing during the crisis.

“The US economy is the best game in town because of the success of the
Fed,” said David Jones, president of DMJ Advisors, a Denver-based
consultancy firm.

Jones, who praised the Fed’s “central bank activism,” gave credit to
former Fed chairman Ben Bernanke, who studied depression economies and
advocated for early and plentiful stimulus during the financial crisis
in 2007 and 2008.

“Central bankers can do one thing that no one else can do: they can
create money out of thin air,” he said.

“Bernanke dealt successfully with the crisis, and he should be given
credit for it. Now, the dollar is strengthening, while the yen and the
euro get weaker because they were slow to react,” concluded Jones.

Europe and Japan were late to Bernanke’s controversial stimulus
measure, quantitative easing, in which the Federal Reserve bought
billions of dollars’ worth of mortgage bonds and Treasury bonds to
keep interest rates low. Low interest rates, in turn, were designed to
spur spending and economic growth.

Theoretically, quantitative easing also helped jumpstart the US
economy through low, long-term interest rates, which in turn spurred
consumer spending. Also, it provided a pop to mortgage refinancing
activity, and overall helped improve business confidence. Finally, of
course there is the wealth affect, as low rates forced investors into
equities, and the subsequent stock market gains also increased
consumer confidence.

Other central banks have followed Bernanke’s example.

“Japan is now in the process of more aggressive QE. They are using
monetary policy following the Fed’s example to boost the economy. It
has depressed the Japanese yen and boosted their stock market, just
like in the US,” Jones added.

What did US policymakers do right? And, are there lessons other
advanced economies may want to heed?

One thing, say experts, was moving fast on various kinds of stimulus
measures, without even knowing if they could work. Action beats
inaction, say economists.

“America used massive firepower early. Not only was it big, it came
fast. That is why the US is looking good. Early and fast is better
than late and little. Europe is late and little,” said Cary Leahey,
senior advisor to Decision Economics.

That’s not to underplay to risks of the Fed’s move. The Fed slashed
its key policy rate to zero to 0.25% by December 2008, and established
an unconventional large scale asset purchases program, known as
quantitative easing. The massive bond-buying initially depressed the
US dollar.

QE loaded the Fed with debt. The Fed’s balance sheet soared from about
$850bn before the global financial crisis to a high-water mark of
$4.5tn currently. The Fed recently concluded its QE3 asset purchase
program in October.

Of course, even policymakers doubt whether all the credit belongs to
QE.

“You will see mountains of papers written over the next 30 year
analysing what it actually did or didn’t do. But, the Fed was the
first major central bank to introduce QE and it was the most
aggressive out of the block,” said Bill O’Grady, chief market
strategist at Confluence Investment Management.

Other areas also took half measures. The ECB has been notoriously slow
to embrace actual outright sovereign bond purchases. Despite the
internal opposition to outright purchases, the ECB has been hinting
that it will buy sovereign bonds in 2015 if current measures fail to
raise the level of inflation or inflation expectations.

Japan, whose long recession acts as a cautionary tale in the world
economy, has been battling slow growth and deflation, or low prices,
on and off again for nearly 20 years.

While the Bank of Japan (BOJ) did experiment with quantitative easing
in the early 2000s, the country has not been able to fully conquer its
slow growth and deflationary tendencies.

DMJ Advisor’s Jones compares the size of Japan’s QE to the Fed’s.
“Before the crisis in 2007, the Fed’s balance sheet stood at 7% of
GDP. When the Fed ended QE3 in October 2014, that had climbed to 25%
of GDP.”

The Bank of Japan is holding much more debt – from 20% of GDP before
the financial crisis to almost 55% now, Jones said.

Japanese prime minister Shinzo Abe came into office in December 2012
with sweeping “Abenomics” policies aimed at stimulating growth. It has
made inroads, but progress has come in fits and starts as the country
also raised key taxes like the consumption tax.

The drop in commodities from corn to gold to oil helps the US economy
and the US dollar, because other countries have to exchange their
currencies to buy their commodities in dollars. That promises
resilience for the dollar. It’s been a long wait.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by d***@agent.com
The 2014 currency turmoil in emerging countries is
just the latest in a succession of needless crises that have
occurred over the past several decades as a consequence of
unstable money. Today's huge and often-violent global markets,
in which a nation's currency can come under attack, did not exist
before the dollar was taken off the gold standard. They are a
direct response to the risks created by floating exchange rates.
The crises for most of the Bretton Woods era were mild & infrequent.
It was the refusal of the U.S. to abide by the restrictions of
the system that brought it down.

http://www.theguardian.com/business/2014/dec/04/us-dollar-growth-yen-euro
US dollar surges, leaving euro in the dust

You post more copy and paste crap that contradicts
your own previously stated position

The American worker would benefit if the value
of the dollar decreased. It would mean that foreign
made goods would cost more and that would mean more
of the goods would be produced inside the US borders.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">
The American worker would benefit if the value
of the dollar decreased. It would mean that foreign
made goods would cost more and that would mean more
of the goods would be produced inside the US borders.

