Tilted Forum Project Discussion Community - View Single Post - Why Oil, Gold, Silver, Nickel, and the Canadian Dollar, Cost More

host · 08-19-2006, 10:50 AM

I've advocated in a number of posts, a proposal that the U.S. government issue a sudden ulitmatum to the other nuclear powers in the world, that they agree to disarm immediately, or the US will do it for them.

We in the US, are running out of time, because over time, the purchasing power of the dollar is deteriorating, and will continue to do so....we are already past the point of no return. The rise in the value of the Canadian dollar is a harbinger of the diversion of purchasing power of two currencies that reflect the wealth potential in the respective countries.

We live in a world of fiat money and fractional reserve banking. "Money" is created out of thin air, via debt creation. Every mortgage or loan that originates from a bank, is "new money". Banks create a debt instrument, the borrower signs it, the check that is issued is cashed against deposits that are only a tiny fraction of the amounts that banks are allowed to lend. If banks were only permitted to lend what was on deposit, minus an ample reserve against periods of heavy withdrawals (Y2K fears were a recent example), the line for loans and mortgages, and the interest rates, would skyrocket, growth would slow, and, considering that we "enjoy" a negative savings rate, even in a recent climate of high growth, where would the savings deposits come from to satisfy the loan demand, and still keep interest rates so low?

We currently live in a country whose consumers borrow a billion dollars per day from the rest of the world, just to purchase oil at today's prices, and almost another $1.5 billion per day for everything else that we impost, vs. the much lower value of what the rest of the world buys from us. The federal government must also finance at least another billion dollars per day in new borrowing because it spends that much more than it collects in taxes and other revenue.

Canada, on the other hand, exports more than 1 million bbls/per day of oil....mostly to the US, that it collects more than $70 million per day from, along with many other exported raw materials.

The reason that US interest rates do not skyrocket due to all of the US borrowing, is because all of the dollars that Chinese and Japanese exporters receive in exchange for the goods that we buy, are purchased by the central banks of Japan and China with yen and renminbi (yuan), that are printed out of "thin air", exchanged for dollars that companies like Toyota receive from the US, and then are used by the Japanese and Chinese central banks to purchase T-Bills issued by the US treasury to finance our huge borrowing.

The Chinese and Japanese print their paper money to prevent the value of it from increasing, the way the Canadian dollar, and oil, and gold, etc. have increased, because they do not want the goods that they make and export, to become less affordable in the US, their biggest customer.

If the US experiences an economic slowdown, and/or the value (purchasing power) of the dollar continues to drop to where average US consumers lack the ability to purchase both energy (gasoline, nat. gas, electricity) and consumer goods from Wal-Mart or Toyota.....but continues to run an $800 billion trade deficit (due to even higher prices for Canadian oil, adjusted for the "scam factor" of the "thin air" yen/yuan prop up of the dollar), and a big federal budget deficit, due to less tax revenue from lower corporated earnings, and continued GWOT expenses.....there will be less dollars coming to Chinese and Japanese exporters, for the central banks of those countries to print paper money to buy....and less US debt/T-Bills purchased by those two country's central banks.

When that happens, the only way to attract new lenders, will be to pay higher interest rates to those lenders. Oil exporters like Canada, Saudi Arabia, Venezuala, and Iran, already require more and more paper dollars that are propped up by yen and yuan that are printed out of "thin air", in exchange for a resource of real value.....oil, than ever before. These countries are either producing less oil than a year ago, even with the incentive of record high prices per bbl....in dollars, than ever before, or in the case of Canada, at a higher expense because of the higher cost of turing oil sands into petroleum, vs. pumping it from naturally pressurized underground pools of oil.

Even with less demand that an economic downturn will trigger, every new bbl sold will cost more to replace and bring to market, and only higher US interest rates will make it attractive to oil producers to accept even $70 per bbl, next year, for their oil.

Who is taking the risk by buying US T-Bills at ridiculously low interest rates now, considering the likelihood that US dollars will devalue at a greater rate than the interest paid on the T-Bills? It doesn't seem to be the central banks in Japan and China....they bought the T-Bills with dollars that they bought from exporters in their own countries, with yen and yuan that they printed out of....."thin air". This isn't new....and it isn't "news"....Japan has been engaged in this for more than ten years.

China and Russia are growing richer as the US grows poorer. A visit to "Janes", on the internet will show you that the US nuclear arsenal and delivery capability is overwhelming, and that China has less than 25 nuclear ICMBs, and that Russia is about to embark on an ambitious modernization program of it's degraded, negelcted, and antiquated, nuclear arsenal.

The purchasing power trend for the dollar is in crisis. Even if you argue that it is in "slow motion" fall, consider that when the Euro debuted, just six years ago, a dollar bought 1.2 euros, and buys just .77 euros, now.

Liberals pontificate with moral outrage to my proposal, that is starkly absent when it comes to their defense of abortion on demand. "Ohhhh noooo", they exclaim...."it is immoral to threaten or intimidate Russia and China into disarming, and attacking them with nuclear weapons if they refuse a US ulitmatum". Okay.....the dollar is imploding, trends in wealth flow and known military strategies of China and Russia indicate that they will upgrade their nuclear armament, and your plan to preserve a strong US defense capability and economy....is ??????? I'm waiting........

