Friday, December 24, 2010

Oil: The Final Frontier

Evidence that monetary policy is affecting the price of staple goods shows how all prices for commodities have risen.  From cotton to soy, no crop has been left cheap.  Geography may have played a role in the price fluctuations, as space is intricately interwoven with time, but a uniform increase is more than naturally ironic.  It is a sign.

Oil has been let to hover in a tight range for the last decade, an average of $80 per barrel except for the brief price explosion before the collapse of the financial system.   If the Federal Reserve's price stability mandate means anything, it means keeping gas prices stable.  I will point out the ludicrousness of keeping a ' unit good' stable by using a paper IOU as collateral, and I will point out that the 'Federal Reserve Note', the paper currencie that keeps the Bank solvent and the currencie the Federal Reserve uses as a proxy to determine price stability, has no effect on oil production, as oil is not an excess commodity of the United States of America, let alone the Federal Reserve.

This is because a price rise in oil affects all inputs-not only commodities but any good that must travel.  Oil is the all important input, and if its price is rising, that means the gig is almost up.  A high price destroys discretionary spending.  This would wreck havoc on the already fragile economy.

Is there anything ominous about the recent price increase during the 'Holidays'?  Well nay sayers say the recovery dictates the price, but you and I know we are headlong in a depression.  What if the power grab becomes desperate?  What if the final squeeze of America happens now?

There will be blood when oil stays over $105 per barrel.


  1. Interesting post...BTW, it's the "jig" is up, not the "gig" is up.

  2. The "Nightmare" of higher oil prices is soon to be upon U.S. What will even be more sobering... is when OPEC decides that debased U.S.$ will not be the medium in which the price is denoted. GAME OVER. If our Army, and Aircraft Carriers were not currently situated over there... U.S. would be done. This is coming, and they can demand what they want... unless we wage a (nightmare) successful war??? Can there be such a thing? Prepare now... PM's, labor and commodities will rule the future. Playas' that don't have it will be hunting... or DEAD.

  3. Great points enicar333!

    And I always thought it was a reference to a music show, not a dance. I learn something new everyday!

  4. What do you mean there will be blood if oil stays abouve $105? The whole system will come crashing down? Alternatively, under $80 Mexico collapses!

  5. Anyone who makes minimum wage or near it should not be able to commute more than 4 hours a day. No one will be driving on vacations. Road trips will end. That is what $4 a gallon will do. Oil priced at $105 should do the trick. And the thing is, normally the price would come down, but supply will soon be decreasing. This cross of decreasing supply, increasing demand, and messed up price control via the Federal Reserve will make it so the price will not be able to have elasticity.