The value of the U.S. dollar is anchored in trust. As a fiat currency, the U.S. dollar isn't linked to any physical reserves, like gold or silver; it's just paper. For the U.S. dollar to be worth anything, it has to be backed by an economy people have faith in. Otherwise, the U.S. dollar would collapse. Regardless of its intentions, the Federal Reserve's quantitative easing (QE) experiment has left America with many unintended consequences, namely a devalued U.S. dollar, growing income inequality, and a weak economic underpinning. Not the best framework for the world's largest economy.

Welcome to the choir. If it wasn't for the dollar being tied to the oil trade we would be in the deep stuff already. When the dam brakes, the results won't be pretty.

Think of it as a plane aloft traveling across the middle of the Pacific on autopilot with no crew, a hole in it's tank and a broken fuel gauge. (OK, a crew that has no idea what they're doing)
No one knows how long we have, but the inevitable is approaching. We either brace for a watery landing and hope we can survive till we drift to terra firma, or continue to take our chances and keep flying blind, pretending the inevitable can be avoided.

It really is that cut and dried. I say we land this bitch, start cutting while paying down the debt, before our enemies divest in the dollar and call in their markers.
Because when it happens, austerity being a missed opportunity would have looked like a circus net and security blanket compared to what will happen.

But that inevitably is only for those that didn't prepare. Have you prepared?

Quote from: Possumpoint on December 03, 2014, 05:19:30 AM
Welcome to the choir. If it wasn't for the dollar being tied to the oil trade we would be in the deep stuff already. When the dam brakes, the results won't be pretty.

True though ... !

I don't belive Dollar will colapse. Dollar is still the strongest currency in the world. And if I'm not mistaken majority of international trade still takes place in US dollar.

Quote from: european101 on December 10, 2014, 02:05:12 PM
I don't belive Dollar will colapse. Dollar is still the strongest currency in the world. And if I'm not mistaken majority of international trade still takes place in US dollar.

I am certainly not an economist, but I do pay attention to history and reality. In times of turmoil and chaos, I think we are now in these times, and the markets seek stability. What other currency in the world has the stability of the dollar? The world will have to adjust to current oil levels, which favors the USA, so times will continue to be chaotic going forward. Oil prices do not favor OPEC, Iran and Russia.

Well yes oil prices went down becouse of the fracking technology. But we Europe and America must reindustrialize if we want to have more jobs. We must become the place where taxes are low and doing business is simple and easy. We lost so many jobs becouse our taxes are too high especially in Europe.

Quote from: european101 on December 10, 2014, 04:16:37 PM
Well yes oil prices went down becouse of the fracking technology. But we Europe and America must reindustrialize if we want to have more jobs. We must become the place where taxes are low and doing business is simple and easy. We lost so many jobs becouse our taxes are too high especially in Europe.

Actually, that's almost backward in a sense, and only partially correct in another sense.

Fracking is a wonderful thing, but it's also considerably more expensive than older, more conventional and less complicated methods. It was the high price of oil that justified -- and actually financed -- the fracking boom in the US. Fracking isn't new; it's been in use since at least the 1940s. But it ain't cheap, and oil at $20/barrel won't pay for it. But oil at $110/barrel damn sure will. Paradoxically, even today, with oil drifting below $70, planned new explorations in the US are beginning to be put on hold because the commodity price is dropping past the break-even cost of some proposed projects.

It's not necessarily fracking that is directly responsible for the drop in the price of oil. It could have been any technology or discovery. What made the price go down was a vastly increased supply and a massive reassessment of recoverable reserves. The entire concept of "peak oil" has been relegated to the doghouse, at least for the foreseeable future.

Quote from: TboneAgain on December 10, 2014, 04:36:58 PM
Actually, that's almost backward in a sense, and only partially correct in another sense.

Fracking is a wonderful thing, but it's also considerably more expensive than older, more conventional and less complicated methods. It was the high price of oil that justified -- and actually financed -- the fracking boom in the US. Fracking isn't new; it's been in use since at least the 1940s. But it ain't cheap, and oil at $20/barrel won't pay for it. But oil at $110/barrel damn sure will. Paradoxically, even today, with oil drifting below $70, planned new explorations in the US are beginning to be put on hold because the commodity price is dropping past the break-even cost of some proposed projects.

It's not necessarily fracking that is directly responsible for the drop in the price of oil. It could have been any technology or discovery. What made the price go down was a vastly increased supply and a massive reassessment of recoverable reserves. The entire concept of "peak oil" has been relegated to the doghouse, at least for the foreseeable future.

I've been reading where they expect $50. per bbl to be the magic number, simply because of a 6 month oil supply on hand.
In other words, the price they're getting now, is not reflected 6 months out, which is when $50. is expected, at which point, some are saying a return to $80. might be in the mix.
But either way, fracking is making a monstrous difference, and much of it has to do with natural gas.

Quote from: Solar on December 10, 2014, 05:17:53 PM
I've been reading where they expect $50. per bbl to be the magic number, simply because of a 6 month oil supply on hand.
In other words, the price they're getting now, is not reflected 6 months out, which is when $50. is expected, at which point, some are saying a return to $80. might be in the mix.
But either way, fracking is making a monstrous difference, and much of it has to do with natural gas.

