Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

Clearing up the economic effects of depletion

Discussions about the economic and financial ramifications of PEAK OIL

Unread postby Matrim » Thu 16 Sep 2004, 15:18:44

OK I generally don't pipe in on economic issues as I really know next to nothing about economics but I have to comment on this: Keep in mind what I'm going to say is purely my opinion based on my observations:

ie free trade makes for higher efficiency = more people get more, better stuff.


No. It doesn't. At all. Before free trade if I bought a vacuum, it worked for a loooong time. My grandma still had hers til about a year ago.......from 1950. Now if I buy a vacuum, it f@cking breaks the day the warrantee is done. It's like these goddamn things have timers. And trust me I'm not just talking about vacuums. Everything is MADE TO BREAK. PERIOD. Nothing is made to last anymore. I worked at dodge city for a few months when I was 18, bringing cars in for mechanics to work on. You wouldn't believe how many new cars, of various models but especially dodge neons, come in f@cked. I'm talking the motor is shot, done. As in you need a new car buddy. I currently work in a pawnshop, if you saw our pile of broken shit you'd agree with me. Free trade gaurantee's we'll all get a cheap VCR, but it also gaurantee's it'll be a piece of shit.

factless raving complete.....
User avatar
Matrim
Lignite
Lignite
 
Posts: 211
Joined: Thu 26 Aug 2004, 03:00:00

Unread postby MonteQuest » Thu 16 Sep 2004, 15:46:26

It's like these goddamn things have timers.


In the jargon if an earlier era, it was called "planned obsolescence." Today, due to the ever increasing breakthroughs in design and technology, anything made today is obsolete in 90 days. Buy a $40 DVD player at Wal-Mart, use it until it doesn't work, then buy another. Cheaper to buy a new one than to get it repaired in every case. The direction this whole mind set has gotten us is nothing more than a temporary party; the food and beer is gone, and we are waking up in the bright harsh light of the morning after with a huge headache that two aspirins and call me in the morning won't fix.
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
User avatar
MonteQuest
Expert
Expert
 
Posts: 16593
Joined: Mon 06 Sep 2004, 03:00:00
Location: Westboro, MO

Unread postby mgibbons19 » Thu 16 Sep 2004, 16:11:33

Matrim wrote:
ie free trade makes for higher efficiency = more people get more, better stuff.


No. It doesn't. At all.


Well yeah it does. At least mathematically. Now companies can make shit if they think they can make more money doing that, which is what you are complaining about (and with which I incidentally agree).

Simply put, assume you are better at making cereal, and I am better at making milk. now, without trade, you have to get your own milk, and you don't get much, cause you suck at it. I have to make my own cereal, which is crappy for same reason. If you get to focus on cereal, and not waste time on milk, you make mo' betta cereal. And I can make mo betta milk since I'm not wasting time with all that rotten granola. So we trade and between the two of us we have more milk and more cereal. Thing is this works mathematically no matter if the trading partners are equally matched , or if you're talking Iceland and the US.

This is why the free market types will defend this to the death. This is where the "a rising tide floats all boats" comes from. There simply is more shit for everyone to divvy up.

There are of course many and good criticisms to this paradigm. But this is the basic.

So you can see that if shipping costs not so much, we can all have tuscan wine, georgia peanut butter, and seattle coffee. And these places can spend their time doing what they do best.

Shipping costs change --> the whole equation changes.
mgibbons19
Heavy Crude
Heavy Crude
 
Posts: 1105
Joined: Fri 20 Aug 2004, 03:00:00

Unread postby Falconoffury » Thu 16 Sep 2004, 16:13:42

How many Americans would work for that? How many could afford to?


Well, maybe we could at least eliminate unemployment. Wages may be low, and the standard of living will go down, but at least everyone would have work. If the housing bubble pops, it will bring down the cost of housing. Won't that help people who have been saving lots of money for a house? I guess it all comes to how bad inflation will get. If we need a wheelbarrow of change to buy a loaf of bread, nobody will be helped. If the inflation doesn't get all that bad, the people who saved money won't be so bad off.
"If humans don't control their numbers, nature will." -Pimentel
"There is not enough trash to go around for everyone," said Banrel, one of the participants in the cattle massacre.
"Bush, Bush, listen well: Two shoes on your head," the protesters chant
User avatar
Falconoffury
Expert
Expert
 
Posts: 1395
Joined: Tue 25 May 2004, 03:00:00

Unread postby MonteQuest » Thu 16 Sep 2004, 16:29:07

Falconoffury wrote:
How many Americans would work for that? How many could afford to?


