[grabby]

here are some fun numbers:

This is our national debt today:


Don't blink.

Here is our oil bill for fuel this year

2.2 TRILLION DOLLARS.

Question:

When will our debt plus our oil bill surpass our GDP?

(GDP is 11 Trillion dollars)

And when it does, it don't mean anything, its just some fun numbers to play around with.
Isn't this fun?

[lutherquick]

grabby,

Did we realy spend 2.2 TRILLION DOLLARS on oil in one year?

I'm thinking as I write...
The world makes about 85 million brl of oil per day, 26% is for the US... That's 22 million brl per day for the US. That comes out to 1.5 billion dollars per day... that comes out to about 500 billion dollars... ok, this doesn't include natural gas and other energy product imports...

anyway... 2.2 trillion, that's big... but then, we are printing the money we use to pay for it... so 2.2 trillion is nothing.

[Jack]

I came up with the same 500 billion number as you, Lutherquick - and part of our oil use is domestic production.

But I think the answer is easy enough. Nothing will suddenly change - we'll just see a further depreciation of the dollar, and an increase in interest rates.

I am reminded of the event horizon of a large black hole. You can cross the event horizon and not notice it - but you can never escape. You're trapped. I suspect the same developments with our burgeoning debt.

[grabby]

oh yes, thanks the 2.2 trillion is for the whole world, we are 500 billion, chump change.
when it doubles to 100 dollars a barrel we will hit one trillion,
wthen we can have a party.
how much electricity did we use and natural gas that would be interesting to figure.

I just like big numbers at the beginning of my work week, it sets the stage for a good week of posts.


O, pres siogned a bill that it is now ok to go to 9 billion debt this year. I am relieved.

[lutherquick]

grabby,

I think debt is realy nothing, short term for the US. Simply because the notes that we owe are in our currency...

If Russia owed 10 trillion dollars, then that would be bad for them.
If we owed 100 trillion Rubles that would be bad for the US...

But, we owe the world 10 trillion of something we make, DOLLARS...
I'm not conserned about that 10 trillion...

What scares me is the other 60 trillion when you add up our debt, M3 and other piles of dollars...

It's getting to the point that what other countries do, is just as powerfull as our FED raising or lowering interest rates...

We basicly created a monster and now our interest rate adjustments do little, it's why we were so low to make the economy grow, and why will see hyper inflation and 30% interest rates as we try to remove liquidity once the world dumps the dollar while at the same time peak oil removes GOODS out of the economy....

Yea, it's party all right, but there will be nothing left of the US once the comon man, peasant, and the upper class in the world realize the dollar is worthless and once they cover their own azzes with peak oil mitigation...

America is doomed... even if their is great tech and great innovations, America has it's head up it's azz and will not move fast enough as 48% of Americans still think Saddam did 9/11, and wmd are secured... these same dip sh!ts think Exxon is the problem, few Americans can understand PO... most live in a video game.

[lutherquick]

grabby,

By the way grabby,

As you said 2.2 is for the world... Now think that .5 is for the US and 1.7 is for the rest of the world... But that 1.7 trillion is denominated in dollars... this is why America is so powerfull today, because of something others do, not of what America does, but America created the carrier, it's called the dollar...

It won't last long, and the whole thing is a con job...

While the world tries to figure out how to get another 1.7 trillon of oil, America just keeps on printing... and that 1.7 actualy makes the other .5 easier for America...

That's why President Hu signed papers with Saudi Arabia to trade in Yuan, it's why Russia needs to trade with her partners in their respected currencies...

At that point, America's .5 trillion will go to 50 trillion in just a few months, once people see the dollar ain't worth sh!t... war and great American marketing will delay it.

[Tyler_JC]

The dollar has already crashed!

It has lost more than 40% of its value against the Euro since 2002.

Surely a 10% annual decline qualifies as a collapse, no?

