Posted on 09/18/2013 12:43:11 PM PDT by DallasBiff
More pain at the pump for the middle class, but according to Wall Street this is a good thing.
Supply and Demand.
Buy fewer products made from Crude Oil, and the price of Crude Oil will go down.
Buy more of products made from Crude Oil and the price of Crude Oil will go up.
Demand and Supply.
Crude Oil is the basis for all economies in the World today.
Enjoy Crude Oil.
Did you notice that China has started to buy and sell oil using the Yuan. Not a good sign for the USD.
A 30 year fixed rate mortgage currently goes for 4.71 per cent, an increase of about .32 per cent since the beginning of July. Most analysts seem to think that demand pool for residential refinancing has been satisfied, with new mortgage origination slow due to broad economic weakness and a diminished inventory of new residential housing.
And I wished I could have called in, because they totally blew it on who IMHO is an even bigger threat in terms of Energy to Russia... Israel...
Go here: http://www.timesofisrael.com/should-israel-get-oil-out-of-vinegar-for-an-energy-revolution/
I think #6 gets it. It is not about OUR economy. It’s about the Saudis.
As a major new oil importer, China has become vulnerable to supply disruptions and price spikes and must worry about the security of the flow of foreign oil. In the coming years, this will pose a major dilemma for China in that antagonizing the US and bulking up against the US Pacific Fleet will tend to detract from the security of China's supply of overseas oil.
With the recent (and continuing) rise in US domestic oil and gas supply, we seem poised to have less to fear from turmoil in the Persian Gulf than China as she becomes more reliant on oil from that region. China may succeed in peddling her yuan as a minor transaction currency, but the security of her oil supply seems certain to continue to depend on the US having enough aircraft carriers on station in the Persian Gulf and on the dollar remaining the world's primary reserve currency.
If not, if the yuan were to assume that role, then the US carriers could depart and leave the burden of regional security to China -- a task that she is utterly unequipped for in terms of military power, economic strength, culture, history, and diplomatic clout. Ultimately, that is why the world likes the dollar as a reserve currency and accepts the US as a global superpower: America does the job far better than China or anyone else would.
I’m in the oil business, please xplain how their keeping it artidicially high.
Sure wish we had an edit button.
I wouldn't be surprised if they got back down below 4 soon..
With all due respect, no, it isn't.
The best available tool would be for the Fed to let the market set interest rates and to stop pumping up reserves. Banks artificially propped by by Ben's phony reserves should fail and the government should have to pay market rates for its debt.
Ben's "best" tool just keeps us in fantasy-zombie land.
Gotta ask you a question about that.
The dollar has considerably strengthened against the Yen.
Yet both the Dow and the Nikkei are like straight up.
Shouldn't one of them have gone down if this is all about how investors view their currency?
That may well happen. Impaired job creation and lack of growth in personal income limit the demand for new housing mortgages.
The market does set interest rates, but in the context of Fed money creation designed to counteract the ill effects of Obama’s policies. So long as governments and central banks create money, that kind of tinkering is inevitable and necessary. On the merits, Bernanke and the Fed have done a better job than many are willing to credit them.
I disagree that the market is setting interest rates; it's merely tinkering around the edges of Bernanke's next-to-zero funds rate as is the plan. There is no longer any substantial connection between the pool of loanable funds [people's savings] and the demand for loans.
We have a centrally planned economy by interest rate manipulation. If the government were controlling, say, gasoline prices similarly there would be riots. But, of course, even Bernanke can't make gasoline out of the proverbial thin air.
The Taylor Rule is named for John B. Taylor, the Mary and Robert Raymond Professor of Economics at Stanford University and George P. Shultz Senior Fellow in Economics at Stanford’s Hoover Institution. He is well-regarded in conservative and libertarian circles.
In 2011, in the Cato Journal article, "Legislating a Rule for Monetary Policy," Prof. Taylor laid out the reason for such a rule:
"The objective, as Milton Friedman said many years ago, is to find a way of 'legislating rules for the conduct of monetary policy that will have the effect of enabling the public to exercise control over monetary policy through its political authorities, while at the same time it will prevent monetary policy from being subject to the day-by-day whim of political authorities.'”
Perhaps you see a better alternative. I do not, except for a conservative, free market President and Congress and further refinement by the Fed of its implementation of the Taylor Rule and similar policies that increase the general level of prosperity.
Yes. Absent a return to the classical gold standard, I advocate for stability in the money supply. Ditch all the mathematical equations that are as incapable of predicting individual economic behavior as the climate models are of forecasting the temperature.