Yep, natgas has become almost literally dirt cheap. Living in the boondocks, I just wish the stuff was more easily liquefied; I'm still stuck with propane, and those suppliers are remarkably resistant to drops in the price of oil, even though propane is directly extracted from oil. But it will take time for new generators and older converted generators to allow the natgas glut to be felt in its full potential.

I can see the price of oil stabilizing around $65-80 after a period of fluctuation outside that range. The cost of production for fracking wells will keep some from producing at that price, but allow enough to continue to balance things out.

The best news, I think, is the demise of OPEC, a criminal cartel that has kept the entire world under its thumb for more than 40 years. As far as I'm concerned, they can go back to eating sand for breakfast and camel patties for supper.

Quote from: TboneAgain on December 10, 2014, 05:32:03 PM
Yep, natgas has become almost literally dirt cheap. Living in the boondocks, I just wish the stuff was more easily liquefied; I'm still stuck with propane, and those suppliers are remarkably resistant to drops in the price of oil, even though propane is directly extracted from oil. But it will take time for new generators and older converted generators to allow the natgas glut to be felt in its full potential.

I can see the price of oil stabilizing around $65-80 after a period of fluctuation outside that range. The cost of production for fracking wells will keep some from producing at that price, but allow enough to continue to balance things out.

The best news, I think, is the demise of OPEC, a criminal cartel that has kept the entire world under its thumb for more than 40 years. As far as I'm concerned, they can go back to eating sand for breakfast and camel patties for supper.

Isn't that wonderful news about the demise of OPEC? Now Iran is blaming the Saudis for it's demise because they refused to cut output.
Damn that free mkt!

Quote from: Solar on December 10, 2014, 06:28:01 PM

Isn't that wonderful news about the demise of OPEC? Now Iran is blaming the Saudis for it's demise because they refused to cut output.
Damn that free mkt!

OPEC's trump card was always the US, and its ever-increasing demand. Until around 1950, the US was an oil exporter. Then it became simply cheaper to ship the stuff over from the Middle East. Then, after 20 years of suckling at the ME tit, BOOM! OPEC is formed, production is cut, prices skyrocket, and all hell breaks loose.

OPEC is just exactly like a street pusher of heroin. Once you're hooked, you're owned.

Quote from: TboneAgain on December 10, 2014, 07:10:40 PM
OPEC's trump card was always the US, and its ever-increasing demand. Until around 1950, the US was an oil exporter. Then it became simply cheaper to ship the stuff over from the Middle East. Then, after 20 years of suckling at the ME tit, BOOM! OPEC is formed, production is cut, prices skyrocket, and all hell breaks loose.

OPEC is just exactly like a street pusher of heroin. Once you're hooked, you're owned.

Thank you Jimmuh Carter, the first in a long line of Marxists.

Quote from: TboneAgain on December 10, 2014, 04:36:58 PM
Actually, that's almost backward in a sense, and only partially correct in another sense.

Fracking is a wonderful thing, but it's also considerably more expensive than older, more conventional and less complicated methods. It was the high price of oil that justified -- and actually financed -- the fracking boom in the US. Fracking isn't new; it's been in use since at least the 1940s. But it ain't cheap, and oil at $20/barrel won't pay for it. But oil at $110/barrel damn sure will. Paradoxically, even today, with oil drifting below $70, planned new explorations in the US are beginning to be put on hold because the commodity price is dropping past the break-even cost of some proposed projects.

It's not necessarily fracking that is directly responsible for the drop in the price of oil. It could have been any technology or discovery. What made the price go down was a vastly increased supply and a massive reassessment of recoverable reserves. The entire concept of "peak oil" has been relegated to the doghouse, at least for the foreseeable future.

Expensive or not fracking enabled that now is more oil on the market than before.  The West is now no longer ˝forced˝ to buy oil on traditional markets or Russia and has a choise.

Surplus of oil on the market and reduced dependance of the West from traditional markets has enabled a drop of oil prices.

Quote from: european101 on December 10, 2014, 02:05:12 PM
I don't belive Dollar will colapse. Dollar is still the strongest currency in the world. And if I'm not mistaken majority of international trade still takes place in US dollar.

I've been expecting the dollar to collapse for several years now.

Trillions in national debt and quantitative easing
cannot fail to crash the dollar someday.

I've come to realize that there's one thing preventing the collapse
that most people are not considering:

There still is a substantial amount of manufacturing in the USA.

If the dollar goes down,
that makes U.S. goods more competitive in the world market.

If some country like China or Saudi Arabia
dumps their U.S. Treasury bonds,
the dollar would go down in value,
until U.S. products are cheaper than everyone else's.

That puts a floor on how low the dollar can go.

But if the USA keeps on losing manufacturing capacity to China, etc.
We lose that safeguard, and the dollar actually could go to ZERO!

When the currency is worthless, the country is powerless.

When a country can't produce its own goods, it is helpless.

One more warning:
America could lose ALL of its manufacturing in ONE SECOND!

http://conservativepoliticalforum.com/political-discussion-and-debate/how-iran-can-destroy-america-with-just-three-nukes/