"Peak Oil'; has the threat passed, or simply been postponed?
by Michael Kerlin
Well, about a year ago I posted an article regarding the inevitable downturn in the World supply of oil due to a peak in the remaining reserves known as "Peak Oil". I discussed the looming impact this will have on the world's banking economic model, and to date, nothing seems to have changed with however, a few critical exceptions worthy of note.
While the threat of "Peal Oil" still remains, the current World-wide recession, which has temporarily lowering the demand for oil, and has thus delayed the impact of "Peak Oil" on the World's faltering banking system, has not...I repeat...NOT prevented the coming economic tsunami. In fact, past slow-downs in the demand for oil have resulted in drastic reductions in the price of gasoline, etc., but not this time. Why not...? It would appear that despite the recession based reduction in the demand for oil, something is still causing the price to rise...something unlike anything we have experienced in the past...something that has defied all the known free market principles that imply an increase in the supply of a product which causes it to exceed the demand will result in a decline in the price. But not this time...not with the price of oil.
The only explanation is that there is an unseen non-market force at work which is now driving the price of oil...a force unlike anything we have experienced in the past and despite the world wide slow down in demand, the price of oil continues to rise.
What if we were not in a recession, what if the economy suddenly turned around and the engines of manufacturing around the World were turned back to full speed, as they have in the past when the economy has emerged from a recession? What do you suppose the price of oil would be then, when it is at $4.00 per gallon now? I would suggest that the price of gasoline and all other oil driven products would surge unlike anything we have ever experienced in the past and what effect do you think that would have on a recovery...could a recovery even continue in the face of oil prices at double or triple, or more of their current levels?
Think about that and then reapply the principle of "Peak Oil" into this model and you might then begin to understand the dire straits we find ourselves immersed in right now!
The Fed's are currently printing Fiat currency at levels never seen or experienced before. The result is a steady resulting increase in the cost of value backed
commodities such as Gold, Silver, Platinum, even lowly Copper, relative to the ever dropping value of all Fiat currencies around the World which is also causing the cost of oil, a value based commodity, as well, to increase. Another word for this is "inflation" which has traditionally driven the cost of value based commodities, including precious metals, due to the ever increasing supply of worthless Fiat currency being dumped into the economy since 1932.
If you do not take anything else away from your reading of this article, understand this;
The relative value of Gold, Silver, Platinum, etc., when compared to Fiat currencies has NOT changed. When the dollar was once worth something, whether real or perceived, and the government's spending was limited to the available Gold reserves on hand, you could buy whatever you wanted based upon its real value compared to the real value of Gold, etc. For example; you could buy a new car in 1932 for $300 or 15 ounces of Gold, when we were still on the Gold standard and an ounce of Gold was valued at $20. Take that SAME 15 ounces of Gold, today, where Gold is currently around $1,700 per ounce and you can buy a new car for around $34,000. The ONLY difference between now and 1932 is the value of our Fiat dollar, NOT the value of the precious metal relative to what you were buying!
The reason the dollar cost of everything has constantly risen since 1932 is because the government decided to take us off a system that had, for over 150 years, restricted their ability to increase their spending, unchecked. The result of their decision in 1932 is reflected in the value of an ounce of Gold relative to Fiat dollars, today.
Don't be the only ones standing when the music stops on this economic game of musical chairs that was started back in 1932. The cost of losing will be very high, perhaps more than you will be able to bear.
An example that is not that far removed occurred at the end of the Civil War when Southerner's were left with stacks of worthless confederate currency...think it can never happen to you? Maybe...maybe not, but personally, I don't want to find out the hard way while my family pays the price for my undeserved faith in a worthless Fiat currency that is doomed to fail, sooner or later.
The only question that now remains is not "if" our present Fiat system will fail, only "when"?
Just a little food for thought...