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Stock Market Crash! (merged) Pt. 9

Discussions about the economic and financial ramifications of PEAK OIL

Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Sat 21 Sep 2019, 13:55:29

The end of the fiat system is approaching


The last fiat system was founded on perpetual growth, and that was founded on infinite growth in oil supplies. The next fiat system will be founded on Tesla, WeWork, FaceBook, and Uber. The last fiat system built the Golden Gate Bridge, and the Trans Continental Railroad. The next one will be used to build a new app to pay your car insurance on line.

We have become so myopic we can't even see the brick wall we are driving into.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby The_Toecutter » Sat 21 Sep 2019, 15:53:25

shortonoil wrote:
The end of the fiat system is approaching


The last fiat system was founded on perpetual growth, and that was founded on infinite growth in oil supplies. The next fiat system will be founded on Tesla, WeWork, FaceBook, and Uber. The last fiat system built the Golden Gate Bridge, and the Trans Continental Railroad. The next one will be used to build a new app to pay your car insurance on line.

We have become so myopic we can't even see the brick wall we are driving into.


Actually, it's worse than that.

As we speak, everyone who has renewed a state issued drivers' license or ID card in the last 7-10 years or so depending on state, has been put into a facial recognition database(even in states where this practice has been outlawed). The company that produces the ID cards was called Morphotrust(who later sold their tech and contract rights to IDEMIA to avoid controversy after rigging the elections in Kenya and leaking the data of tens of millions of millions of people, bribing Nigerian officials to force biometric ID cards on their population, helping implement China's social credit scoring system, and all that other good stuff), the subsidiary of the French/Chinese/US CIA-owned defense contractor SAFRAN. When you go to obtain or renew an ID card in the U.S., the photograph is taken to an ICAO/ESO international standard for global interoperable use in facial recognition, with images of a sufficiently high resolution to also grab and register irises. This company has a business model based partially on monetizing, trading, buying, and selling biometric information. This company also used illegal software produced by the Russian-owned firm Papillion, that whistleblowers say has a backdoor built into it allowing Russian intelligence access to the data collected, this system also used in the FBI's IAFIS that processes everyone arrested(regardless of whether they are innocent or guilty) as well as similar systems used in government security clearances. The same people running these companies, as we speak, are helping the implement China's social credit scoring system and bringing it here to the U.S., Europe, Australia, and other places where people theoretically have human rights.

All of that biometric data, gathered legally or not, has value. It's being monetized. Wall Street is licking its chops at using it for targeted advertising based on every piece of data that can be inferred by those forced into this system, Minority Report style, as well as law enforcement and intelligence seeking to weaponize it against the American public and attach every known piece of information about American citizens, including but not limited to health/education records, work history, criminal records, assets, leins/judgements, purchases, library records, known relatives/friends/associates, anything gathered by the NSA and stored at that Bluffdale, Utah data center(among others) including but not limited to phone calls, emails, internet usage, recorded conversations from smart devices, and everything else that databrokers are trying to gather, as well as social media info. All of this info is being tied together, and then being tied to unique and immutable physical features that identify you, permanently.

Your face and other biometrics are being rendered into machine readable barcodes so that this information can be pulled up by anyone with access to the tech, with the gathered biometrics widely distributed so that registration becomes permanent and irreversible.

In my home state of Missouri even, the Department of Revenue got caught in 2013 using biometrics in their drivers license issuance, in violation of a Missouri law passed with the specific intent of protecting the privacy of Missourians and preventing this invasive datamining. This has never been corrected, the courts refuse to address it, and the vendor(formerly Morphotrust, now IDEMIA), is still getting access to everyones' data in my home state illegally and issuing the licenses/ID cards. The U.S. government is also gathering this data as part of the REAL I.D. act, without regard to the U.S. Bill of Rights, and even the "non compliant" licenses and IDs are going into the REAL ID-associated databases and being shared to the law enforcement and intelligence communities and even INTERPOL as well as sold to databrokers. I never renewed.