The value of the dollar is increasing.
I have more support than you do:

http://www.forbes.com/sites/nathanlewis/2014/12/04/the-intellectual-foundation-for-monetary-reform-is-falling-into-place/

The Intellectual Foundation for Monetary Reform is
Falling Into Place
by Nathan Lewis, 12/04/2014 @ 11:51AM 763 views

In 2012, I concluded that we really needed a lot more high-caliber
intellectual support if we were going to come up with a viable
alternative to today’s funny-money orthodoxy.

Now it is two years later, and that intellectual support is starting
to form. The Cato Institute in September created the Center for
Monetary and Financial Alternatives. To head this new effort, they
chose George Selgin, formerly from the Univ. of Georgia, and one of
our better gold standard experts from academia today.

Also in 2014, Judy Shelton was made a co-director of another new
initiative, the Sound Money Project of the Atlas Network. I gave
Shelton’s recent book on gold-based money a thumbs-up last year. I
think it is the kind of sophisticated and contemporary work that we
(still) need more of today.

These are not wishy-washy middle-of-the-road academics with a vaguely
conservative aroma. They are real experts in gold-based money.

At the recent Cato Monetary Conference in November, Norbert Michel of
the Heritage Foundation gave a nice talk about various “rules-based”
approaches to managing currencies, including fixed-value systems such
as a gold-based system. While Heritage has not yet reached the point
of designating a separate program for monetary affairs, nevertheless I
am heartened to see that they have turned some of their high-powered
analytical capabilities toward this most fundamental of issues.

I think they would add a lot by approaching it from a neutral and
skeptical stance, without dogmatic devotion to the often woefully
flawed arguments of the mid-20th-century gold standard advocates, who
were generally just as confused as their Keynesian counterparts. If
they can make a proposal for Social Security reform or tax reform, why
not, in the same sort of practical spirit, a proposal for monetary
reform?

I think that the publication of Steve Forbes’ book Money: How the
Destruction of the Dollar Threatens the Global Economy in June 2014
also moved things forward considerably. Forbes is, in my opinion, one
of the best monetary thinkers in the U.S. today (including academics).
In our ignorant era, it takes a brave man to say that the monetary
system the United States used for over 180 years – a gold standard
system – in the process becoming the wealthiest and most powerful
country in the world, is maybe not such a bad idea after all. Now that
he has planted his flag on the issue, with all the expertise to back
it up, perhaps some less-brave people will declare that they actually
thought the same thing all along.

This intellectual leadership is enabling political leadership, in the
form of Kevin Brady’s Centennial Monetary Commission Act of 2013, H.R.
1776. Although this bill disappointed many as it is just a proposal to
create a commission for discussion, nevertheless that is about where
we are in the political process.

Among conservatives, there is increasing realization that
Friedman-style “monetarism,” which dominated the 1980s and much of the
1990s, is just a framework of justifications for having the Fed manage
the fiat dollar a little differently than other people would have it
managed. Not much different really. We’re seeing a split today between
conservatives that embrace monetarism or perhaps some other
funny-money alternative like nominal GDP targeting, and those who are
basically gold advocates. There isn’t really very much else on the
menu.

Also, the gold standard advocates themselves have become considerably
more sophisticated, having abandoned various once-popular schemes by
which a gold parity would be determined by the reciprocal of the
amount of gold supposedly (but probably not) in a vault somewhere, the
“pure gold standard” 100% bullion proposals popular in the 1980s, or
the gold coin extremists. I hope they will eventually abandon more
mistaken concepts dating from the “mind-bending ignorance of the
Bretton Woods years.”

For me, this game is global. The United States is probably the least
favorable political environment for such things today. The political
system will likely cling to the fiat-dollar-centric status quo until
the bitter end, because everyone now believes it is the solution to
any conceivable problem. Rather, the ideas & consensus created today
are most likely to find application elsewhere in the world. The Flat
Tax idea was also created by Americans, in the 1980s, with research
and support from conservative think tanks, and finally wide
popularization in the presidential campaigns of … Steve Forbes. In the
U.S., it was a flop. But, over thirty other governments implemented
the plan since 2000, and pretty much got the results that the
think-tank white papers indicated, or better.