The Fed, if it must exist at all, should not be expected to plan the economy. Indeed, it should be forbidden to.
With no monetary pumping and no interest-rate fixing, economic bubbles and their ensuing recessions would end and entrepreneurs would be able to make accurate economic calculations.
When gold is credited as money, the money supply changes as governments buy and sell gold and convert gold into money in circulation as specie or gold backed paper currency and credits. Thus, under the gold standard, the money supply can change as governments and banks issue -- or fail to issue -- currency or credit or their equivalents.
Thinking otherwise is mistaken and can be profoundly destructive in policy decisions, as when the French accumulated gold bullion during the 1930's but did not issue currency or credit reflecting the addition to their national stock of gold. The result of France's withdrawal of gold from money creation was a notable contraction of the global supply of gold and hence money, thus contributing to the general deflationary trend of that period that aggravated the Depression.
The price of gold is also subject to manipulation for private gain. For example, the September 1869 Black Friday collapse of the financial markets was caused by Fisk and Gould's infamous Gold Ring that sought to corner the gold market and run up the price in order to reap massive profits by selling their gold holdings at the inflated price.
As it was, Fisk and Gould's scheme collapsed when the Treasury Department announced that it would sell gold to the market. In effect, the US government decided to inject more gold into the market in order to alleviate a short squeeze and drive down the price of gold and thereby relieve short sellers and those who otherwise needed to buy gold.
The faults of the gold standard also include bouts of inflation when major new supplies of gold are mined or acquired, as occurred after the Spanish secured massive gold from the New World and began to convert and spend it as new specie (gold minted into coin).
In addition, the gold standard can hamper economic growth by making it hard for areas of ongoing or potential economic growth to obtain the currency and credit they need. For decades, this played out in US history as battles over banking policy as to the ease of chartering, bank reserve requirements and lending standards, deposit insurance, and the circulation of bank notes as money, and over the push to accept silver as backing for money in addition to gold.
In the modern era, the rigidities and defects of the gold standard mean that we have and are stuck with fiat money -- and that is not a bad thing. Moreover, the alternative to having a central bank is to permit major private players to make key financial decisions and to do so for their own benefit -- and sometimes at the expense of the economy and of the general public. And the alternative to a reliable and empirically proven rule for money creation such as the Taylor Rule is to have the Fed and Treasury Department and Congress make decisions based on political considerations instead of sound economics.
Yet the price of gold still has a useful role as an economic indicator, and there is some evidence that the Fed and many economic analysts see it that way. The result is not so much as having gold as backing for currency and credit but having the price of gold as a reality check against governments, central bankers, and financial analysts trusting their schemes and judgment too much.
About everything sold here is made somewhere else.
The only thing that would be good for the economy -
BRING BACK THE EXPORTED FACTORIES AND JOBS.
Oh, yes. Any system designed by men will always be subject to dishonesty and over, um, exuberance. Under the gold standard, however, recessions were short-lived and generally limited in scope.
the money supply changes as governments buy and sell gold and convert gold into money in circulation as specie or gold backed paper currency and credits
The government should not buy and sell gold. It has no legitimate reason to. Citizens may, of course, buy and sell all they want. The market should determine the amount of money in circulation -- not the government.
And, yes, that implies that the money supply would vary. But it would vary according to the needs and wishes of individuals -- not a central planner.
Fisk and Gould's infamous Gold Ring that sought to corner the gold market and run up the price in order to reap massive profits by selling their gold holdings at the inflated price.
See above: no system is immune to dishonesty and corruption.
The faults of the gold standard also include bouts of inflation when major new supplies of gold are mined or acquired, as occurred after the Spanish secured massive gold from the New World and began to convert and spend it as new specie (gold minted into coin).
Of course. Any massive injection of unearned money into the currency supply will create inflation. Gold's attractiveness these days is that the supply is so stable. That could change, though, if fracking gold becomes possible. I will admit that.
Long story short. The period of the late 19th century when the gold standard was the international norm was also a period of immense economic growth and stable prices. The gold standard is not perfect -- I only submit that it's a far sight better than what we have now.
(2) Now you add another condition in addition to the gold standard: that the government should not issue coinage or currency, but that private parties may do so, presumably in gold or paper money backed entirely backed by gold.
(3) You candidly accept that fraudulent, economy shredding schemes like Fisk and Gould's gold ring are inevitable from time to time under your preferred system.
(4) You misattribute the true sources of progress and prosperity in the late 19th Century -- peace, the new efficiencies of the steam engine, free trade, low taxes, and limited regulations -- to the gold standard.
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