You don’t have to lecture to me about the oil boom in Texas, I have my finger in that pie. No doubt, the US economy is optimistically riding on the coattails of our oil-based prosperity. Nothing but government meddling could stifle it. However, the paper coming off the mint’s presses is not directly backed by gold, oil or anything else tangible. The only thing that gives value to fiat money is the public’s confidence in the government. How much do you trust them? That confidence can be extremely ephemeral. Ours would not be the first government that printed itself into hyperinflation. Ever hear of the Weimar Republic, or Zimbabwe?
The only thing that gives value to fiat money is the public’s confidence in the government.
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You’re right that the current administration is a bunch of third world communist crooks. But the example we have of that is Brazil. Their government is a bunch of communist crooks. But they’re energy independent. They have a strong currency. And a strong economy.
(Now they have screwed themselves for the time being by demanding so much in taxes from offshore drillers there that the oil industry has abandoned efforts to tap an enormous offshore oilfield there.)
The public’s confidence in the government is mostly a function of the public’s confidence in their own future. You are mostly confident in your own future. Its the rest of the country that worries you. Just read your last paragraph backwards starting with the last sentence and work your ways forward.
Considering Brazil, or any one of a dozen oil rich but incompetently run third world countries — there’s a simpler way to say this.
Deep oil pockets cover a lot of economic sins.
Ever hear of the Weimar Republic
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On the Weimar Republic my own personal hobbyhorse is that reason that both Germany and Britain were very successful in the 19th century was that they produced their own energy in the form of coal.
When the economies of Europe switched over to oil in the second and third decades of the 20th century—both Germany and Britain went straight south—because neither country had homegrown oil.