I think in the future we may continue to see low double digit drops every year. If that continues, dollar debt will become worthless but we will never hit a crisis "break point" collapse.

http://www.economist.com/surveys/displa ... id=2050678

Low on fuel
But how can the world be weaned off its over-reliance on American spending without sending the global economy into recession? In theory, the route to a more balanced world is clear. Americans must spend less and/or foreigners must spend more and/or the dollar must fall (because a cheaper dollar shifts Americans' spending away from imports and boosts exports). Ideally, most of the adjustment should come from higher spending by foreigners. If other countries revved up their economies, they would suck in more American imports. That would allow America's current-account deficit to fall without causing the world economy to suffer.

It has been done before. In the early 1980s, when Ronald Reagan was president, America also borrowed furiously from foreigners, pushing up the current-account deficit to over 3% of GDP. In the later part of the decade, that deficit came down again without causing a global recession, thanks to a big but controlled drop in the dollar and especially to booming economies in Germany and Japan.

Plug China in for "Germany and Japan".

The future will possibly see China purchasing American products at discount as the dollar slides against the Yuan. US taxes will go up like they did in 1990 in order to help balance the budget.

Life will go on, the US standard of living however, will drop somewhat.

[DantesPeak]

$this->bbcode_second_pass_quote('Tyler_JC', 'T')he dollar has already crashed!

It has lost more than 40% of its value against the Euro since 2002.

Surely a 10% annual decline qualifies as a collapse, no?

I think in the future we may continue to see low double digit drops every year. If that continues, dollar debt will become worthless but we will never hit a crisis "break point" collapse.

http://www.economist.com/surveys/displa ... id=2050678

Life will go on, the US standard of living however, will drop somewhat.

[rwwff]

$this->bbcode_second_pass_quote('DantesPeak', '
')Congress probably won't do anything about PO, outside of a very few who understand our energy situation, they are actually making the problem worse. Instead of calling for higher taxes on energy, which could be rebated to those in lower income categories,

[azreal60]

Only if the republicans stay in power in the house and senate. Which the way things are going, good chance they won't be. If that happens, you might see a few things you aren't expecting.

That, and the guy wasn't saying he thought it would get done. Rather he thought that's what Needed to be done if we where truely trying to mitigate peakoil. Instead we are proposing things that aren't going to help at all, like lowering taxes. I personally think he's exactly right, and frankly, if you propose to be a republican and a capitalist, I don't see how you can disagree. The point is we are trying to discourage people from doing something. Buying oil that is. I mean, what's more discouraging than higher taxes to a Republican? =)

[DantesPeak]

The Republicans from Reagan forward, very sucessfully I might add, have passed the burden of federal budget deficits from lower taxes unto foreigners. Clinton almost eliminated the budget deficit (granted that's only if you exclude long term commitments to SS, Medicare, etc.) but what did he get - impeachment proceedings.

As long as foreigners wish to finance the US current account deficit of $1 trillion a year - and even past $1 trillion per year in 2007 according to this week's report from the OECD - the dream world of deficit spending can continue. But when that dream is over, the public will be very angry when they start paying higher prices for everything from gasoline to all the Chinese stuff they find at Walmart. And that will be because of the falling dollar.

[rwwff]

$this->bbcode_second_pass_quote('azreal60', 'O')nly if the republicans stay in power in the house and senate. Which the way things are going, good chance they won't be. If that happens, you might see a few things you aren't expecting.

[grabby]

Wouldn't it be in the countries best interest , if they are worried about inflation, to use these dollars to buy copper, iron, titanium sheet, plastic, oil, redwood logs cows sheep cars boots rubber land buildings waterdams, windmill farms and everything else useful?

we know the dollar has to blow up for us to get out of debt.

It all comes clear now, the govment is not even THINKING of how to get out of debt, it isnt possible.

In fact every move is to hyperinflate the debt until we crack.

This will allow a new currency and a start over.

It seems plausible, since veverytime this happens there is a war, and that makes total sense why we have the greatest military machine in the world cause it will be needed soon.

so buy solid goods with the dollars before they inflate and when pprices climb just buy more.

is that why they are furiously buying and storing oil in the reserves/?
Oh wait
Maybe that is why CHINA is now buying every scrap of metal and wood and rubber and land and utility they can find@! they dont want to bbe stuck holding hyperinflated dollars?

hey it all makes sense now?