Well, maybe we could at least eliminate unemployment. Wages may be low, and the standard of living will go down, but at least everyone would have work. If the housing bubble pops, it will bring down the cost of housing. Won't that help people who have been saving lots of money for a house? I guess it all comes to how bad inflation will get. If we need a wheelbarrow of change to buy a loaf of bread, nobody will be helped. If the inflation doesn't get all that bad, the people who saved money won't be so bad off.


These are the key words to Peak-oil "rate" (how fast) and magnitude (how big). Eliminate unemployment? Trust me, if people could only make $5 an hour, most businesses would disappear overnight here. People's savings will go for food, not to buy a house or even a movie. Think of all the companies that make "stuff" that people who make $15 to $20 an hour consume. A 75% drop in wages would resound through everything we know. The fat would be trimmed instantly.

Even basic economics is hard to grasp, but you are asking questions that will lead you to that understanding.
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
User avatar
MonteQuest
Expert
Expert
 
Posts: 16593
Joined: Mon 06 Sep 2004, 03:00:00
Location: Westboro, MO

Unread postby Markos101 » Thu 16 Sep 2004, 17:50:29

MonteQuest,

Tell me if I've got this right;

- US dollars are obviously the oil reserve currency
- Therefore countries who's native currency is not the dollar need to supply goods and services to the US in order to obtain dollars
- If they simply took their currency and 'converted' it to dollars, they'd be devaluing their own currency because no economic growth would have occurred to match the creation of the converted currency they've created to obtain dollars to pay for oil
OR is it
- They need to pay so much for oil, there isn't enough dollars in circulation, created by the US banks, in order to convert their currency to dollars. Therefore they need to trade with the US in order to obtain dollars.
- Then, for security and because they need dollars for oil, they hoarde dollars to keep a reserve supply
- To keep it from devaluing, and as a secure appreciator or wealth, they invest in US securities, which are bought and sold in dollars.
- These US securities pay for US debts, debt incurred from commercial banks who create the money based on 10% reserves and charge interest on it. This is required because the amount the US gov't get in tax every year does not pay for its spending.
- If the oil bearing countries change their reserve currency to the Euro, this obviously means that countries no longer have to hoard dollars, they need to hoard Euros.
- Therefore they will sell their US securities and start buying securities dealt in Euros.
- This obviously means that the US trade deficit can no longer be serviced by other countries, which means the debt bubble bursts, and the dollar goes down in value because there are so many of them around that has not previously been tied to any form of production.
- Peak oil will cause a problem too, because countries will not be able to buy so much oil due to decreasing supply. They will (forcibly or not) therefore not need to hoard so much dollars, and again US debt will not be serviced by the rest of the world.

Is this correct? I've put the ones I (think I) am unclear about in bold.

Cheers for the help,

Mark
User avatar
Markos101
Lignite
Lignite
 
Posts: 381
Joined: Tue 24 Aug 2004, 03:00:00
Location: United Kingdom, Various

Unread postby Markos101 » Thu 16 Sep 2004, 17:54:18

Actually I put 'Then, for security...' - in other words other countries perceive US securities as secure because of the perceived strength in the economy. If other countries lose faith in the US economy (and therefore its securities and currency), the bubble bursts.

Mark
User avatar
Markos101
Lignite
Lignite
 
Posts: 381
Joined: Tue 24 Aug 2004, 03:00:00
Location: United Kingdom, Various

Unread postby MonteQuest » Thu 16 Sep 2004, 18:19:07

- If they simply took their currency and 'converted' it to dollars, they'd be devaluing their own currency because no economic growth would have occurred to match the creation of the converted currency they've created to obtain dollars to pay for oil
OR is it
- They need to pay so much for oil, there isn't enough dollars in circulation, created by the US banks, in order to convert their currency to dollars. Therefore they need to trade with the US in order to obtain dollars.


How refreshing! Finally somebody who understands! Yes, all your statements are spot on. As to your above questions, since all currencies are pegged to the dollar, if a country converted to dollars they would devalue their currency against the dollars present value. There is no "even" swap. The converting country would have to "create" more debt money to replace the decreased purchasing power of the conversion, causing inflation in their currency. So, yes, you are correct, there is no new growth to offset the increase in the money supply. Understanding this makes your second question moot, I think.

