This is all very interesting, but there are many aspects of what you say that are either confusing and/or don't make sense to me. What, in concrete terms, do you mean for example by "an oil based dollar?" Are you saying that all the world's oil buyers, with the exception of those buying Iranian oil, pay for that oil in dollars, that European oil importers do not pay in Euros, that Japanese oil importers do not pay in Yen? Are you saying that oil is the only commodity for which this is true, and thus it is unique in world markets?
My understanding of how the oil trade works is that the amount of oil a dollar will buy is determined by the amount of oil production relative to the value of the dollar. The rulers of the oil producing countries generally try to manage production so that the price of oil goes neither too law nor too high. They don't want the price too high because because (a) if the price gets too high, then alternative energy sources start becoming more economically viable, which undercuts the market for oil, and (b) they also have a vested interest in the health of the U.S. economy. This interest is not primarily due to U.S. military protection, but because they too are part of the world market and would be hurt by an economic downturn in the largest economies, which would suffer if the price of oil became too high. Most of the oil-producing states owe the lion's share of their economies to oil sales, and are arguably even more dependent on paying customers for their oil than more diversified economies like the United States are dependent on the oil itself. But they also don't want the price of oil too low, because they want to make money. And even if companies based in countries other than the United States *are* buying oil in dollars, how is that money being "recycled to New York" as you put it? Sure the banks in the U.S. federal reserve system make some cut when the U.S. government prints more dollars, but how do they make money when an oil buyer in Germany uses dollars to pay an oil seller in Nigeria?
Also, I'm not sure it makes sense to talk in terms of things like "the U.S. manufacturing base" as if it we were living in a world of national command economies. In a very real sense, Shanghai is probably more a pillar of the "U.S. manufacturing base" than is Detroit. So what? Does this make Shanghai better off? Perhaps there is value in comparing unemployment rates (or at least there might be if these numbers were calculated based on reality), but "balance of trade?" If a banker regularly pays somebody at a deli to make her a sandwich, and somebody else down the street to make the flower arrangements she takes home to her husband, and the banker doesn't make anything that she sells to the people who run the deli and the flower shop, does that negative "balance of trade" necessarily make the deli owner and the flower owner better off than the banker? Of course not. They're all trading in money, and they all buy concrete stuff with that money, regardless of whether what they produce in their work is a concrete product or an intangible service. So why would it work differently at the international level? Maybe it does, but I have yet to hear an explanation that really makes sense. Perhaps you can take a stab at it.
Meanwhile, you say that paper monetary instruments like dollars and U.S. treasury certificates are flowing to Chinese manufacturers and hence to the Chinese central bank(s), whereas if the regime in Beijing were operating in a free market fashion, they would be getting gold instead. Do I understand you correctly to be saying that "those Chinese very smart" for taking paper instead of gold? Doesn't such an analysis fly in the face of your own investment strategy as an individual of buying gold?
The present currency system is broken and does not serve the interests of the american people, except wall street. The system was initially established by fiat in 1944 in Bretton Woods when the US , due to it's complete military dominance owned the lions share of gold in the world and the lions of surviving manufacturing capacity and was thus able with the guidance of Wall Street Bankers to impose on the world the doller standard. The dollar standard became compleately faith based in 1971 when all vestiges of physical backing were removed. What followed was a rapid depreciation of the dollar vs gold and vs oil, as producers of oil sought some material trade for thier very material petroleum. The slide in the dollar was arrested and the rise in gold and petroleum prices arrested by the tacit establishment of an oil based dollar. The powers in the middle east , in exchange for the military umbrella of the US agreed to recycle petro dollars to New York. Saddam violated this agreement by trading oil in euros and gold. Teheran has recently begun trading oil in euros.
On the other side of Asia, China has engaged in a very successful mercantilist ploy. By consistently manipulating the exchange rate with dollars, keeping it fixed for a very long time, it has maintained it's status as the worlds low cost producer. The resulting flood of dollars are used to buy US treasuriies and mortgage backed securities, of which China now has a trillion dollars worth. By using the dollars it takes in to buy treeasuries rather that it's own currency in the open market of currencies, it keeps it's currency very cheap and thus it's goods cheap.
This has hollowed the US manufacturing base and sent it to Shanghai.
Lets give a recent example...
LETS FOLLOW THE MONEY.
I neede American Flags to deck the platform of our Peace rally tomorrow. The Chinese made flags were less than half the price of the made in USA flag. I bought about 100 bucks of flags and poles.
