Oil and finance are inextricably linked, for as long as the US (Fed) prints dollars, and exporters accept them in trade for physical oil, then the US is able to effectively act as if it still has lots of cheap oil, for in a real sense, it does as long as it can trade paper for oil.

Correspondent David P. recently connected the end of the gold backing of the dollar with the decline of domestic production and the rise of the debt/speculative "financialized" economy:

Interesting, the concept of trading paper for oil. This is something we engineered when Nixon closed the gold window in 1971. Before we'd have had to trade gold for oil, and now? Just paper. A nice trick. But that was simply a coping mechanism that came about because we needed to maintain our supplies of cheap oil and didn't want to give away our gold in return.

And, when one does that, it doesn't come for free - there are winners and losers. When the US prints dollars, it effectively taxes savings to make this happen. What that does is encourage debt, and discourage savings. The 1970s trashed savers, and encouraged all sorts of debt and speculation to stay ahead of inflation. So perhaps we can say, a direct result of losing our oil superpower status was stripmined savings. This educated a generation of Americans formerly used to saving that saving is wrong and accumulating debt is the right strategy since debts are inflated away.

Perhaps one can say today's casino ridden debt-laden society came directly from the end of domestic cheap oil and our decision to print money instead of downsize our energy usage?

Thank you, David, for a most insightful commentary. Printing money for oil may well be the initial Devil's Pact that started the U.S. down the road to its present addiction to debt, money-printing and "cheap" oil imported from elsewhere and paid for with paper money.


Email alert: As a result of family visits and obligations, I will be unable to respond to email for the next few weeks. Blog entries will likely be sporadic as well. Your understanding is greatly appreciated.


Fall Garden/Seed Special: Our friends at Everlasting Seeds have put together a Fall Garden Special on seeds: "George at UrbanSurvival suggested a new fall garden collection that would allow folks to extend their gardens, concentrating on the more hardy [and 'table substantial', in contrast to, say, herbs/seasonings], especially those with cold frames or greenhouses; this collection consists of 188 seeds per variety (click link below to view entire list). The price of this special offer, normally $88.00, is $80.00."


PRINT EDITION DISCOUNT: The print edition of An Unconventional Guide to Investing in Troubled Times is now available at a 31% "pre-release" discount for readers of oftwominds.com through the publisher, Createspace. (List price $25.85, discount price $17.85) You will have to set up an account with Createspace to order the book directly and receive the 31% discount. After you click "add to cart," insert this discount code M4A8ED8B in the "options and discount" section of the following page.

The print edition will be available through amazon.com at the retail price later next week.

If this recession strikes you as different from previous downturns, you might be interested in my new book An Unconventional Guide to Investing in Troubled Times, now available in Kindle ebook format. You can read the ebook on any computer, smart phone, iPad, etc. Click here for links to Kindle apps and Chapter One. The solution in one word: Localism.


Readers forum: DailyJava.net.



My new book An Unconventional Guide to Investing in Troubled Times is available in Kindle ebook format. You can read the ebook now on any computer, smart phone, iPad, etc. Click here for more info about Kindle apps and the book.

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