How then, do we move backwards? How does a society, with most of the people having no clue of future events, move from being dependent on a vast and intertwined network of goods and services produced by the indigenous people of whereever, to a local resource and renewable energy based society, and do so in the timeframe available (20-30 years using the most liberal extimates, 10-20 with resonable estimates, 5-10 with worst case scenarios), all the while prices on everything increasing, world politics getting more militaristic, governments continuously reducing civil liberties, shortages of goods on the market and weather patterns resembling bad Hollywood movies?
Joined: Mar 04, 2005 Posts: 2552 Location: New Zealand
Posted: Fri Jun 27, 2008 8:20 pm Post subject: High Crude Oil Prices? It's the Fed, Stupid
On May 17, I posted this "crazy" idea that the American economy was being manipulated by bankers.
Quote:
Meanwhile, through the financiers’ control of the U.S. Federal Reserve System, the producing economy was shattered through the Fed-induced recession of 1979-83, where interest rates were raised to the highest in history to combat the inflation the financiers had themselves caused by the oil price shocks.
I found this article, which supports Cook's theory:
High Crude Oil Prices? It's the Fed, Stupid
Quote:
The Federal Reserve plays a key role in the price of oil, but lawmakers and leading media outlets seem to be busy looking everywhere else for a way to explain sky-high gasoline prices to a frustrated American public.
Congress on Wednesday held its 40th hearing this year to explore the issue, but the low target interest rate maintained by the central bank was barely mentioned. At the same time, Fed Chairman Ben Bernanke and his fellow central bankers elected to leave the central bank's fed funds rate target at just 2%, despite rising signs of inflation, for fear of hurting already weak economic growth.
Then on Thursday, OPEC President Chakib Khelil said the price of crude could go as high as $170 a barrel this summer due to the weak dollar, while debate in the media largely has centered on the role of speculators vs. supply and demand in driving up prices. The effects of monetary policy on the value of the dollar and market forces was almost totally ignored.
To be sure, geopolitical strains and global supply-and-demand forces are impacting the rising price of crude. But oil is priced in dollars and the dramatic decline in the value of the greenback of late has to be giving upward momentum to crude prices.
By keeping interest rates low, the Fed is raising the supply of dollars and other forms of liquidity in the financial system, thus weakening the value of the U.S. currency. But the lack of scrutiny of the central bank in the current oil debate is curious.
"We suspect that at least some of the liquidity being pumped into the system by the Fed is going into the oil market," says RGE Monitor analyst Rachel Ziemba. "There are global supply-and-demand forces driving oil prices on a long-term basis, but in the short-term, the Fed's actions must be lending momentum to the market."
A spokeswoman for the Fed declined to comment.
thestreet _________________ Human history becomes more and more a race between education and catastrophe. H. G. Wells.
Fatih Birol's motto: leave oil before it leaves us.
Joined: Mar 04, 2005 Posts: 2552 Location: New Zealand
Posted: Sat Jun 28, 2008 11:10 pm Post subject: Re: High Crude Oil Prices? It's the Fed, Stupid
It is good to see that I did not recieve any abuse after I posted this story. At the time, I thought it was "interesting" and I posted it because I'm still "exploring hydrocarbon depletion". Nobody has expertise in all subjects that are relevant to peak oil - there's quite a wide range. So I take the risk that sometimes I will post a story that is naive and it will provoke ridicule. If I didn't take a risk, then I probably wouldn't post at all!
In view of the above, I think that this story that I've posted in it's own thread will be better received. But I haven't finished with the Fed yet.
Oil and Inflation
Quote:
The Fed’s decision Wednesday to hold interest rates steady — after a string of cuts to stabilize financial markets and support the economy — underscored its growing concern about prices.
Then came Thursday and Friday. The stock market plunged into bear market territory, leaving no doubt that the credit crunch persists and the economy is still very fragile. At the same time, oil prices surged, sharply increasing inflationary pressure. The Fed would have preferred to deal with the threats of recession and inflation sequentially. But it does not have that luxury.
The Fed is in a bind. If it keeps rates low and loans plentiful to combat a recession, inflation could worsen. If it raises rates and tightens the money spigot to fight inflation, the downturn could be deepened and prolonged.
We don’t know how the Fed is going to get out of this bind. In the long run, however, the bigger challenge is not the Fed’s. Policy makers must come up with strategies to prevent the recession-and-inflation problem from happening time and again. Foremost would be a systematic plan for reducing the nation’s dependence on oil. From this perspective, high oil prices are actually a good thing — cutting use and spurring the development of alternative energy — but there must be help for the most hard-hit Americans, like lower-income workers.
The country first saw how high oil prices can wreak economic havoc with the oil shocks of the 1970s. Congress and presidents have failed to reduce America’s vulnerability by reducing its dependency. The Fed will have to feel its way through the current crisis. But the next president and Congress will have to tackle the oil problem once and for all.
nytimes _________________ Human history becomes more and more a race between education and catastrophe. H. G. Wells.
Fatih Birol's motto: leave oil before it leaves us.
Posted: Sun Jun 29, 2008 1:48 am Post subject: Re: High Crude Oil Prices? It's the Fed, Stupid
It's good to see stories like this posted. It's not surprising at all to see interest rates used as a way to 'consolidate' wealth again, considering who controls the fed in the united states. These techniques were used extensively prior to wwI and wwII to destroy economies while concentrating wealth. The fact that oil as the primary basis for the western economy should be used as the leverage for such destruction should come as no surprise. The tactic is not new. The spread of poverty and economic hardship is calculated and premeditated for the benefit of the few.
Joined: Oct 23, 2004 Posts: 5347 Location: New Jersey
Posted: Sun Jun 29, 2008 9:20 am Post subject: Re: High Crude Oil Prices? It's the Fed, Stupid
I agree that the Fed will take actions that have and will increase the price of oil. But basically this is a resource depletion issue.
To sum up, we have past the peak of net available oil and are headed downward. The price of oil is mostly determined by supply/demand but also being prodded up by Fed policies that have become much more inflationary since last November 2007.
The Fed will react to the weaking economy and coming banking collapse by creating even more inflation. If oil is viewed as the most stable essential commodity - and basically a currency - then the price of oil will just keep climbing in the long term. _________________ It's already over, now it's just a matter of adjusting.
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
News
Discussions
Resources
Members
Forum FAQ
Search
Usergroups
Profile
Log in to check your private messages
Log in