Thus, the creation of Cato’s Center for Monetary and Financial
Alternatives is the path to getting a gold standard system in —
Albania. And a few dozen other countries. And then we go on from
there.

I was talking to a friend about how to get the United States to return
to the high monetary ideals of its founders. I said: “We get at least
a dozen successful and reliable gold standard currency systems set up
worldwide, perhaps as second or ‘alternative’ currencies. Maybe some
big countries like Russia, China, Germany and Brazil introduce their
own gold-based currencies. Then, if there is an environment of
monetary crisis in the United States and Europe, and the gold-based
approach has been tested and proven by numerous other governments,
the U.S. would do it too.”

“Yes,” she said. “Of course it would be easy then.”

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The American worker would benefit if the value
of the dollar decreased. It would mean that foreign
made goods would cost more and that would mean more
of the goods would be produced inside the US borders.

The value of the dollar is increasing.

You don't have any support. You don't even have a
brain with which you could think for yourself. All
you have is copy and paste articles that you clearly
don't understand.

The value of the dollar may be at the moment going up
relative to other major foreign types of money. However,
the American worker would benefit if the foreign exchange
rate of the dollar was decreasing instead. There is
no reason for American workers to support politicians
that want to make the dollar exchange rate stronger.

The value of the dollar relative to other major
currencies like the German mark or British pound
has remained about the same for the last 30 years.
The exchange rate is determined by the market
place.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The American worker would benefit if the value
of the dollar decreased. It would mean that foreign
made goods would cost more and that would mean more
of the goods would be produced inside the US borders.

The value of the dollar is increasing.

The value of the dollar may be at the moment going up
relative to other major foreign types of money. However,
the American worker would benefit if the foreign exchange
rate of the dollar was decreasing instead. There is
no reason for American workers to support politicians
that want to make the dollar exchange rate stronger.

Why not let each of the 50 states have their own
currency? Then they could each try to make theirs weaker
than others, to gain advantage over their neighbors!

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The value of the dollar may be at the moment going up
relative to other major foreign types of money. However,
the American worker would benefit if the foreign exchange
rate of the dollar was decreasing instead. There is
no reason for American workers to support politicians
that want to make the dollar exchange rate stronger.

Why not let each of the 50 states have their own
currency? Then they could each try to make theirs weaker
than others, to gain advantage over their neighbors!

The fallacy in your logic is that the
govt doesn't have the control of the
economy you pretend it does. The markets
determine the relative value of the money of
different govts.

There was a time when the value of
govt's money was determined by the govts
ability to attack and steal the gold of
others. Those days are gone.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The value of the dollar may be at the moment going up
relative to other major foreign types of money. However,
the American worker would benefit if the foreign exchange
rate of the dollar was decreasing instead. There is
no reason for American workers to support politicians
that want to make the dollar exchange rate stronger.

Why not let each of the 50 states have their own
currency? Then they could each try to make theirs weaker
than others, to gain advantage over their neighbors!

The fallacy in your logic is that the
govt doesn't have the control of the
economy you pretend it does. The markets
determine the relative value of the money of
different govts.
There was a time when the value of
govt's money was determined by the govts
ability to attack and steal the gold of
others. Those days are gone.

Global trade in the modern era is why, despite two world wars, there
has been a long-term decline in military conflict since the feudal
period. Like their mercantilist forebears, our Keynesian policy makers
persist in seeing trade as war, with monetary policy as the primary
weapon. This thinking is as fallacious today as it was in Colbert's
time. Worst of all, it has created our current perilous global system
of fiat money in which nations seek to gain a trade advantage
by lowering the value of their currencies.
Countries that don't know how to defend their monies & maintain
their value risk attacks by speculators that can mean the collapse
of a currency. Exacerbating global rivalries & antagonisms, this
needlessly volatile environment gives new meaning to Colbert's
vision of commerce as combat. Worse, it has held back the global
economy & destroyed untold wealth.
When it comes to money & trade, politicians are conflicted. Free
trade has long been the official mantra. Policy makers may not
talk about winning in combat--the more politely stated objective is
usually to correct a trade deficit or achieve a so-called balance
of trade. The bureaucratic euphemisms, however, boil down to
Colbert-style protectionism: promoting exports that bring in more
dollars or other hard currencies while limiting money- and "job-
draining" imports that are believed bad for the economy.
Under the spell of this mercantilist mindset, a weak dollar--one
that is cheap in relation to other currencies--is considered good
because it makes foreign imports more costly & our exports more
attractive. A strong dollar worth more than other currencies is
considered bad because it makes imports cheaper & U.S. exports
more expensive.
Since WWII, govts have wanted both cheap money & strong money.
They face a quandary: weak money policies are considered a plus
domestically because they encourage exports & are believed to
stimulate the domestic economy, but too much money printing under-
mines one's currency & can incur the enmity of one's trading
partners.
When he first took office, Obama, who has done more to weaken
the dollar than any other president in recent history, signaled thru
his soon-to-be treasury secretary Tim Geithner that he was in
favor of a strong dollar.
This is typical. Most adminstrations declare their intention to
support a strong dollar--until they don't. Former Obama economic
advisor Christina Romer conceded as much in a candid piece in the
NY Times. She recounts that, after joining the administration,
former treasury secretary Larry Summers advised her that in public
statements the official line should always be that "the U.S. is in
favor of a strong dollar," even though officialdom really considers
a weak dollar more desirable.
Ambivalence over the issue of a weak-vs-strong dollar has long
caused countries to lurch back & forth between loose & tight money.
It was this widespread confusion, along with ignorance of the
importance of sound money, that led to the breakdown of the
Bretton Woods gold standard in the early 70s & the fiat monetary
system we have today.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The value of the dollar may be at the moment going up
relative to other major foreign types of money. However,
the American worker would benefit if the foreign exchange
rate of the dollar was decreasing instead. There is
no reason for American workers to support politicians
that want to make the dollar exchange rate stronger.