It won't just be "to build a new app to pay your car insurance on line", but constant, unblinking surveillance where anything and everything about you, including everywhere you go and everything you do and everyone you know/associate with, is gathered and sold to anyone willing to pay for it, whether its private databrokers, law enforcement, or the intelligence community, regardless of whether or not you consent, without you getting any of the profit, and no way to object or stop the data gathering once permanent biometric enrollment has occurred. Commercial entities are salivating at the prospect of identifying customers as soon as they walk in the door, without permission, and having access to all their data, while using AI to help automate the shopping experience and discriminate against individuals regarding prices set for goods and services, as well as employers being able to know everything about everyone, as well as law enforcement having access to it all. They also intend to tie this to your ability to buy, sell, travel, and work.

Everything about you is being monetized. That's the next and possibly final frontier in the neoliberal quest to monetize and conquer everything, and your very identity, your body, and your autonomy are about the last things remaining that these fuckers can still exploit stripmine for profit, and they intent to take it all.

And if any group eventually revolts,once the technology is there, it will be a trivial matter for mass automated drone strikes or robots to take out any and all that are deemed targets, which is exactly what the fucks at DARPA have in mind.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Cog » Sat 21 Sep 2019, 16:11:14

You have no expectation of privacy in public. If I wished, I could take high resolution of your face in a public setting and sell them to the highest bidder and you couldn't do shit to stop me under the US Constitution.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby The_Toecutter » Sat 21 Sep 2019, 16:20:36

Cog wrote:You have no expectation of privacy in public. If I wished, I could take high resolution of your face in a public setting and sell them to the highest bidder and you couldn't do shit to stop me under the US Constitution.


That's a bullshit argument though, because legal precedent has established you also have the right not to be stalked or harassed. And the existence of this technology, and the willingness for people to use it for profit, totally erodes these rights.

And it's not merely privacy we're talking about, but also anonymity.

To say that one has no right to either privacy or anonymity in public is to say one has no right to these things at all, because going out in public is unavoidable during the course of your life.

It's like the courts ruling that police gathering one's DNA because the person shed's dead skin cells, even with the explicit lack of permission by the person to whom that DNA pertains, without a warrant, is constitutional. It is not constitutional, regardless of what the courts say, because the courts are saying it just because it's convenient for law enforcement and the case of the prosecution and for little else, and totally disregarding the 4th amendment rights of the person subject to the search that they did not consent to and that there was no warrant for, even though the court claims they consented by shedding dead skin cells, against their will.
The unnecessary felling of a tree, perhaps the old growth of centuries, seems to me a crime little short of murder. ~Thomas Jefferson
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Cog » Sat 21 Sep 2019, 16:39:10

The courts determine what is constitutional, not you. And if you are in public I can photo you to my hearts content. I can take pictures of your license plate, your image, your house, your kids, and anything that comes to mind. And I can sell that information to the highest bidder. The Constitution prevents the government from invading my privacy but it does not prevent me, a private citizen from doing so. Only if you can show harm can you prevent me from obtaining as much public information on you as I wish. Good luck with all of that.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Sat 21 Sep 2019, 21:36:29

China’s debt went from 2 trillion to 40 trillion since 2000.

It’s the race to the bottom
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby asg70 » Sat 21 Sep 2019, 23:34:54

The_Toecutter wrote:At the Wall Street Casino, whether it's up or down, the house always wins.


I would expect nothing more than this brand of blind cyncism from a hangout like this.

HALL OF SHAME:
-Short welched on a bet and should be shunned.
-Frequent-flyers should not cry crocodile-tears over climate-change.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Yoshua » Sun 22 Sep 2019, 03:06:50

The Repo spiked because U.S and foreign banks that operate in the U.S refused to use their USD 1.4 Trillion in reserves parked at the Fed in the Repo market.

They refused to hand over money to banks that needed liquidity even if the banks offered treasuries as collateral.

So the Fed had to step in as the lender of last resort.

https://www.zerohedge.com/markets/these ... are-parked
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Sun 22 Sep 2019, 07:12:03

The Repo spiked because U.S and foreign banks that operate in the U.S refused to use their USD 1.4 Trillion in reserves parked at the Fed in the Repo market.

They refused to hand over money to banks that needed liquidity even if the banks offered treasuries as collateral.


The interest rate was not high enough to produce a positive risk/ reward outcome for the those holding the available funds. As the debt continues to build exponentially, and the interest rate continues to go down the situation will only worsen. Long term there is nothing the FED can do to alleviate the situation. The debt will continue to grow, and interest rates will continue to fall as we approach the end of the oil age. The monetary system will continue to unwind in the process. The age of fiat currency will end as the oil age comes to its end.

