is world war three on the way?
09 Feb 2009, 5:57 pm
That's preposterous. You can't calculate inflation based on a single commodity because commodities can undergo price swings unrelated to the value of the currency or other commodities. By that logic, since oil was $147 per barrel in July, and now it's more like $45, we must conclude that the dollar is three times as valuable now as it was in July? Of course not.
The baseline for the consumer price index starts in 1902, with a barrel of flour costing $2, which was 1/10 Oz of gold.
By that measure $1 then is $45 now.
While commodies can trade in a range, under or over valued due to production and demand, or in the case of oil, speculation, it was only recently sold as a future, that range is bracketed by dollars and gold. oil was $13 a barrel, now $40, gold was $350 an Oz. now $900, so the dollar is worth about 1/3 of what it was when Bush took office.
The barrel of oil is the same, the Oz. of gold, the only change is the dollar.
Housing is a commody, like oil, it went up through speculation, then down through over production.
You're completely out of touch with the way this stuff is actually measured. A barrel of oil is not the same, and it wasn't pure speculation which drove the price up. Oil responded to supply shocks and an increasing demand unaccompanied by a corresponding increase in supply. Commodities can't be used by themselves as a measure of a dollar's worth because their price is volatile due to a comparatively inelastic supply. If China consumes greater oil and the supply remains more or less flat, the price goes up by simple supply and demand, and the supply is inflexible to such increases in demand.The price of oil has only collapsed temporarily respnding to contemporary market shifts (particularly in demand), and there's every reason to suppose it will be back on the rise once the world's economy picks back up. I mean, it wasn't like it was "speculation" which drove the price to near $100 (2007) per barrel in the early '80s; it was simply a shift in the supply demand curve.
I mean, c'mon, how many in the mainstream actually think the dollar's gone down that much in value, or are going to seriously calculate inflation on a couple of commodities? You're grossly over simplifying the picture. Let's see some citations.
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Chibi_Neko
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09 Feb 2009, 6:12 pm
10 years back a few friends and I used a Ouija board on halloween for kicks and asked to speak to Anne Frank. The messages we got was another world war will begin early in the new millennium. While I am a skeptic with Ouija boards now, but back then we totally believed in that stuff and found the message creepy.
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09 Feb 2009, 7:25 pm
The Dow did not go to 14,000 due to productivity and profits, but from a decline in the value of the dollar.
Housing did not go up more then the traditional 1-2% a year to 12% and 20% because of hot real estate, but because of declining dollars.
For a broader view of commodities go food shopping, no price crash there.
Bush started with a balanced budget, no national debt, and ran up $11,000,000,000,000.
The new guy has almost loaned, pledged, insured, as much in less than a month.
We are in debt for 150% of Gross National Product.
That is 100% of the next ten years taxes.
The dollar is being further devalued because the government could not, would not, pay the War Babies Social Security, which is valued in dollars. They will get Pesos instead.
09 Feb 2009, 7:36 pm
Housing did not go up more then the traditional 1-2% a year to 12% and 20% because of hot real estate, but because of declining dollars.
No it was a bubble with overvaluations, which is currently being corrected.
Bush started with a balanced budget, no national debt, and ran up $11,000,000,000,000.
The new guy has almost loaned, pledged, insured, as much in less than a month.
We are in debt for 150% of Gross National Product.
Well, no, not yet anyway. Last I checked, total debt was 73% GDP for 2008. It may rise, but you may be reasonably sure we've got a ways to go before we hit the big 150.
The dollar is being further devalued because the government could not, would not, pay the War Babies Social Security, which is valued in dollars. They will get Pesos instead.
Well, again, the thing is that the dollar isn't going down despite the printing and low low interest rates due to the lack of liquidity and remains markedly higher against say the Euro despite all of this than it was even a year ago. The dollar will plummet in the future if the fed can't do little things like raise the damn interest rates at the correct time in order to keep the amount of money moving down, but the value of money is much more complicated than you're making it out to be.
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09 Feb 2009, 9:39 pm
That's preposterous. You can't calculate inflation based on a single commodity because commodities can undergo price swings unrelated to the value of the currency or other commodities. By that logic, since oil was $147 per barrel in July, and now it's more like $45, we must conclude that the dollar is three times as valuable now as it was in July? Of course not.
The baseline for the consumer price index starts in 1902, with a barrel of flour costing $2, which was 1/10 Oz of gold.
By that measure $1 then is $45 now.
While commodies can trade in a range, under or over valued due to production and demand, or in the case of oil, speculation, it was only recently sold as a future, that range is bracketed by dollars and gold. oil was $13 a barrel, now $40, gold was $350 an Oz. now $900, so the dollar is worth about 1/3 of what it was when Bush took office.
The barrel of oil is the same, the Oz. of gold, the only change is the dollar.