Lets say just for simplicity the Flags made all its money on the shipping and handling charge, so lets say it paid 100 for the flags to a hypothetical Shanghai flag company. Mr. Shanghai gets the hundred dollars and goes to the bank with it. He has to pay his rent, his suppliers and his workers in Yuan Remembi so he gives his local bank the hundred dollars and gets a bunch of Yuan Remembi. The bank now has this hundred bucks, but it needs yuan remembi to fill it's versatellers. It sends the hundred dollars to the china central bank and they send a bunch of yuan rembi. Now here comes the crux. In a free market, the big money center banks of a country would also need to get yuan remembi to replace the ones they just shipped off to the local bank in Shanghai. A free market banker would go into the world currency markets and use the one hundred dollars to buy the bunch of yuan remmeebi to replace the ones he sent off to shanghai. But the chinese central bank is not a free market entity. It does not want to buy yuan remembi in the world currency markets, for to do so would decrese the supply of Yuan Remembi in the world markets and increse the supply of dollars. In time there would be glut of dollars and a shortage of yuan. The value of the dollar would decrease. The dollar would buy less. Chinese goods would seem more expensive to American consumers. The chinese central bank does not want that. It wants to increase it's manufacturing market share by keeping chinese goods cheap in the US. So what does the chinese central bank do with hte hundred dollars it got from this libertarian buying american flags. It buys a fannie mae bond that fiances part of a mortgage in Nob Hill.
But where does the chinese central bank get the bunch of Yuan it needs to send to the bank in Shanghai , Easy, my little libs. It prints it out of thin.air.
Eventually the Chinese will tire of the resulting inflation, but by then they may have destroyed the entire manufacturing base of the United States.
Those Chinese very smart.
Wall Street bankers because they sell all these bonds to china , and these bonds underlie the housing bubble and all the rest of the uS speculative ponzi economy. Goldman Sachs is the most profitable company per employee of any large company in history, giving over 18 billion in bonuses to it's manhatten based employeses last december. Goldman sits on the FRB, owns shares of the FR and has it's ex CEO's serve as treasury secretaries under both Bush and Clinton 1.
Under the standard prioor to 1944, if country had a large trade surplus such as china does, then gold would flow into that country. Gold would flow out of the country that had the deficit. The money supply in the country that had the trade deficit, the us in this example, would decrese as gold flowed out. With less money, around, there would be price deflation. With less money chasing the same amount of goods, there would be less money to go around for each chicken ,each pot ,and each donkey and each car. Domestically produced items would go down in price.
Meanwhile , in this example, more gold would flow to china. More gold would translate to more money floatting around in China. There would be more money chasing each chicken, each pot, each donkey, and each bowl of rice.
Prices would go up in China. Chinese goods would become more expensive. Some chinese consumers would start buying cheaper us goods.
thus in a world where all money was backed by gold, long term trade impbalances wwere self balancing.
the worlwide acceptance of gold from the fall of Napolean to the outbreak of WW1 may have contributed to nearly 100 hundred years of peace.
the widespread adoption of central banks, and the imposition of fiat paper led to the downfall fo economic stability and the onset of WW1.
In this post I distilled the essence of the US economic dilema. It is hard to find this information in such a distilled format. It took me a long time of digging and thinking to get to what is distilled here. Please reconize this as pearls and re read it till you understand. You will then know more than all the idiots in Congress, except one, aall of the bankers in San Francisco, and for certain more than the board of Sups or Lou Dobbs, or god forbid Bill O'Reilley.
Please reread,until you understand. Nothing but war destroys a city more surely than economic catastrophy. The bankers keep the disasters coming. If you bury your head in the sand , your ass is a target.
----- Original Messag
e -----
From: Starchild
To: lpsf-discuss@yahoogroups.com
Sent: Sunday, March 18, 2007 8:28 PM
Subject: [lpsf-discuss] Re: Individual interests vs. government interests
Derek,
I agree with your implicit argument that consumer interests should outweigh government interests. Individuals should be free to invest when and where they choose, in accordance with their own interests and regardless of the interests of any particular government, including the United States government. If the economic or strategic interests of government (and what makes government interests more "strategic" than individual interests?) are put ahead of those of the individual, then the people are effectively serving government instead of government serving the people.
Love & liberty,
<<< starchild >>>
Eric:
A more rational approach would be to continue foreign investing when
it benefits us economically or strategically to do so. To not do so
is akin to pointing a gun at one's head and threatening to shoot.
As an example, which should be obvious if you think it through, as
harmful as it would be if a country levied an enormous tarriff on US
goods, it would be even MORE harmful for American consumers for the
US to respond in kind.
-Derek
--- In lpsf-discuss@yahoogroups.com, "eric dupree"
<dupreeconsults@...> wrote:
>
> When foreign investors stop, we need to stop foreign investing.
> Let 'em protect their own freedoms and everything else.
> We need them like we need a hole in our head/pocket.