Most will not notice until the equity and bond markets have collapsed. Considering that the credit markets are freezing up at present, it will only require a brief period for the next crisis to appear. Fiat currency will begin to disappear at the consumer level, and that is already happening. Bank runs are on the horizon.

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby SRSroccoReport » Sun 22 Sep 2019, 07:43:02

Shortonoil,

It is interesting how the Central Banks are using debt and zero (or negative) interest rates to offset the Falling EROI and Thermodynamics of oil depletion. Furthermore, you make a good point that the Fiat Currency System will go down in flames right along with the end of the oil industry. This is something I don't believe many people realize.

For centuries, even going back thousands of years, the empires wanted to control the GOLD & SILVER supply. By controlling the gold and silver mines and supply, they were able to control the ENERGY of the world, and at that time, it was mostly human and animal labor.

So, when the Spanish conquered Mexico, Central, and South America in the 1500s, they become the leading empire in the world due to the massive discoveries of silver and gold (looting) in those regions. Again, the control of the gold and silver supplies allowed the Spanish to control a large portion of the Energy Flow to remain as the world's leading power for centuries.

However, this all changed when oil came on the market. It was no longer a focus of Empires or Central Banks to control the gold and silver supply because the new PRIZE was oil. By controlling the oil supplies, the world's leading powers by-passed the precious metals and went right to the prime energy source... OIL.

And, as you know, each barrel of oil contains thousands of energy slaves. So, Currency was no longer necessary to be backed by gold or silver, when it was backed by the oil supply. It was no coincidence that Nixon dropped the Gold Peg to the U.S. Dollar in 1971, the year after the U.S. peaked in conventional oil production. And as long as global oil production grew, so could the amount of debt.

But, now with the END OF OIL close on the horizon, the precious metals will return back to a more sound form of money, regardless of what the SHALE BULL OIL NITWITS believe it or not.

Short... as they say, Ignorance is an excuse if one doesn't know the facts, but Stupidity goes right down to the bone.

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby rockdoc123 » Sun 22 Sep 2019, 11:25:37

However, this all changed when oil came on the market. It was no longer a focus of Empires or Central Banks to control the gold and silver supply because the new PRIZE was oil. By controlling the oil supplies, the world's leading powers by-passed the precious metals and went right to the prime energy source... OIL.

And, as you know, each barrel of oil contains thousands of energy slaves. So, Currency was no longer necessary to be backed by gold or silver, when it was backed by the oil supply. It was no coincidence that Nixon dropped the Gold Peg to the U.S. Dollar in 1971, the year after the U.S. peaked in conventional oil production. And as long as global oil production grew, so could the amount of debt.


Maybe you need a lesson in history. It was in 1933 that President Roosevelt cut the dollar's ties with gold which pretty much every economist over the past number of decades points out as being the only reason the US got out of the Great Depression. Prior to that period, the US had to maintain high-interest rates to avoid people cashing in their gold deposits which would, in turn, deplete the gold reserve and effectively shrink the US economy. Although the US continued to allow other gov't to exchange dollars for gold Nixon ended the practice in order to keep foreign governments who had lots of cash from depleting the US gold reserves, but the dollar link to gold had long before been eradicated.

When the gold link to the dollar was dropped oil production in the US was ¼ of what it would eventually be during the mid-seventies when it peaked for the first time. Oil prices when the gold standard was removed in the early thirties was down around $20/bbl and by 1975 it had risen to around $50/bbl but was rising fast as the Iranian revolution took full force and its production was nationalized.

So sorry there is no link as you state.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby Armageddon » Sun 22 Sep 2019, 11:57:16

Look Out Bears! Fed New QE Now Up to $165 Billion

http://wallstreetexaminer.com/2019/09/l ... 5-billion/


This is just the beginning.
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Sun 22 Sep 2019, 12:03:13

And as long as global oil production grew, so could the amount of debt.


Now they are attempting to grow the debt without a compensatory growth in the oil supply. Due to depletion, oil's per unit ability to power the economy has been declining since the beginning, but during its earlier period its increasing production rate was enough to compensate. That is no longer the situation, and currency is coming into existence without an associated, and equal quantity of production activity. Fiat currency needs no production to be formed; it just needs an entity to assume the debt with sufficient assets to act as the collateral. The difference between what has been produced, and the currency that has come into existence is the debt. That now stands at $332 trillion, or 3.9 times the value of the world's annual GDP. With oil now on the back side of its curve; the world will never be able to make up the production deficit it has been accumulating. Its debt based currency system is a mirage. There is no longer enough production to authorize it, and never will be!