Why not let each of the 50 states have their own
currency? Then they could each try to make theirs weaker
than others, to gain advantage over their neighbors!

The fallacy in your logic is that the
govt doesn't have the control of the
economy you pretend it does. The markets
determine the relative value of the money of
different govts.
There was a time when the value of
govt's money was determined by the govts
ability to attack and steal the gold of
others. Those days are gone.

Global trade in the modern era is why, despite two world wars, there
has been a long-term decline in military conflict since the feudal
period. Like their mercantilist forebears, our Keynesian policy makers
persist in seeing trade as war, with monetary policy as the primary
weapon.

Once again you build a straw man and beat it to death.
The monetary system doesn't work the way your fantasy
portrays it.

The main function of monetary policy is the smooth
functioning of the payment system.

Gold based systems have been abandoned because they
are characterized by continual dysfunction in
the payment system.

The gold standard in a monetary system
is like using speed bumps to control speeding on
highways. If we put a speed bump every 100 yards
on every road there is no doubt it will prevent
speeding but the cost is a continuously poorly
functioning transportation system.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The value of the dollar may be at the moment going up
relative to other major foreign types of money. However,
the American worker would benefit if the foreign exchange
rate of the dollar was decreasing instead. There is
no reason for American workers to support politicians
that want to make the dollar exchange rate stronger.

Why not let each of the 50 states have their own
currency? Then they could each try to make theirs weaker
than others, to gain advantage over their neighbors!

The fallacy in your logic is that the
govt doesn't have the control of the
economy you pretend it does. The markets
determine the relative value of the money of
different govts.
There was a time when the value of
govt's money was determined by the govts
ability to attack and steal the gold of
others. Those days are gone.

Global trade in the modern era is why, despite two world wars, there
has been a long-term decline in military conflict since the feudal
period. Like their mercantilist forebears, our Keynesian policy makers
persist in seeing trade as war, with monetary policy as the primary
weapon.

Gold based systems have been abandoned because they
are characterized by continual dysfunction in
the payment system.

Gold standards were abandoned out of ignorance
and politics.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
Gold based systems have been abandoned because they
are characterized by continual dysfunction in
the payment system.

Gold standards were abandoned out of ignorance
and politics.

Ignorance and politics will continue
to try to get the govt to sponsor their fetish.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
Gold based systems have been abandoned because they
are characterized by continual dysfunction in
the payment system.

Gold standards were abandoned out of ignorance
and politics.

Ignorance and politics will continue
to try to get the govt to sponsor their fetish.

Most politicians are ignorant of business, so
they will continue to behave irresponsibly.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
Gold takes decisions about the value & supply of
money out of the hands of bureaucrats.

The value of money in a market economy is determined
by the people and businesses in the economy that
participate in money transactions. You have presented
no evidence that you can control how participants
determine the value of exchanges and still carry
on market transactions in a free and open manner.

Every alternative to a gold standard has been tried, including no
standard at all. If something were superior--another commodity or
a basket of commodities--we would have found it.

The worshiping of gold may go back thousands
of years but that doesn't make gold standard superior.

The 2014 currency turmoil in emerging countries is
just the latest in a succession of needless crises that have
occurred over the past several decades as a consequence of
unstable money.

What about the much greater turmoil and
succession of needless crises that occurred
under the gold standard? Your snake oil sales
pitch counts on the fact that nobody remembers those
breakdowns in the monetary system that were far worse
than anything in the modern times.