Am I right? anyone with a little knowledge could you expand on this direction if it makes sense? is that why china has to military buildup wuickly meanwhile furiously build to make themselves independant on oil?

I think everyone knows they should buy useful things before they cant.
Gold is not a useful thing
silver is not a useful thing.

it is not
why?

cause just like the 40-50's when everyone got the bright idea to buy gold and bought and bought and bought and put all their dollars in it, the govment just waited and waited.

until all the gold and silver was bought at HIGH PRICES

then you know what they did?
THEY PASSED A LAW THAT TOMORROW IT IS ILLEGAL TO OWN GOLD@!
that is what they did, and they said everyone must sell within a fesw weeks.
and the price plumeted and every one got about a dollar for an ounce, boy tdid they loose money!

If you are buying silver or gold, the govment is just going to wait until all your money is spent, and then they will just pass a law saying trading in silver or gold is a felony.

this is kind of what happend in my fathers day, he is not buying gold now.

I wouldselll the gold now while the price is high.

then pay off the debts, whatever you do do not take a loan on a house to buy gold@!

that would be the wordst move you can make.
hard house complete ownership is much better.
buy land, cars that run cheap, bicycles, hoes rakes a large propane tank and fill it, an undergroundgas tank 10,000 gallons if you can act to be a farmer. etc


Gold COULD be a problem. but of course they cant outlaw jewlry probably just limit its sale somehow.

Maybe you could make krugerand rings or something.

[DantesPeak]

I pretty much agree grabby - except about gold confiscation. Yes, they could pass a law to outlaw gold. But then they'd have to buy everyones and lose the tax revenue on future capital gains - which BTW is 28% on gold (not 15% like on stocks).

But even if they did, most of the demand for gold comes from outside the US. Will the rest of the world ban gold too? Most unlikely.

[grabby]

That is correct. and the official LOCKED IN gold rate the PTB last posted is 42 dollars per ounce, if I remember right, this is what they would have to pay us by law.
lots of hiding and smuggling in the future.

[grabby]

ah, here it is I found it:

$this->bbcode_second_pass_quote('official price of gold in US LAW', ' ')(still in effect)
An attempt was made to keep the Bretton Woods system going by a revised agreement, the Smithsonian agreement, reached at the Smithsonian Institution in Washington on December 17-18, 1971. Called by President Nixon "the most important monetary agreement in the history of the world," it lasted only slightly more than a year, but beyond the 1972 U.S. presidential election. At the Smithsonian Institution the Group of Ten agreed on a realignment of currencies, an increase in the official price of gold to $38 per ounce, and expanded exchange rate bands of 2.25 percent around their new par values.

Over the period February 5-9, 1973, history repeated itself, with the Bundesbank taking in $5 billion in foreign exchange intervention. On February 12, exchange markets were closed in Europe and Japan, and the United States announced a 10 percent devaluation of the dollar. European countries and Japan allowed their currencies to float and, over the next month, a de facto regime of floating exchange rates began. The floating rate system has persisted to the present, with none of the five most widely traded currencies (the dollar, the DM, the British pound, the Japanese yen, the Swiss franc) in any way officially fixed in exchange value with respect to the others. (Briefly, from October 1990 to September 1992, the DM and the British pound were nominally linked in the Exchange Rate Mechanism of the European Monetary System.) With the breakdown of Bretton Woods, there began a slow dismantling of the array of controls that had been erected in its name. This included gold.

As part of the Jamaica agreement in 1976 (which ludicrously proclaimed a "New International Economic Order"), IMF members agreed to demote the role of gold. But few central banks subsequently followed up this agreement in practice. One associated change that did come about, however, affected the private gold market in the United States. On January 2, 1975, after forty years of prohibition, U.S. citizens were allowed to purchase gold bullion legally. The Comex in New York subsequently became an important center for the trading of gold