The assets used as collateral to create the currency that became the debt must be serviced at ever lower costs to assure that the funds are available to provide for the servicing. When interest rates reach zero (or some low value) those agents who are now loaning money will be better off financially to be borrowing it. The mirage will then vanish before our eyes!
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby SRSroccoReport » Sun 22 Sep 2019, 12:21:20

rockdoc123 wrote:
However, this all changed when oil came on the market. It was no longer a focus of Empires or Central Banks to control the gold and silver supply because the new PRIZE was oil. By controlling the oil supplies, the world's leading powers by-passed the precious metals and went right to the prime energy source... OIL.

And, as you know, each barrel of oil contains thousands of energy slaves. So, Currency was no longer necessary to be backed by gold or silver, when it was backed by the oil supply. It was no coincidence that Nixon dropped the Gold Peg to the U.S. Dollar in 1971, the year after the U.S. peaked in conventional oil production. And as long as global oil production grew, so could the amount of debt.


Maybe you need a lesson in history. It was in 1933 that President Roosevelt cut the dollar's ties with gold which pretty much every economist over the past number of decades points out as being the only reason the US got out of the Great Depression. Prior to that period, the US had to maintain high-interest rates to avoid people cashing in their gold deposits which would, in turn, deplete the gold reserve and effectively shrink the US economy. Although the US continued to allow other gov't to exchange dollars for gold Nixon ended the practice in order to keep foreign governments who had lots of cash from depleting the US gold reserves, but the dollar link to gold had long before been eradicated.

When the gold link to the dollar was dropped oil production in the US was ¼ of what it would eventually be during the mid-seventies when it peaked for the first time. Oil prices when the gold standard was removed in the early thirties was down around $20/bbl and by 1975 it had risen to around $50/bbl but was rising fast as the Iranian revolution took full force and its production was nationalized.

So sorry there is no link as you state.


roc... there is a link. Unfortunately, ignorance can't be your excuse.

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Sun 22 Sep 2019, 15:48:30

roc... there is a link. Unfortunately, ignorance can't be your excuse.


OH - Yes it can. Just read on. Mother Goose invented better stories.


Maybe you need a lesson in history. It was in 1933 that President Roosevelt cut the dollar's ties with gold which pretty much every economist over the past number of decades points out as being the only reason the US got out of the Great Depression.



The 1944 Bretton Woods agreement established a new global monetary system. It replaced the gold standard with the U.S. dollar as the global currency.

https://www.thebalance.com/bretton-wood ... nt-3306133

The US got out of the Great Depression because of WWII.

FDR's New Deal did not end the Great Depression. Instead, in 1937, the stock market collapsed by 90 percent and unemployment soared.


Roosevelt didn't have much to do with it - he was dead, or very close to it for most of it. In 1933 Roosevelt made gold illegal to be held by US citizens. The US was still paying its bills in gold until Bretton Woods. The FED has been busy little beavers since the beginning. Gold has been their long, long time primary competitor. Anyone who believes that 105 year old paper stands any chance of coming out on top against 7,000 year old gold is slightly off balance in the head dept. Maybe acupuncture can help; to the head.
https://www.huffpost.com/entry/when-own ... b_10708196
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby SRSroccoReport » Sun 22 Sep 2019, 16:22:32

Shortonoil,

You should know better than applying LOGIC here... HA! Well, some people might still have an open mind.

Anyhow, Gold and Silver were the dominant sources of POWER (ENERGY control) in the world until oil came on the market in a big way during the early 1900's. The EROI of some of the early oil wells, such as the Lakeview Gusher in California had an EROI of 35,000/1.

http://theoildrum.com/node/10011#comment-966282

For example, one of the richest deposits of silver ever found was in Potosi, Bolivia. After the Spanish started mining silver from Potosi, estimates are 1.3 billion ounces were extracted over the following 200 years. Potosi's population reached a peak of 200,000.

https://openendedsocialstudies.org/2016 ... an-empire/

Founded in 1545 as a mining town, Potosi soon produced fabulous wealth, and the population eventually exceeded 200,000 people, making it one of the largest cities in the world during the 1600s. The rich mountain, Cerro Rico, produced an estimated 60% of all silver mined in the world during the second half of the 16th century.