08-19-2006, 10:50 AM	#1 (permalink)
host Banned	Why Oil, Gold, Silver, Nickel, and the Canadian Dollar, Cost More I've advocated in a number of posts, a proposal that the U.S. government issue a sudden ulitmatum to the other nuclear powers in the world, that they agree to disarm immediately, or the US will do it for them. We in the US, are running out of time, because over time, the purchasing power of the dollar is deteriorating, and will continue to do so....we are already past the point of no return. The rise in the value of the Canadian dollar is a harbinger of the diversion of purchasing power of two currencies that reflect the wealth potential in the respective countries. We live in a world of fiat money and fractional reserve banking. "Money" is created out of thin air, via debt creation. Every mortgage or loan that originates from a bank, is "new money". Banks create a debt instrument, the borrower signs it, the check that is issued is cashed against deposits that are only a tiny fraction of the amounts that banks are allowed to lend. If banks were only permitted to lend what was on deposit, minus an ample reserve against periods of heavy withdrawals (Y2K fears were a recent example), the line for loans and mortgages, and the interest rates, would skyrocket, growth would slow, and, considering that we "enjoy" a negative savings rate, even in a recent climate of high growth, where would the savings deposits come from to satisfy the loan demand, and still keep interest rates so low? We currently live in a country whose consumers borrow a billion dollars per day from the rest of the world, just to purchase oil at today's prices, and almost another $1.5 billion per day for everything else that we impost, vs. the much lower value of what the rest of the world buys from us. The federal government must also finance at least another billion dollars per day in new borrowing because it spends that much more than it collects in taxes and other revenue. Canada, on the other hand, exports more than 1 million bbls/per day of oil....mostly to the US, that it collects more than $70 million per day from, along with many other exported raw materials. The reason that US interest rates do not skyrocket due to all of the US borrowing, is because all of the dollars that Chinese and Japanese exporters receive in exchange for the goods that we buy, are purchased by the central banks of Japan and China with yen and renminbi (yuan), that are printed out of "thin air", exchanged for dollars that companies like Toyota receive from the US, and then are used by the Japanese and Chinese central banks to purchase T-Bills issued by the US treasury to finance our huge borrowing. The Chinese and Japanese print their paper money to prevent the value of it from increasing, the way the Canadian dollar, and oil, and gold, etc. have increased, because they do not want the goods that they make and export, to become less affordable in the US, their biggest customer. If the US experiences an economic slowdown, and/or the value (purchasing power) of the dollar continues to drop to where average US consumers lack the ability to purchase both energy (gasoline, nat. gas, electricity) and consumer goods from Wal-Mart or Toyota.....but continues to run an $800 billion trade deficit (due to even higher prices for Canadian oil, adjusted for the "scam factor" of the "thin air" yen/yuan prop up of the dollar), and a big federal budget deficit, due to less tax revenue from lower corporated earnings, and continued GWOT expenses.....there will be less dollars coming to Chinese and Japanese exporters, for the central banks of those countries to print paper money to buy....and less US debt/T-Bills purchased by those two country's central banks. When that happens, the only way to attract new lenders, will be to pay higher interest rates to those lenders. Oil exporters like Canada, Saudi Arabia, Venezuala, and Iran, already require more and more paper dollars that are propped up by yen and yuan that are printed out of "thin air", in exchange for a resource of real value.....oil, than ever before. These countries are either producing less oil than a year ago, even with the incentive of record high prices per bbl....in dollars, than ever before, or in the case of Canada, at a higher expense because of the higher cost of turing oil sands into petroleum, vs. pumping it from naturally pressurized underground pools of oil. Even with less demand that an economic downturn will trigger, every new bbl sold will cost more to replace and bring to market, and only higher US interest rates will make it attractive to oil producers to accept even $70 per bbl, next year, for their oil. Who is taking the risk by buying US T-Bills at ridiculously low interest rates now, considering the likelihood that US dollars will devalue at a greater rate than the interest paid on the T-Bills? It doesn't seem to be the central banks in Japan and China....they bought the T-Bills with dollars that they bought from exporters in their own countries, with yen and yuan that they printed out of....."thin air". This isn't new....and it isn't "news"....Japan has been engaged in this for more than ten years. China and Russia are growing richer as the US grows poorer. A visit to "Janes", on the internet will show you that the US nuclear arsenal and delivery capability is overwhelming, and that China has less than 25 nuclear ICMBs, and that Russia is about to embark on an ambitious modernization program of it's degraded, negelcted, and antiquated, nuclear arsenal. The purchasing power trend for the dollar is in crisis. Even if you argue that it is in "slow motion" fall, consider that when the Euro debuted, just six years ago, a dollar bought 1.2 euros, and buys just .77 euros, now. Liberals pontificate with moral outrage to my proposal, that is starkly absent when it comes to their defense of abortion on demand. "Ohhhh noooo", they exclaim...."it is immoral to threaten or intimidate Russia and China into disarming, and attacking them with nuclear weapons if they refuse a US ulitmatum". Okay.....the dollar is imploding, trends in wealth flow and known military strategies of China and Russia indicate that they will upgrade their nuclear armament, and your plan to preserve a strong US defense capability and economy....is ??????? I'm waiting........