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300 Comments
- Herostratus, on 10/27/2007, -13/+96Sensoukami you obviously don't understand how this works. Let me explain.
You have $100
The value deflates by 10% due to printing money to pay off the deficit spending
You still have $100 however in relation to the $100 you had prior its current relative value is only $90.
This is essentially a result of the devaluation of the dollar. The other currencies are not devaluing so their prices do not go up because their monies retain the same relative value.
Fiat currency is unreliable. A gold standard is necessary and should be re-instituted. - Shigglyboo, on 10/27/2007, -6/+69very nice article. short and to the point. I don't like it when my money loses value. I sure wish it was backed up by something more than a promise from uncle sam...
- scottc, on 10/22/2007, -14/+49Nice explanation until the last line. A gold standard makes no sense at all, which is why it was abandoned decades ago. Why should the value of our currency fluctuate with the supply and demand of a particular metal?
- heystoopid, on 10/27/2007, -2/+35Bomb Iran and see what happens to the both the price of Oil and the US dollar !
- Gabberwok, on 11/07/2007, -4/+31Personally, I just wish a promise from Uncle Sam was worth more than it is today... Our credibility is shot thanks to the Commander in Chimp.
- DutchMaster, on 10/19/2007, -1/+26Can I get paid in Canadian dollars from now on, please?
- heystoopid, on 10/19/2007, -2/+25Failed Economics 101 at grade school did we ?
- pleiadianagenda, on 10/27/2007, -6/+28Let's see. Oil companies showing record profits. Citizens paying record prices at the pumps and for crude. In 2003, the Oil Embassy was the first building protected by US troops in Iraq.
One of the many reasons it is flying through the roof is false scarcity. Not only did we go into Iraq for oil, but we went in to shut the flow of oil off, creating scarcity (or the illusion of), and jacking up prices. - Wiggles2, on 10/27/2007, -1/+22 satanatnmtedu- not true. Gold is a precious metal that you can't simply print endless quantities of, as you can with fiat paper. That's a functional difference.
- FluffyWolf, on 10/19/2007, -2/+22Yes and No...
The price of oil is determined by supply and demand, while the price is noted in US dollars it is set by supply and demand. And to a large degree the increased price is due to the devaluation of the US dollar (as the rest of the world is prepared to pay more in US dollars due to the devaluation of the US dollar). - jazzmichael, on 10/22/2007, -9/+28Answer: Inflation + We're being ***** by the oil companies.
- BESTenemy, on 10/27/2007, -3/+22Gold is not fiat. You are completely wrong. It has real value. Doesn't oxidize, is easy to melt and shape, maintains good structural integrity at thickness of just a few atoms, excellent conductor of electricity. But most importantly, its supply is limited and it cannot be manufactured out of thin air, like paper money.
Fiat cash has no real value. Gold does. Also, the value is transferable. If you don't like gold coins, you can melt them and use the raw material for purposes mentioned above. When it comes to money, you can either burn it to keep warm or wipe your ass with greens, but you'll get the exact same effect regardless whether you're wasting $1 or $100 bills. Bank notes only have value if they're printed responsibly, where every bill represents wealth. In our current state, money represents debt and nothing but debt. - dukeeeey, on 10/22/2007, -14/+30This article is flat out false. Firstly everyone is paying higher prices for oil, in whatever currency they use.
http://uk.reuters.com/article/motoringNews/idUKNOA ...
Sure the falling dollar is having in impact for Americans ... but it is NOT the driving force.
It's a 2 part equation. The first part is demand has become a run away train. Massive growth in demand from china and India, along with the continued growth in the west.
Then the supply aspect .. this is where it gets interesting.
Supply is flat.
See numbers -> http://www.theoildrum.com/uploads/12/plateau_dec06 ...
We need an extra 3 million barrels a day to meet demand and stabalise prices. - SickMonkey, on 10/27/2007, -1/+16Cheney has to be happy. He invested between $10 & $25 million in Euro Bonds a few years ago.
http://articles.moneycentral.msn.com/Investing/Ext ... - FuzzyBunny, on 10/19/2007, -2/+15Buried your comment as stupid
- catalysis, on 10/19/2007, -3/+16On the plus side, US exports have jumped to record levels, pushing the trade deficit to its lowest in 7 months.
http://today.reuters.com/news/articlenews.aspx?typ ... - Wiggles2, on 10/22/2007, -1/+13satanatnmtedu- not true. Gold is a precious metal that you can't simply print endless quantities of, as you can with fiat paper. That's a functional difference.