A quote from another source: https://www.theguardian.com/cities/2016 ... capitalism

The discovery of a mountain of silver (and a new way to extract it) transformed this remote Incan hamlet into the economic centre of Spain’s empire – larger than London, Milan or Seville.

High in the dusty red mountains, the city was surrounded by 22 dams powering 140 mills that ground the silver ore before it was moulded into bars and sent to the first Spanish colonial mint in the Americas. The wealth attracted artists, academics, priests, prostitutes and traders, enticed by the Altiplano’s icy mysticism. “I am rich Potosí, treasure of the world, king of all mountains and envy of kings” read the city’s coat of arms, and the pieces of eight that flowed from it helped make Spain the global superpower of the period.

------------------------------
Would you look at that? One of the largest cities in the world during the 1600s and all due to Silver.

Anyhow... as I stated, when the SHALE OIL PONZI finally goes the same way as Bernie Madoff, well then, the global oil industry starts to unravel and a quicker rate. And along with it, the Fiat Monetary System.

So... if you have the majority of your wealth in a pension plan, IRA, Retirement Account of other Funny Money Financial Investments... you have my sympathies.

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby rockdoc123 » Sun 22 Sep 2019, 17:41:53

roc... there is a link. Unfortunately, ignorance can't be your excuse.


Prove it then.

There is zero link of the move from the gold standard to oil production in the US or the world (and you better get your timing right with regards to when all this happened). It should be simple for you to demonstrate there is via some plots....maybe get Short to do them as he seems to be the king of spurious correlation. :roll:

OH - Yes it can. Just read on. Mother Goose invented better stories.


Obviously you need a history lesson as well. Are you claiming that Roosevelt did not remove the US from the Gold standard during the depression?
He most certainly did.
April 5th 1933 – FDR orders Americans to turn in their gold in exchange for dollars in order to prohibit hoarding and the redemption of gold by other countries.
Jan 30, 1934 – Gold Reserve Act prohibited private ownership of gold…government could pay its debt in dollars, not gold. Banks turned in all their gold and could no longer export it. The US was no longer on the gold standard for internal trading.

1944 Bretton Woods was a modified gold standard following the end of the depression which fixed the rate of gold at $35. Because the US held most of the world's gold at that point most countries avoided bothering with links to gold and pegged their currency to the US dollar with Central Banks having fixed exchange rates which they kept by buying back their own currency on foreign markets and they printed more money to avoid wild swings to the negative in exchange. Essentially gold was no longer the standard, the US dollar was the currency of trade courtesy of the Bretton Woods agreement more than a 1/4 century before you are claiming the big switch happened.

Nixon officially removed the revised gold standard established by Bretton Woods in the early seventies in several steps as a consequence of stagflation and the rush of banks attempting to redeem their holdings in gold. It had not been an issue up to that point.

If you are going to try to draw relationships I think you should at least inform yourself of the actually timing of these events don't you?
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Re: Stock Market Crash! (merged) Pt. 9

Unread postby SRSroccoReport » Sun 22 Sep 2019, 18:05:53

roc... read the Potosi Silver Mining post.

God Hath A Sense Of Humor.

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Re: Stock Market Crash! (merged) Pt. 9

Unread postby shortonoil » Mon 23 Sep 2019, 10:39:34

roc... there is a link. Unfortunately, ignorance can't be your excuse.

Maybe you need a lesson in history. It was in 1933 that President Roosevelt cut the dollar's ties with gold which pretty much every economist over the past number of decades points out as being the only reason the US got out of the Great Depression.


April 5th 1933 – FDR orders Americans to turn in their gold in exchange for dollars in order to prohibit hoarding and the redemption of gold by other countries.


By law the US Federal Reserve dollar, between 1933 and 1944, had to be backed with 40% gold at 1/35 oz. per dollar. Going off the gold standard had nothing to do with the end of the Great Depression because the US did not go off the gold standard until after the Depression had ended, and Roosevelt was dead. FDR did not take the US off the gold standard, he took gold away from the American public. He stole it from the public by royal edict, and gave it to the FED so they could print more of their dollars. In 1944 they dumped gold altogether. That has not worked out exceedly well! They now have $331 trillion in debt, and the world's economy is coming apart at the seams by the day.