> > From: Rob <robpower@...>
> > To: lpsf-discuss@yahoogroups.com
> > Subject: [lpsf-discuss] Re: Fw: U.S. Rep. Ron Paul, a Texas
Republican known for his Libertarian views,
> > Date: Thu, 15 Mar 2007 14:45:52 -0000
> >
> > While I'm certainly not a currency expert, I think the following
page
> > shows why GDP alone, ignoring other factors like deficits, is not
a
> > good predictor of a strong dollar. In fact, GDP can rise, but if
> > deficits outpace the rise in GDP, the dollar actually becomes less
> > attractive to foreign investors:
> >
> > http://www.atimes.com/atimes/Global_Economy/FJ14Dj01.html
> >
> > Rob
> >
> > --- In lpsf-discuss@yahoogroups.com, "Derek Jensen" <derekj72@>
wrote:
> > >
> > > This isn't quite true what you say about relative size of euro
and dollar.
> > >
> > > The countries in the European Monetary Union have a collective
> > > Nominal GDP of $10.1 trillion. The United States has a nominal
> > > GDP of $12.5 trillion. (2005 IMF data)
> > >
> > > -Derek
> > >
> > > >
> > > > You know, he's so close to being right that it's all the more
> > > > frustrating that he remains so wrong.
> > > > > His argument about socialism being doomed to failure is
dead-on. But
> > > > he misses the point that building a Berlin Wall along our
Southern
> > > > border is just as doomed to failure as the real Berlin Wall
was.
> > > > > There's a very good reason that the Dollar is no longer the
favored
> > > > currency in the world, and it's not the war in Iraq. It's
that
> > > > investors prefer big currencies. When you add up the wealth
of all of
> > > > Europe, the Euro becomes a bigger currency than the Dollar.
The
> > > > Dollar will never again become the dominant currency. But an
Amero
> > > > most certainly would dominate (at least for a little while,
until the
> > > > EU expanded or Asia adopted a single currency).
> > > > > If Ron Paul would get over his fear of Mexicans and gays,
I'd vote
> > > > Republican for the first time in more than ten years. But,
sadly,
> > > > just like the socialist regimes he mentioned, his own vision
of a
> > > > walled-off Ozzie and Harriet version of the United States is
doomed to
> > > > failure. I only hope most Libertarians realize this and
support our
> > > > own party's candidates instead.
> > > > > Rob
> > > > > P.S. I wonder if Ron Paul would be so opposed to a single
currency if
> > > > it excluded Mexico and only included the U.S. and Canada and
still
> > > > called it a Dollar. (We already have the highways into
Canada like
> > > > the one proposed for Mexico, and I don't hear him calling for
those to
> > > > be bulldozed.) If he'd support such a U.S.-Canadian
currency, then I
> > > > think it's obvious what he thinks of Mexicans.
> > > > >
> > > > > http://www.worldnetdaily.com/news/article.asp?
ARTICLE_ID=54660
> > > > > > > > > Ron Paul announces White House bid
> > > > > Texas Republican says nation has strayed from Constitution
> > > > > > > > > > > U.S. Rep. Ron Paul, a Texas Republican
known for his
> > > > libertarian views, today announced he will vie for the GOP
> > > > presidential nomination next year. > > ...
> > > > > He said the collapse of the Soviet system surprised
many, but
> > > > not devotees of freedom. > > > > They, he said, "have
> > > understood for decades that socialism was
> > > > doomed to fail. Communism, like all socialism, failed
intellectually
> > > > and failed practically. And so too will the welfare/warfare
state
> > > > fail, and then our cause will be heard. The love of liberty
will not
> > > > die." > > ...
> > > > > He's been especially vocal in his denunciations of
plans such
> > > > as the "Trans-Texas Corridor," a superhighway project that
opponents
> > > > argue would be used to bring Chinese goods through Mexico
directly
> > > > into and through the U.S. > > > > Why? The ultimate
goal,
> > > he said, is not simply a superhighway,
> > > > "but an integrated North American Union - complete with a
currency, a
> > > > cross-national bureaucracy and virtually borderless travel
within the
> > > > union. Like the European Union, a North American Union would
represent
> > > > another step toward the abolition of national sovereignty
> > > altogether." > > > > Plans for such a "North American
> > > Union" were cited as the No.
> > > > 1 story on WND's list of 10 most underreported stories for
> > > 2006. > > > > The January 2007 edition of WND's monthly
> > > Whistleblower
> > > > magazine, which explores this topic in-depth, is
titled "PREMEDITATED
> > > > MERGER: How our leaders are stealthily transforming the
U.S.A. into
> > > > the North American Union." > > > > Paul would join a
> > > field that features John McCain, Mitt Romney
> > > > and Rudy Giuliani, but also could include Newt Gingrich, Tom
Tancredo,
> > > > Duncan Hunter, Sam Brownback, Mike Huckabee, Tommy Thompson,
John H.
> > > > Cox, Alan Keyes and others.
> > > > >
> > > >
> > >
>
> >
>
> =
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