Sorry. - brstilson, on 10/22/2007, -2/+14and $4.75 of each gallon is directly due to your government's taxes. You receive public services that American's don't for that extra money you're paying.
- prisoner24601, on 10/19/2007, -0/+12A few weeks ago congress approved an increase in the federal debt from 8.9 to 9.8 TRILLION dollars. The news barely reported it. America's finances are being overseen by people who apparently never took even a basic economics class. No wonder the rest of the world is looking on us now and wondering just how tied they want to be to our trainwreck fiscal policy.
- rcook18, on 10/22/2007, -1/+12Who really thought we can spend what we don't have without economic consequences?
- duster805, on 10/19/2007, -1/+12The price of oil is also driven by the lack of refineries, a result of Environmentalist pressure over the last 20 years. I'm not a big friend of the oil companies but your tired conspiracy arguments are not supported by basic economics as everyone else on Digg illustrates for you.
Also, you say "we went in to shut the flow of oil off, creating scarcity (or the illusion of), and jacking up prices." like we went into Iraq to intentionally shut off oil production? That is ridiculous and even if so, they have been exporting pre-war levels for most the time we've been there (remember they were sanctioned before we invaded (only had oil for food program) and all of the insurgent effort now keeps them at a almost equal pre-invasion production levels now that they are allowed to export as much as they can produce).
http://online.wsj.com/public/resources/images/NA-A ... - Scarfy, on 10/27/2007, -1/+11The american dollar is just getting shamed right now.
- kingrooster, on 10/27/2007, -4/+14I don't care what economic condition you are in, gold is worth more than... what was it that the federal government backs up newly printed currency with... oh yeah... NOTHING!
- TrevorBradley, on 10/19/2007, -0/+9I believe the word is "pwned"
- FluffyWolf, on 10/19/2007, -2/+11I like that, problem solving by trial and error, very intuitive.
- Bomb Iraq....*dollar sinking.* *Check*
- Hmmm...Bomb Iran!!....*dollar sinking.* *Check*
- Condoleezza!!! Let's call the generals and have them unbomb Iran and Iraq, I'm gonna try something new! - brucerchapman, on 10/19/2007, -1/+10This bears out to be true for most people. Back when Oil hit $60+ in early 2006, Australian petrol prices went above about $1.25 per litre. Now, the oil price is at $90 and petrol prices are still lower than 2006. Why? Because the Australian dollar continues to climb relative to the US dollar. So a falling US dollar and $90 oil is equivalent to a stronger US dollar and $60 oil. The mask is that anyone with savings or assets denominated in USD has lost about 25% of their wealth in the last couple of years, so oil is more expensive for them, but not so much for the rest of the world - who are not spending trillions of dollars on foreign policy excursions. And you thought the french were just surrender monkeys, when in fact they were smart operators who didn't want to flush their economy down the toilet. Freedom fries indeed!
- marksven, on 10/19/2007, -0/+9If the Fed continues to cut rates to save his buddies on Wall Street, the dollar is going to continue to fall, and inflation of energy and food is going to skyrocket. Tell your Senators and Congress to do something about it!
http://financialpetition.org/ - djbon2112, on 10/19/2007, -3/+11Yes, there's a finite amount of it.
- humperdeath, on 11/07/2007, -2/+10If they had priced oil in Euro, the price would barely have changed in quite some time. Oil (and GOLD too) appear to be more expensive to USA because the shrinking $.
- Wiggles2, on 10/19/2007, -0/+8sensoukami- yes oil is bought and sold with dollars, but if the dollar starts to depreciate and you are a gold exporter, wouldn't you start wanting more dollars for your oil?
- staxofmax, on 10/19/2007, -1/+8There is no mention of that in the article. Source please?
- inactive, on 10/19/2007, -2/+9I hope you're not as dumb as you are ugly. Blaming liberals and a lack of supply, hell even lumping liberals into a collective consciousness is just plain retarded.
- brucerchapman, on 10/19/2007, -0/+7To clear it up for the non-thinkers amongst the audience, what you might have said is this: for Europeans (and other countries) the price hasn't changed much at all. For Americans, the price has risen strongly, because each US dollar now buys less oil. It also buys less gold, chinese toys, french wine, german cars and italian floor tiles. Everything imported in the US will become more expensive as the dollar becomes worth less and less - oil is just one of those things.
- jokerthief, on 10/19/2007, -0/+7No thank you.