Housing is a commody, like oil, it went up through speculation, then down through over production.
You're completely out of touch with the way this stuff is actually measured. A barrel of oil is not the same, and it wasn't pure speculation which drove the price up. Oil responded to supply shocks and an increasing demand unaccompanied by a corresponding increase in supply. Commodities can't be used by themselves as a measure of a dollar's worth because their price is volatile due to a comparatively inelastic supply. If China consumes greater oil and the supply remains more or less flat, the price goes up by simple supply and demand, and the supply is inflexible to such increases in demand.The price of oil has only collapsed temporarily respnding to contemporary market shifts (particularly in demand), and there's every reason to suppose it will be back on the rise once the world's economy picks back up. I mean, it wasn't like it was "speculation" which drove the price to near $100 (2007) per barrel in the early '80s; it was simply a shift in the supply demand curve.
I want to make one more comment about the oil market. Oil prices bottomed out in the late 1990s at about $16/barrel, not due to anything to do with the dollar but due instead to a collapse in demand precipitated by the Asian Financial Crisis. Comparing the bottom price with the current price of oil is disingenuous.
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09 Feb 2009, 11:48 pm
Oil is a very political commodity, so true the price can vary for other reasons than supply and demand.
The Euro, yen, are floated against the dollar, strong money, lower exports. Weak money does what tarriffs used to. Up exports, lower inports.
I do see the strong domestic dollar, our trade has been unbalanced, that has changed, Americans are spending less, saving more, paying down debt, and driving less.
Most of the dollars that existed in the market, housing, and banks were just numbers on paper, excess value, good that it is gone. The employed 90% get paid in real dollars, which have buying power. The comsumer is 70% of the economy, and what is good for them is bad for banks, China.
The result is scarce dollars, excess goods, deflation. Since the banks, Wall Street and the governments are bankrupt, and the people have all the money, what is good for us is bad for them.
The problem is still the banks, they wrote a mortgage which defaulted, has been sitting, was looted for copper, homeless people have been living there, and the banks want 100% of face for the mortgage. Houses that are selling are going for half of that, in good condition.
They no longer own the mortgage, sold mortgage backed securities, so they are stuck. If they sell, they have to pay off the bonds. 3,000,000 more are going back to the bank, and they are just holding on for a few more paychecks. They will fail, the sooner the better. Good banks are selling their losses, writing it off and moving on.
Another problem is, every decade about half of the Fortune 500 cease to exist. Except in times of easy credit, then they just borrow and keep getting paychecks. We have a backlog of companies that should have folded years ago.
Then there is commercial real estate, 2,000 malls more than demand, office buildings, hotels are not doing well. These are much larger loans than houses. The upkeep is high.
This is not the people's 70%, this is all in the 30% funded by old money. They are sore losers.
Then there is the intrest problem, I agree, it should be higher. Warren Buffet $5 billion in Goldman Sacks, at 10%, AIG government money at 8%, the same for the banks. So why is a 10 year $10,000 CD 2.9%?
At 7% CDs the banks could raise all the capital they want.
It seems that private savings are being pushed into higher risk investments.
I have to agree that the value of money is a hard thing to pin down.
I would give one value to unemcumbered private savings, another to the weekly payroll, another to money in the market, and another in government debt spending.
The first two are real money, the market works, over twenty years, and the last is a form of counterfiting. It is based on the promise to tax the other groups.
As for those living in debt, Buffet I think said, "When the tide goes out we will see who was swimming naked."
22 Feb 2009, 10:27 pm
the first world war lead to poverty throughout the world and as a result hitler gained power and started world war two, we're starting to develop a depression again and so could this lead to someone gaining favour and taking the world into an even darker place?
It's possible for charismatic tyrants to take advantage of bad situations to gain power. This happens quite often throughout history. In fact, if you look at the dictators and tyrants of today, pretty much all of them came to power through similar means. As such though... it makes it rather hard to predict who will be next Hitler until they actually are.
Instead of finding a next Hitler, i would pay more attention to cultural, ideological and resource issues between nations. Flashpoints situations so to speak; a potential single event that can set off a larger conflict. The start of WWI was full of flashpoints set up to where every nation could get drawn in as long as one pair duked it out. WWII's big flashpoint was the Treaty of Versailles which allowed someone like Hitler to gain power by appealing to people hurt by the treaty.
I would say in today's world the thing to watch for is any escalation between Israel and Iran. Both are keen on hitting the other and looking for a solid reason to do so and this would be kind of conflict that could draw in other more powerful countries(namely the US and Russia).
Don't bother with these Obama conspiracy theories because that's all they are. People had the same damn theories about Bush and it was all hooey. Pay attention to the real world and history.
Isn't Israel covertly sabotaging Iran's nuclear facilities even as we speak?
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