$100 US =$121 euro $100 US=$110 yen as of today
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
User avatar
MonteQuest
Expert
Expert
 
Posts: 16593
Joined: Mon 06 Sep 2004, 03:00:00
Location: Westboro, MO

Unread postby MonteQuest » Thu 16 Sep 2004, 18:30:42

Markos101 wrote:Actually I put 'Then, for security...' - in other words other countries perceive US securities as secure because of the perceived strength in the economy. If other countries lose faith in the US economy (and therefore its securities and currency), the bubble bursts.

Mark


Yes, the US wealth and economy seems the safest and best place to invest. If foreign investors and central banks moved out of the dollar, the market would be flooded with those excess dollars and the US securities they hold (i.e. the $3.7 trillion part of our $7.3 trillion debt) would be impossible to unload. Who has money to buy them? US has a saving a rate of .6% now, no rebound there. The US govt has borrowed 80% of the world's savings, so nobody is flush with cash.

The end result, the FED would have to create money money to offset the currency slide, raising interest rates to slow the inflation rate. It could turn into runaway inflation like Weimar Germany in the 1920's. Big, huge, colossal problem. BIG, BIG elephant in the room folks. In the words of radio announcer, Paul Harvey, "Stand by for News!"
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
User avatar
MonteQuest
Expert
Expert
 
Posts: 16593
Joined: Mon 06 Sep 2004, 03:00:00
Location: Westboro, MO

Unread postby fred2 » Thu 16 Sep 2004, 19:48:32

mgibbons19 wrote:
Shipping costs change --> the whole equation changes.


Yes it changes, but I dont think that, in itself, is necessarily too serious. I think there are plenty of goods we could stop shipping halfway round the world, with little serious consequence. Adjustment, yes, but cataclysmic consequence? Not necessarily. I suspect there are also lots of other current uses of oil we could do without that would have little serious effect.

E.g. thinking of food, what are the reasons why we currently ship it round the planet to countries in the west?
1. some things simply can't be realistically produced at home. E.g. bananas in Scotland
2. some produce is of higher quality that cant be obtained locally. E.g wine in the UK. The French and Australian stuff is better, although we can do some (generally 2nd rate) stuff ourselves.
3. some produce, which can equally well be grown locally, is cheaper to source overseas and ship in.

I doubt that the volume of shipped goods in class (1) would be much reduced by an oil shortage, until it really got quite bad. Type (3) would be more or less eliminated. Type (2) would reduce. The decrease in (2) and all of (3) would be compensated by increase in locally produced foods. Consider that at present some of this stuff is shipped round the world in AIRPLANES e.g. out of season strawberries etc. What a stupendous waste of energy, just to satisfy our expectation of being able to eat what we want, whenever we want. Its only relatively recently that we've grown used to having everything whenever we want, something we could easily do without.

Of course, the cost of all foods that do get shipped long distance will continue to go up, all resulting in decreasing shipped food, and compensating increasing consumption of locally produced foods. We will see a reduction in the diversity of what we eat. But thats not really so hard.

Curiously, the huge diversity of foodstuffs we in the west now enjoy hasnt done us any good. We have significantly increased diet-related health problems than the previous 2 generations, if obesity and other diet problems are considered.

Thinking of non-food goods, I expect theres probably lots of stuff shipped around the world we could easily do without. E.g. think of all those millions of cheap plastic toys that get handed out in fast-food restaurants. They're all made in China and get shipped halfway across the planet to get discarded after a few minutes distraction in a burger bar. No doubt lots of oil is used making the stuff too. Ok, its a trivial example, but no doubt there are others.

Of course, there are going to be some very serious problems for some countries. E.g. China, USA. But other aspects of the impact will be just 'change', not necessarily all 'bad change'. Most of these changes are one form or other of conservation. I suspect there are huge opportunities for conserving oil when we really focus on it. Yes its change. Some of it will be major change. Some of it will be very good change too. Like CO2 emission reductions. To date, we simply haven't had to bother because the wells just keep flowing. I think we tend to forget one thing about human society in the west: it is one of continual change. We shouldnt necessarily fear change. Look back at the history of the last 150 years in the west. Vast, continuous change, particularly in 1900-1950. We shouldnt fear all change; some aspects of what may be coming are to be truly welcomed.
User avatar
fred2
Peat
Peat
 
Posts: 94
Joined: Thu 26 Aug 2004, 03:00:00

Unread postby Markos101 » Thu 16 Sep 2004, 19:58:05

In that case I feel sorry for America. Most of the borrowing has been done by a government who should know better, but the majority of the American public know precious little about this situation because their education system and media have taught them (strangely perhaps) very little about money.