Your post above is a complete fabrication. Your attempt at making up some completely ridiculous tale only goes to show how false your argument was from its inception. It is a really a lame attempt to rewrite history to serve some petty agenda. Then again maybe there really is no substitute for stupid.

After 1944 the world went from a gold backed currency to a petroleum backed currency. It never gave one iota of consideration to depletion. It never took into considered that they had already spent the last 85 years pumping as fast as possible the best that could be found, and leaving the dregs for another day. The world has now spent the last 160 years doing the same, and the dregs are now barely worth taking out of the ground. The commodity that the world has used to back its currency, and its economy has reached the bottom of its barrel. The debt has exploded in response, and the world's economy is sliding into an abyss. The era of oil, and its currency is fast coming to a close!

We can close our eyes, plug our ears, and say nothing, or seek out a new direction. Those who choose correctly will be the survivors. Those that don't can serve as fertilizer for the new coming era.


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Re: Stock Market Crash! (merged) Pt. 9

Unread postby rockdoc123 » Mon 23 Sep 2019, 11:14:06

Your post above is a complete fabrication. Your attempt at making up some completely ridiculous tale only goes to show how false your argument was from its inception. It is a really a lame attempt to rewrite history to serve some petty agenda. Then again maybe there really is no substitute for stupid.


well I guess pretty much every historian in the world must be stupid then. Lets see what the History channel has to say:

https://www.history.com/this-day-in-his ... d-standard


1933
June 05
FDR takes United States off gold standard
On June 5, 1933, the United States went off the gold standard, a monetary system in which currency is backed by gold, when Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold. The United States had been on a gold standard since 1879, except for an embargo on gold exports during World War I, but bank failures during the Great Depression of the 1930s frightened the public into hoarding gold, making the policy untenable.


After 1944 the world went from a gold backed currency to a petroleum backed currency.


Bretton Woods essentially replaced the gold standard with the US dollar as reserve currency. This eventually led to the US and Saudi Arabia agreeing to set oil prices to US dollars decades later but it didn’t happen in 1944 and Bretton Woods Agreement says nothing about oil as a reserve currency.

Here is an article from Forbes that talks about the myth of the term petro-dollar

https://www.forbes.com/sites/douglasbul ... 9de1e6a14b

The myth of the Petro-dollar comes from efforts in the 1970s to prevent the U.S. suffering severe negative effects in its balance of payments from rising oil prices. Until the late 1960s the U.S. had been an oil-exporter, but by also being an oil consumer they had never sought to maximize the rent from oil production by driving prices upwards. OPEC countries, however, never had such qualms and when the opportunity arose as the U.S. became an importer, happily restrained supply to drive prices, and their own national incomes, higher. The U.S. was worried about the resultant trade deficit caused by suddenly having to pay vast amounts for necessary imports, and so secured the agreement of Saudi Arabia to only trade oil in U.S. dollars, meaning the U.S. could pay for oil in their own currency. Saudi Arabia, for their part, accumulated huge reserves of U.S. dollars, investing some of them back into the U.S. economy.

The enormous lake of U.S. dollars this created augmented the role of the dollar as the global reserve currency, being a highly liquid, easily-exchanged claim on the products, services and investment potential generated by the U.S. economy. But this was merely one step in the rise of the greenback as the global reserve. The next step came when other economies–East Asia in particular–followed the lead of the oil producers and also built up huge reserves of U.S. dollars, all of which was made possible by the abandonment of the Bretton Woods fixed exchange rate system in the early 1970s. This practice helped to keep exchange rates for exporters low, and kept a lid on inflation in the U.S., which suited everyone up to a point.

Bringing this up to date, it was a long time ago when the link between oil and the dollar mattered much at all beyond the financial returns of non-dollar based oil companies. Since the 1980s, the dollar has been consolidated as the global reserve currency because of the strength and dynamism of the U.S. economy, and oil exporters have demanded to be paid in U.S. dollars because that's the currency they prefer to hold on to. 

Those who believe that oil being traded in U.S. dollars gives the U.S. economy a unique advantage in the global economy have it exactly the wrong way around. The U.S. economy is the central economy in the global system because it is the most open, innovative, and productive economy in the world, and because of this, the U.S. dollar is the most convenient, liquid and reliable medium of exchange.
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