If you think going to a gold standard will help
emerging countries then why aren't you trying to
peddle your snake oil to emerging countries?
Be warned that the emerging nations that don't
have significant gold producing mines are going to
laugh at you when you try to sell the idea of basing
their money on unobtanium. .

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
The 2014 currency turmoil in emerging countries is
just the latest in a succession of needless crises that have
occurred over the past several decades as a consequence of
unstable money.

What about the much greater turmoil and
succession of needless crises that occurred
under the gold standard? Your snake oil sales
pitch counts on the fact that nobody remembers those
breakdowns in the monetary system that were far worse
than anything in the modern times.

In a 2000 study, researchers from Rutgers, UC Berkeley, & the
World Bank analyzed data spanning 120 years of financial history
& found that the "crisis frequency since 1973 has been double that
of the Bretton Woods & classical gold standard periods & is rivaled
only by the crisis-ridden 1920s & 30s."
The turmoil of the post-Bretton Woods era is what sent European
nations scurrying for the shelter of a stable currency, setting
the stage for the euro. The explosion of currency trading it
has wrought has become a huge source of fees for banks. It has
helped produce the market swings & giant windfalls so decried
by Occupy Wall Street & others. In this dangerous world,
monetary policy is deployed as a frequent weapon, nearly always
with destructive consequences.

Post by jim <""sjedgingN0Sp\"@">
If you think going to a gold standard will help
emerging countries then why aren't you trying to
peddle your snake oil to emerging countries?
Be warned that the emerging nations that don't
have significant gold producing mines are going to
laugh at you when you try to sell the idea of basing
their money on unobtanium. .

It's already happening (until the Euro collapses):

Dozens of Countries Have Already Kicked the Fiat Currency Habit
by Nathan Lewis, 10/02/2014, 2,600 views

It might seem that today we are deeply devoted to the Mercantilist
paradigm in monetary affairs: the notion of a floating fiat currency
managed by a panel of bureaucrats, to address an ever-changing menu of
issues including unemployment, exchange rates, financial markets,
government funding, and the interests of one group or another. Some
people call this the Soft Money paradigm, characterized by the “Rule
of Man.”

But, I think it is important that quite a few governments have
actually abandoned this paradigm. They do not attempt to manage their
economies by jiggering their currencies. Rather, they adopt a simple
fixed-value system: the value of the currency shall be X. There is no
domestic discretionary element. This is the Classical paradigm, the
Hard Money paradigm, in which the “Rule of Law” is primary.

But what is “X”? In the past, it was gold. A “gold standard system” is
a system in which gold is the “standard of value,” i.e., “X”. A
“dollar” was once worth 23.2 troy grains of gold.

Today, lots of countries have the same sort of arrangement, but they
use the euro as “X” instead of gold. This includes the eighteen
members of the eurozone, all of which have given up any avenue of
domestic money-jiggering.

It is true that the euro itself is a floating fiat currency, and that
the ECB does take into consideration the concerns of eurozone member
states during its funny-money decision-making process. However, we
also know that the ECB doesn’t really take orders from any one state,
not even Germany, which is a little miffed at the central bank’s
latest money-printing scheme.

We also know that there are many Mercantilist economists who declare
loudly that any state that gets itself into trouble should have its
own independent currency, which can supposedly be jiggered by its own
independent board of incompetents to make all the boo-boos better,
really we promise.

Thus, I would argue that the euro is basically serving as an external
monetary benchmark for these states, much as gold did in the past.

In addition, there are another ten small states and territories that
use the euro but are not officially part of the eurozone. Also, there
are twenty-eight countries, mostly in Africa, that have some sort of
euro link, mostly via a currency board system.

In total, there are fifty-five states and territories that have a
Classical fixed-value system based on the euro. The only difference
between these “euro standard systems” and a “gold standard system” is
the choice of the “standard of value.”

The Classical ideal in money is very common today.

But why use the euro as a “standard of value” instead of gold? The
most basic reason is stability of exchange rates, or what I call the
“terms of trade.” The smaller countries of Europe have always had a
high degree of trade with each other. This does not only include
imports and exports, but also financing and investment. Whatever the
potential benefits of using gold as the “standard of value,” the fact
is that to do so would introduce a lot of chaos into exchange rates
with other euro-using states, and other countries as well, which would
be completely intolerable to businesspeople.

One of the primary attractions of a Classical fixed-value arrangement,
rather than an independent floating fiat currency, is to gain all the
advantages of stable trade relationships. That’s why Europe gave up
their independent currencies and created the euro in the first place.