It'll no doubt be a big shock when families find themselves in such difficulties and seemingly no visible, tangible reason for it. A lot of innocents who didn't know anything else have been digging their own financial grave thinking there was a treasure chest at the bottom. I hope the bubble doesn't 'burst' as such but contracts at a rate that is at least minimally managable.

Damn the American government for their short-sighted spitefulness.

Mark
User avatar
Markos101
Lignite
Lignite
 
Posts: 381
Joined: Tue 24 Aug 2004, 03:00:00
Location: United Kingdom, Various

Unread postby MonteQuest » Thu 16 Sep 2004, 21:56:34

Damn the American government for their short-sighted spitefulness.


Mark, the whole world is based on the fiat money system. We in the US have just been the one to most egregiously abuse it. But, as I have written on numerous occasions, a money system based upon the ever-increasing consumption of energy in a finite world has limits. China is right behind us over-taking Japan as #2 in oil consumption and with runaway growth 8.7% in GDP.

The world's bankers, not just the ones in the US are the guilty parties. Thre is a ruling elite that dictates all this.
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
User avatar
MonteQuest
Expert
Expert
 
Posts: 16593
Joined: Mon 06 Sep 2004, 03:00:00
Location: Westboro, MO

Unread postby Markos101 » Thu 16 Sep 2004, 22:02:05

MonteQuest wrote:
Damn the American government for their short-sighted spitefulness.


Mark, the whole world is based on the fiat money system. We in the US have just been the one to most egregiously abuse it. But, as I have written on numerous occasions, a money system based upon the ever-increasing consumption of energy in a finite world has limits. China is right behind us over-taking Japan as #2 in oil consumption and with runaway growth 8.7% in GDP.

The world's bankers, not just the ones in the US are the guilty parties. Thre is a ruling elite that dictates all this.


You're right, as I wrote in 'Debt-Based Banking Explained' - if world economic energy efficiency can't grow at the same rate of economic growth, you get increasing energy demands with expansion and eventually you're going to hit resource limits imposed by Earth.

However, you're wrong that the whole world is based on fiat money. In fact the island of Guernsey are a prosperous little island, and have a debt-free money system (insignificant in the world economy though, I know).

There is a ruling elite, but I'd be interested to put names to it. One needs to trace back probably to the IMF or World Bank - who owns these assets (which is what they are?). And what do they know about energy consumption? Probably quite a lot.

I'd like to know who these people are.

Mark
User avatar
Markos101
Lignite
Lignite
 
Posts: 381
Joined: Tue 24 Aug 2004, 03:00:00
Location: United Kingdom, Various

Unread postby MonteQuest » Thu 16 Sep 2004, 22:08:08

I'd like to know who these people are


Mark, Look in your private mail box.
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
User avatar
MonteQuest
Expert
Expert
 
Posts: 16593
Joined: Mon 06 Sep 2004, 03:00:00
Location: Westboro, MO

Unread postby Markos101 » Thu 16 Sep 2004, 22:28:07

http://news.bbc.co.uk/1/hi/business/677485.stm

The president of the World Bank appears to be someone called James Wolfensohn. The article contains some interesting references to the World Bank such as:

The World Bank believes it is facing an uphill task, as the number of the world's poor has stayed the same despite world economic growth.

In its report, "Voices of the Poor," based on conversations with thousands of poor people across five continents, Mr Wolfensohn wrote:

"What poor people are sharing with us is sobering... we are prepared to hold ourselves accountable to make an effort to respond to those legacies."

The World Bank has traditionally operated at a great distance from the poor people it has tried to help.

The World Bank is under unprecedented attack, with governments questioning the role of official lending as never before, while pressure groups question the World Bank's analysis and prescriptions.

If Mr Wolfensohn can satisfy all these audiences, while reducing the distance between the Bank and the poor it serves, he will be making a very great contribution indeed.


However, presidents are almost always chosen by banks because they look like presidents should. They are part of the marketing, as are all management.

I'm not sure the bank is the one institution it all converges upon, but I'm increasingly becoming convinced that if one traces the monetary systems and world economy you will find one pervading institution, run by a certain number of directors. And that institution is likely owned by an individual or individuals. So who are these people?

This is sounding like 'what is the matrix'.

...Mark
User avatar
Markos101
Lignite
Lignite
 
Posts: 381
Joined: Tue 24 Aug 2004, 03:00:00
Location: United Kingdom, Various

Previous

Return to Economics & Finance

Who is online

Users browsing this forum: No registered users and 26 guests