- BoDeeDoe, on 10/19/2007, -0/+7Fiat currency through history has always eventually been destroyed. Gold on the other hand has always held its value. Civilizations have come and gone and yet their gold currency still has value. The byzantine empire lasted for more than 800 years on a gold standard. We should try and learn from history.
- Wiggles2, on 10/19/2007, -2/+9Pretty juvenile sounding for a "classy" European.
- Wiggles2, on 10/19/2007, -0/+7Probably because things are exports are cheaper to foreigners now, due to the weak dollar. That's how these currency imbalances are supposed to be rectified with free floating exchange rates.
- FuzzyBunny, on 10/19/2007, -2/+9Yes, but the price fluctuates based on the demand which for gold, a rather non essential material, is just about as arbitrary as the US GDP. We had inflation long before we had fiat currencies.
- Wiggles2, on 10/19/2007, -1/+8Not to mention I could probably drive coast to coast in England with a tank of petrol. Try that in the states.
And brits have a much better public transport system. Americans have a ***** public transport system. - Wiggles2, on 10/22/2007, -0/+7geekee there are convincing arguments against a gold standard, of which you mentioned precisely none.
- YojimboJango, on 10/19/2007, -0/+6Yes gas is $6 dollars a gallon, but the average european doesn't need to buy gas to get places. They have trains and buses, we don't.
If I want to get groceries from my house it'd take a 8 hour round trip walk to get there and back. (That's a 4mph walk for 15 miles there and 15 miles back and a half hour to actually buy stuff). That's a day trip just to get as much food as you can carry.
Europeans can get as snobbish as they want about this crap, but they aren't required to fork out even a 10th of what an American has to on fuel a month. - rocket777, on 10/22/2007, -1/+7And if you agree with what hero.... said, you should understand that the people who are doing all the counterfeiting are the ones that took us off the gold standard (and in historical senses, going back to when money was invented - this was just seconds ago). So, why do you think they did it? Simple, so they could counterfeit with nothing to stop them. Infinite cash printing presses.
Here’s the ticket: You don’t need to back federal reserve notes with gold, you just need to repeal the legal tender law and allow competing currencies. Let us use dollars or euro’s, or any other currency, including a truly gold-backed currency, just nobody is forced to take something they don’t want. That’s it.
Naturally, all business transactions would stay exactly the same, credit cards, cash, etc. But you have to eliminate taxes on money exchanges – no capital gains tax especially.
There might be separate true “gold” cards where the merchant would know you are paying in gold. People could choose which money they preferred. All the details would be worked out by computers, as they do today already for anything with a credit card.
This is basically Ron Paul's plan. He is truly one of the most intelligent economists. I don’t know if this plan is his original plan, but it seems the perfect solution. You let the FED go down or stay up by competing with other moneys. No more monopoly on money by the government. What’s to fear? - dracostimpy, on 10/19/2007, -1/+7You think of something better than gold to use as money, cuz it sure as hell isn't slips of paper, and barrels of oil aren't exactly wallet-sized. Gold is the best option as proven by society after society throughout history that settled on it as the best form of money, because it's inert, durable, divisible, scarce, and pretty. Find something that meets all those criteria better than gold and we can use that as money instead. Good luck.
- urbanclock, on 12/08/2008, -1/+7is someone stopping you?
- betobeto, on 10/19/2007, -0/+5Also, try picturing paying Amsterdam oil prices while earning a fifth of your monthly American income, and you'll know how it feels to fill up gas pretty much everywhere south of the border (except for Venezuelans, of course, where oil seemingly sprouts from everywhere and is ***** cheaper than water. Lucky bastards).
- zoltanx, on 10/27/2007, -5/+10In the UK we pay £1 per litre of petrol. So thats more than $7.75 a gallon. Don't complain.
- PeachesTheCow, on 10/19/2007, -0/+5Oil Embassy? What's an Oil Embassy?
- 3tcp, on 10/19/2007, -0/+5Michigan was going down the ***** long before the dollar started sliding. The state is dependent on an automobile industry that has been getting rocked by the Japanese since the early 90's and the manufacturing has been moving overseas in droves since the late 90's.
- funk49, on 10/19/2007, -0/+5Here's how much Gold flucuates. Back during the Depression era, a man could buy a really nice suit for an ounce of Gold. In the year 2007, that same ounce (albeit higher quality, 999) will still buy you a really nice suit. I like how that works....much better than our worthless greenbacks.
- mscott82, on 10/22/2007, -0/+5Wow, supply and demand...who would have thought it was that simple!
People make this into a much more complicated subject than it actually is...thanks for intelligent comment. -
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