Oil executives were summoned to Washington to testify before Congress, where
the congressional weenies wanted the oil company weenies to somehow magically
make the price of oil go down by, I assume, calling someone on their cell
phones and saying "Drop the price of oil!"
Part of the questioning by the congressional weenies involved the enormous sums
these oil weenies were making, which was posited as being excessive, and which
was immediately proved when not one of them was smart enough to know why oil
costs so much in dollars! Hahaha! Morons!
This is the Big, Big Reason (BBR) that I am now looking for a cushy job as an
oil company CEO, because I would make a lot of
money for doing practically nothing and apparently knowing even less. It's
perfect for me!
And furthermore, if I had been there at this little inquisition, I could have
grabbed the microphone and said, "I'll gladly answer that question, senator!
The reason that oil costs so much in dollars is that the purchasing power of
the dollar has dropped by 40% in five lousy years, thanks to you letting the
Federal Reserve create so much damned money, you lowlife scumbag! If the dollar
still had its buying power, oil would still be US$25 a barrel like it was in
2002, but nooOOoooo! You dumb, stupid, ignorant congressional morons decided to
borrow and then spend so insanely much money that the Federal Reserve was
required (and only too happy!) to create all the money and credit needed to
finance the disgusting orgy of your irresponsible government spending, now
totaling $9.4 trillion in national debt, because if the Fed did not create the
money, your enormous borrowing needs would have sucked up every freaking dime
of savings in the country a dozen times over, driving interest rates through
the roof, called the 'squeezing out effect'. That's why oil costs so much, you
ignorant, preening Congressional moron!"
My rude and insulting approach differs from that of Chris Mayer, writing at
Agora Financial's 5-Minute Forecast, who calmly explains, "Since January 2001,
you can explain the move in the price of oil largely as a function of
increasing money supply. As the amount of money grows, the price of oil rises.
In fact, almost 87% of the move in the price of oil can be explained by the
increase in money supply."
Apparently, this kind of stupidity is rampant all the way through the federal
government, as evidenced by Junior Mogambo Ranger (JMR) Rob H reporting that he
has looked at the Department of Defense's new "official" guidance for inflation
indices to use for all submitted cost estimates and budget requests, and found
"the one-liner" that made him laugh: "1.034% inflation per year" for the next
30 years! Hahaha! One percent inflation for the next third of a century, when
the MZM money supply is increasing at almost 20% a year right now! And destined
to go up from here! Hahaha!
Wiping a tear of laughter from my eye, I note that the dollar has lost 40% of
its value in the past five years, inflation in food and energy is running at
greater than 20% a year, and yet Congress wants to know why oil costs so much
and the DOD forecasts inflation at less than one-third of one lousy percent per
year! Hahaha!
Peter Schiff of Euro Pacific Capital says inflation will be a "big problem for
us is if the Chinese substantially allow their currency to rise", which he
figures could increase at least fivefold against the dollar over the span of a
year or two.
The advantage to the Chinese is "That [it] reduces the price of oil by 80% for
1.3 billion Chinese. Consumption would go through the roof, and that will drive
prices through the roof for us."
And he thinks the dollar will go down, not only against the Chinese yuan, but
against all other currencies, and by a lot, too! He says, "At a minimum, the
dollar will lose another 40 to 50% of its value. I'm confident that by next
year we'll see more aggressive movements to abandon the dollar by the [Persian]
Gulf region and by the Asian bloc. That's where the stuff really hits the fan."
And by stuff you know what he means, and if you know what that kind of loss of
buying power of the dollar means, then you know why he refers to it as "stuff"!
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
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