This problem did not exist in the past. Before 1971, the major
international currencies, and most minor currencies, were fixed to
gold. Thus, a country that adopted gold as a “standard of value,” or
“X” in a fixed-value system – the role the euro plays today – would
also have stable exchange rates with most major trading partners.
There was no conflict.

At some point, the euro may be so debauched as to render it completely
unacceptable as a benchmark of value in a Classical fixed-value
system. At that point, a government might either adopt another major
international currency as its monetary “standard of value,” or it
might use gold.

If the euro reaches such a state – ECB chief Mario Draghi recently
said he intends to make another trillion euros appear out of thin air,
I kid you not – then other major currencies would also likely be close
behind, except for the Japanese yen, which would be far ahead.

Thus, other major currencies would not likely satisfy those fifty-five
former euro enthusiasts either.

Then they might turn to gold – which actually has a rather lovely
track record, and which actually was the monetary benchmark for most
of those countries for a very long time already.

But when might that happen? History suggests that such a changeover
does not happen until the former benchmark currency has been abused
beyond all hope of renewal.

Disaster. Catastrophe. I admit it holds a certain appeal.

However, there is an alternative: to introduce gold-based currencies
today, but to make them optional instead of mandatory. Thus, the
present euro-based and other fiat currencies would continue, but there
would also be a gold-based alternative.

At first, this gold-based alternative might not be very popular. It
would have a lot of exchange-rate volatility with the fiat euro,
dollar, yen and pound. Let’s be a bit Germanic and call it the
goldmark, and give it the traditional value of 2790 goldmarks per
kilogram of gold.

As today’s fiat currencies gradually lost their viability, people
might decide, incrementally, that they want to keep at least part of
their savings in terms of goldmarks, not euros or dollars. Borrowers
find that they cannot issue debt or borrow money unless denominated in
goldmarks; suppliers want to be paid in goldmarks; workers demand
wages in goldmarks; and producers demand goldmarks in payment for
their goods and services.

As more and more people use goldmarks (and other similar currencies
that emerge), for their own personal interests, they find that they
can also engage in trade with all the other people that use goldmarks,
without the issue of unstable exchange rates. Thus, the issue of
chaotic trade relationships gradually melts away.

But what if everything is fine? What if there is no disaster? People
can still use goldmarks as they see fit – perhaps as an investment
product much like the gold ETFs popular worldwide — but perhaps they
would continue to use fiat euros for most commercial situations. It
works both ways. There is no downside.

The only problem, it seems, is that people are not aware that such a
thing is possible, and in fact rather easy to do. Also, they don’t
know how to do it. But, these are minor issues, really.

[jim <""sjedgingN0Sp\"@">]

Post by jim <""sjedgingN0Sp\"@">
If you think going to a gold standard will help
emerging countries then why aren't you trying to
peddle your snake oil to emerging countries?
Be warned that the emerging nations that don't
have significant gold producing mines are going to
laugh at you when you try to sell the idea of basing
their money on unobtanium.

Do you mean they are already laughing at you?

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by jim <""sjedgingN0Sp\"@">
If you think going to a gold standard will help
emerging countries then why aren't you trying to
peddle your snake oil to emerging countries?
Be warned that the emerging nations that don't
have significant gold producing mines are going to
laugh at you when you try to sell the idea of basing
their money on unobtanium.

Do you mean they are already laughing at you?

You can't build a foundation for success on special interest;
it has to be built on GENERAL interest. The best policy for
ALL would be a dollar pegged to gold, with other currencies
tied to the dollar. Then everyone could trust the value of
money, making investment a lot easier. Without much
inflation or deflation, there would rarely, if ever, be any
crises or panics. Hell, peace might even break out.
You might not like your neighbor, but you can trade with him!

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com
The best policy for
ALL would be a dollar pegged to gold,

That would the best policy for those who
possess the most gold. It is a policy
designed to benefit special interests

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
The best policy for
ALL would be a dollar pegged to gold,

That would the best policy for those who
possess the most gold. It is a policy
designed to benefit special interests.

A gold-based system can work even if a country
doesn't own a single ounce of gold.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
The best policy for
ALL would be a dollar pegged to gold,

That would the best policy for those who
possess the most gold. It is a policy
designed to benefit special interests.

A gold-based system can work even if a country
doesn't own a single ounce of gold.

The people who own the gold are the ones who
benefit - not the ones subjected to the policy.

It is like your policy on death.
You think it is great as long as someone
else does the dying.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
The best policy for
ALL would be a dollar pegged to gold,

That would the best policy for those who
possess the most gold. It is a policy
designed to benefit special interests.

A gold-based system can work even if a country
doesn't own a single ounce of gold.

