To Lower the Price of Oil, Restore Confidence in the Dollar

Way ahead of you, profwork. But this didn't just happen. There is no way out and so institutional investors have lost faith in both the dollar and the euro. They're bidding up the only stuff that is guaranteed to hold value in a global meltdown: commodity minerals, fertilizer and petrochemicals. Which only speeds the spiral.

Jefferson foresaw this time:

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.

good article.. yeah look at dubai and it's oil wealth.. as the main consumer of oil, if you could remove the need of oil from the equation of life, all tht massive money would be in the us, and probably along with all the cranes.
Unfortunately with our current setup, that would probably mean the super rich would be god like rich and not much else would change in the us.

The long term implications are, frankly, staggering.

No question about that. Good article with some interesting points. I doubt the FED will raise interest rates, however. I'd bet good money that they hold them right where they are.

Unfortunately, I'm in the boat with Peter. The US economy has been running on a path of unsustainable growth for too long. We've tried (and failed) to turn debt into a commodity which is slowly ripping the foundation of our economy apart. This is going to get bad and there is nothing the central banks will be able to do. The FED did everything it could to stop the slide at the start of the year, which was moderately successful. The DOW rebounded and remained above 12K points for a few months. Now that high is wearing off and investors are starting to conclude what I suspected last year; the central banks and even the government do not know how to stop the deleveraging that is happening.

Thing are going to get worse, much worse...and soon.

Nice article! The falling dollar has made many products more expensive for the US. Oil is just one of them.

Gumwars

Unfortunately, I'm in the boat with Peter. The US economy has been running on a path of unsustainable growth for too long. We've tried (and failed) to turn debt into a commodity which is slowly ripping the foundation of our economy apart.

You make a great point here that neither of the major presidential candidates are likely to speak about.

neither of the major presidential candidates are likely to speak about

If only more people saw that too...

The dollar has steadied? Um, prof, I have a bridge to sell you. It was in Minneapolis ...

As to the Barron's report, this Pollyanna stuff is kind of tired, don't you think? The oil fundamentals aren't the problem now.

The problem is the US dollar is rightly seen around the world now as a bull@!$%# currency. No one wants to hold a buck any more. After 8 years of supercorruption the US is materially, morally, and prospectively bankrupt, out of gas, done. Like the old song goes,

Once I lived the life of a millionaire
Spent all my money; didn't have no cares
Took out all my friends for a mighty good time
Drinking bootleg whiskey, champagne and wine

Then I began to fall so low
Lost all my friends; had nowhere to go
If I ever get my hands on a dollar again
I'm gonna squeeze it, and squeeze it, like a long lost friend

Because nobody loves you
when you're down and out
In my pocket not one penny-
And as for friends, I don't have any

If you get back on your feet again
Everybody is your long lost friend
It's mighty strange without a doubt
Nobody wants you, nobody knows you, nobody loves you when you're down and out ...

Hi prof,

I've been a damned Cassandra before, for Y2K, and been eating crow ever since. I'm rooting for Pollyanna here - I don't want any of this doomer crap to be real and I'm aching to be proved wrong and shut up.

But looking it in the face the best interpretation I can put on it is that, after the USA crashes, there could be such a drop in demand that the rest of the world would have time to get ready for the real peak.

I don't believe in the US crash, though. I can't imagine America just sitting in the dark with the lights out saying oh dear what a shame. I can imagine the USA providing itself with whatever "they hit us first" story is necessary to seize Venezuela, the Arctic, Iran, and any other place with easy oil.

I imagine hungry men finding good paying jobs and food for the whole family so long as they sign up for a short military hitch. I imagine 50 million kevlar doughboys with their hindbrains playing out "Quake VII" and their forebrains hopped up on Red Bull, keeping America safe from ... um ... whatever.

What happens to civilization in such a world I can't imagine. Let's talk about it again in a year or so ...