The people who own the gold are the ones who
benefit - not the ones subjected to the policy.

Nonsense.

Post by jim <""sjedgingN0Sp\"@">
It is like your policy on death.
You think it is great as long as someone
else does the dying.

No, I don't like it, same as you & everyone else.
I don't think it's great, I'm just being realistic, by
taking everything into account.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The people who own the gold are the ones who
benefit - not the ones subjected to the policy.

Nonsense.

Yes it is nonsense. But selling gold for
fiat money is the profit motive behind
promoting gold.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The people who own the gold are the ones who
benefit - not the ones subjected to the policy.

Nonsense.

Yes it is nonsense. But selling gold for
fiat money is the profit motive behind
promoting gold.

Returning to the Gold Standard is not promoting gold.
It's promoting stable, fixed money, so we can once
again trust the value of the dollar. That will encourage
more people to invest in job-creating businesses,
instead of hard assets. It will also inspire more trust
in general, because you'll know what you're getting
when you make a transaction. The gold is just a
measure of value, like inches in a foot, or minutes
in an hour.

[jim <""sjedgingN0Sp\"@">]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The people who own the gold are the ones who
benefit - not the ones subjected to the policy.

Nonsense.

Yes it is nonsense. But selling gold for
fiat money is the profit motive behind
promoting gold.

Returning to the Gold Standard is not promoting gold.

Really? So you would think it would be
OK for the US govt to sell off its gold and
drive the price down towards zero.

[d***@agent.com]

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">
The people who own the gold are the ones who
benefit - not the ones subjected to the policy.

Nonsense.

Yes it is nonsense. But selling gold for
fiat money is the profit motive behind
promoting gold.

Returning to the Gold Standard is not promoting gold.

Really? So you would think it would be
OK for the US govt to sell off its gold and
drive the price down towards zero.

Well, first you announce it, that we're going to do what we did for
180 years, & then there are various ways you can do it....you can
have a 6-month or 12-month transition period, you can have a big
conference or something. But you have to make it clear it's going
to be done. When you pick a rate, it has to be enacted into law, &
other things that have to be done is remove obstacles from alternative
currencies, as a safety backdrop,...also have redeemability,...not
like a classical gold standard, but you should be able to take your
dollars to govt & buy gold bullion...I'd put a high commission on it,
because I don't want the govt competing with private dealers, &
the govt should, as the ultimate safety net, have to keep 50 million
ounces, 100 million ounces, just so people can believe that over time,
we're gonna really have a stable system.

[nickname unavailable]

Post by d***@agent.com

Post by jim <""sjedgingN0Sp\"@">

Post by d***@agent.com
Gold takes decisions about the value & supply of
money out of the hands of bureaucrats.

The value of money in a market economy is determined
by the people and businesses in the economy that
participate in money transactions. You have presented
no evidence that you can control how participants
determine the value of exchanges and still carry
on market transactions in a free and open manner.

Every alternative to a gold standard has been tried, including no
standard at all. If something were superior--another commodity or
a basket of commodities--we would have found it. And so the answer
to the question /Why gold?/ becomes self-evident; in 4,000 years of
experience human beings have found nothing better. History shows
that a gold-based monetary system is frequently abandoned, but it
always reemerges. Always.

feverish believers are always fodder for scams.


oh the irony:gold bugs are getting screwed by the private sector that is selling debased coins:They include false gradings on the quality of the coins, the use of cheaper alloys instead of pure gold and even brazen scams where you don't actually even own the gold that you buy


gee, i thought gold based money could not be debased, SNICKER!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
thank god for conservatives/libertarians/fascists, without their stupidity in the market place, the con artists would starve:)

http://finance.yahoo.com/banking-budgeting/article/110872/five-hidden-costs-of-gold;_ylt=AjVcMFVwsudkHZmdEZ5SPZ27YWsA;_ylu=X3oDMTFhN2k0cmlpBHBvcwMyBHNlYwNzcGVjaWFsRmVhdHVyZXMEc2xrAzVoaWRkZW5jb3N0cw--?mod=bb-budgeting

Five Hidden Costs of Gold
by Jeff Reeves
Wednesday, September 29, 2010


Commentary: Investing in gold isn't as easy as it looks
There's a lot of talk right now about how gold is booming, and how gold bugs who have been stashing bullion under their mattresses over the last decade or so have made a killing.
That may be true if you look at the price of the yellow stuff per ounce. The price of an ounce of gold is up about 30% in the last year, or over 400% in the last 10 years. How does that relate to actual returns for investors?
The truth is that gold has steep hidden costs, and that looking at the numbers on paper doesn't tell the whole story. Here are big costs many investors overlook.
Higher taxes
The affinity for gold investing and a dislike of the government seem to go hand in hand, from predictions that massive government debt will render the dollar worthless to conspiracy theories that there will be another Executive Order 6102 in which Uncle Sam loots your safe deposit box and seizes your gold.
But the biggest reason for gold investors to get mad at the feds is their tax bracket. The IRS taxes precious metal investments -- including gold ETFs like the SPDR Gold Trust (NYSE: GLD - News) and iShares Silver Trust (SLV - News) -- as collectibles. That means a long-term capital gains tax of 28% compared with 15% for equities (20% if and when the Bush tax cuts expire next year).
While you may see your gold as a bunker investment, the IRS will treat you the same as if you were hoarding Hummel figurines. And that means a bigger portion of your gold profits go to the tax man.
Zero income
Just as the math game on gold price appreciation doesn't tell the whole story, the lack of regular payouts is another reason why the long-term profits quoted in gold are incomplete. Many long-term investors can't afford to stash their savings in the back yard for 20 years. Income is a very valuable feature of many investments and gold simply doesn't provide that.
Remember, simply looking at returns in a vacuum can't tell you whether an investment is "good" or "bad." Is it a good idea for a 70-year-old retiree on a fixed income to bet on penny stocks because they could generate huge profits? Even if those trades pay off, 99 out of 100 advisers would say something akin to "You got lucky this time, but don't tempt fate. Quit while you're ahead and don't be so aggressive."
Similarly, the volatile and income-starved gold market is not a place for everyone. Just because past returns for gold have been so stellar, that does not mean that gold is low risk or that investors who need a secure source of regular income will be well-served.
Gold scams take a toll
In a previous article, I detailed gold coin scams in detail. They include false gradings on the quality of the coins, the use of cheaper alloys instead of pure gold and even brazen scams where you don't actually even own the gold that you buy. And that's just on the coins front. Scams abound in pawn shops and "cash for gold" enterprises that refuse to give you a true value for your jewelry or other gold items.
You'd think it would be obvious that precious metals should never be purchased from anyone other than a broker or seller of good repute who provides proper documentations. But many investors fail to do their homework, or worse, can't tell forged documents from real ones.
Gold is ready-made to be a retail sales item, and with that comes all manner of unscrupulous activity. Vigilant investors can protect themselves, but do not underestimate the very real price of being taken to the cleaners by a gold scam if you don't do your homework.
High ownership and storage costs
Maybe through some creative accounting or selective amnesia at tax time you can mitigate the tax burden of gold. But one expense you can't as easily avoid is the high ownership cost of gold. After all, it's not like you mined it yourself -- and all those middlemen between the ore and you want to get paid.
The first is that old tightwad Uncle Sam again. Even if you can avoid him going on the capital gains front, he gets you coming into gold via sales tax on most jewelry and coins. And then there are the high transaction costs and commissions that gold can carry. Anyone who has bought jewelry knows significant markups are part of the precious metals trade, and that's the same for investment gold as it is for engagement rings. The bottom line is that some of your initial buy-in goes towards the business of gold and you'll never get it back, not unlike realtor fees or broker fees.
And then there's the additional cost of storing your gold. You have to pay a fee for a safe deposit box, and if you have a lot of gold, that can run you a few hundred bucks a year for a good-sized box. Of course if you're afraid of that Order 6102 scam pulled by FDR you likely have your gold at home in a safe -- so that's a one-shot deal. But are you really foolish enough to distrust the government but trust your gold stash to be safe without insurance?
The presumed "safety" of gold is good on paper, but obtaining the actual metal and keeping it safely stored is a costly endeavor.
Yes, gold can lose value
Proponents of gold love to claim that gold has never been worthless like Lehman Bros. or GM. And while this is true on its face, it is actually a half-truth. While gold may never become worthless, it is foolish to think it will never lose value.
Consider that after reaching a record high of $850 per ounce in early 1980, gold plummeted 40% in two months. The average price for gold in 1981 fell to a mere $460 an ounce -- and continued nearly unabated until bottoming with an average price of around $280 in 2000. For those folks in their 40s and 50s who bought gold at that 1980 high, it took them 28 years to reclaim the $850 level. That's hardly much of a retirement plan, unless they lived to be 80 or 90 and just cashed out recently.
Gold is an investment, period. And no matter how gold bugs spin the metal as a hedge against inflation and a sure thing that will only go up, gold can lose its value -- sometimes in a hurry, as in the early 1980s.
Jeff Reeves is the editor of InvestorPlace.com. Follow him on Twitter at twitter.com/JeffReevesIP
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