Daily Digest

Daily Digest 4/20 - High Gas Prices Impact Car Sales, China Responds To U.S. Debt Move, 30 Homes Involved In Copper Theft

Wednesday, April 20, 2011, 9:49 AM
  • Modern Monetary Baloney, Fundamental Values, and the Unaddressed Requirement for Reform
  • Near Record High Gas Prices Emptying Pockets
  • Gold touches $1,500 an ounce
  • GM Will Raise Its Average Car Price By $123
  • High Gas Prices Fuel Used Compact Car Sales
  • Iran Central Banker: Lift Sanctions Or Face Spike In Oil Prices
  • Interest Rates Shoot Up In Spanish Auction
  • Clayton Dips Into Teacher Paychecks For Budget Cuts
  • Idaho's Public Universities Seek Between 5% to 8.4% In Student Tuition And Fee Increases
  • Maryland Cities, Counties See Millions in Speed Camera Revenue
  • China Responds Cautiously to U.S. Debt Move
  • Korea's Largest Steelmaker POSCO Set to Raise Prices on its Major Products
  • Obama Blames Speculators For Rising Fuel Prices
  • China Crops in Shortest Supply as Vanishing Farms Spur Rising Food Futures
  • Clothing Costs Rise As Cotton Prices Soar
  • 30 Mobile Homes Involved In Overnight Copper Theft
  • Law Enforcement Reports 15 Cases Of Stolen Catalytic Converters In Cameron Park Area
  • EU-IMF Face Portuguese Pressures On Debt Rescue

Crash Course DVDThe deluxe DVD features a helpful presenter’s pack and live segments by Chris (NTSC or PAL)

Economy

Modern Monetary Baloney, Fundamental Values, and the Unaddressed Requirement for Reform (adam)

Since the US prints its own currency (or actually just issues electronic payments to create new money) whenever it needs it, as Galbraith puts it, “As long as there is diesel fuel to power up the back-up generators that run the government’s computers, they will have the money to back their own bonds.”

This is technically correct, and underpins much of what is described of late as modern monetary theory.

Near Record High Gas Prices Emptying Pockets

The national average price for a gallon of gas is $3.83 and Americans are starting to cut back. In California, where the average price is above $4, drivers are running out of gas in record numbers.

"It's taking a toll on my funds right now, taking almost $200 to fill up. I'm not a six figure person," said Sean Dozier, who ran out of gas. AAA said calls for emergency gas services are up 13 percent as drivers try to stretch their gas tank that extra mile.

Gold Touches $1,500 An Ounce

The gold contract for June delivery was up $4.50 at $1,497.40 an ounce Tuesday and has traded as high as $1,500.50 an ounce. Spot gold prices were off by $1, according to Kitco's gold index. Silver prices for June delivery were gaining 75 cents to $43.71 an ounce. Gold prices settled at a record high on Monday after rating agency Standard & Poor’s reaffirmed its AAA rating on U.S. debt but cut its outlook to negative from stable, signaling that a ratings downgrade could come in the next two years. The ratings agency expressed concern that U.S. policymakers haven't addressed critical fiscal issues.

GM Will Raise Its Average Car Price By $123

General Motors Co . will raise prices by an average of $123, or 0.4 percent, per vehicle because of higher commodity costs. The price increases will be on most models in the U.S. and will be effective May 2, GM spokesman Tom Henderson said Monday. The move isn't related to the Japan earthquake, he said.

Ford Motor Co. said April 4 it would raise prices by $117, or 0.4 percent. Toyota's increase on most models averaged 1.7 percent, the automaker said March 31.

High Gas Prices Fuel Used Compact Car Sales

Edmunds values compact cars much higher now than it did in September 2010. The value of a 2008 Honda Accord rose 24 percent in the past six months. The 2008 Hyundai Sonata saw a 22 percent increase in value over the same time period.

If you can afford the high gas prices, however, now may be time to buy a gas guzzler. Retailers are finding auction bargains for SUVs. Poor gas mileage has them easy to find. "SUVs have gone down because it's $4 a gallon," Matthews said. "It's hard to sell them."

Iran Central Banker: Lift Sanctions Or Face Spike In Oil Prices

The head of Iran's central bank warned that oil prices will rise above $150 a barrel if economic sanctions against the Islamic theocracy are not lifted soon. “Iran can have an effect on world energy and fuel. Fuel prices will go up dramatically,” Mahmoud Bahmani said in a recent interview with The Washington Times at a meeting of the International Monetary Fund in Washington.

“If sanctions are not removed, particularly sanctions against banks and other economic sanctions, the price of oil will go above $150 a barrel.”

Interest Rates Shoot Up In Spanish Auction

Spain has had to pay sharply higher interest rates to raise euro4.7 billion ($6.8 billion) in an auction of 12- and 18-month bills, indicating renewed market jitters in Europe.

Investors demanded an average interest rate of 2.77 percent to purchase euro3.5 billion in 12-month bills Monday, up from 2.13 percent in the last such auction March 15.

Clayton Dips Into Teacher Paychecks For Budget Cuts

Clayton County teachers and physical education programs will take a hit because of budget cuts. Teachers will end up returning some money they were already paid.

Channel 2’s Linda Stouffer was at the heated Monday night meeting where the school board approved five teacher furlough days. Public outcry saved elementary school counseling, music and art programs, but PE programs will be cut in half. Superintendent Edmond Heatley said the board needs to trim about $50 million in the next two years to make up for a shortfall.

Idaho's Public Universities Seek Between 5% to 8.4% In Student Tuition And Fee Increases

Board executive director Mike Rush warned last month that the schools would have to lean further on student tuition and fees. That's because state support for higher education is poised to further decline under a budget for next year.

Maryland Cities, Counties See Millions in Speed Camera Revenue

Cities and counties across Maryland are reaping the benefits of revenue from speed cameras, with the money going toward video cameras in police cars, longer police station operating hours and matching funds for federal public safety grants, among other projects. Montgomery County, for example, which was the first county in the state to install speed cameras in select residential streets and school zones in 2007, estimated that it would receive more than $13 million in net revenue from fines for fiscal year 2010. That money would be divided between the fire department, the police department and pedestrian safety projects.

China Responds Cautiously to U.S. Debt Move

China called on Washington to adopt "responsible" measures to protect its bond holders, in a cautiously worded response to Standard & Poor's decision to lower its outlook on U.S. government debt that reflects Beijing's awkward position as America's biggest creditor.

China has "taken note" of S&P's move, Foreign Ministry spokesman Hong Lei said on the ministry's website late Tuesday. "U.S. government debt is a reflection of the U.S. government's credit, and is an important investment product for institutional investors in the U.S. and internationally," he said. "We hope the U.S. government earnestly adopts responsible policies and measures to protect the interests of investors."

Korea's Largest Steelmaker POSCO Set to Raise Prices on its Major Products

Korea's largest steel producer, POSCO, is set to raise prices for its major products by 160-thousand won, or around 147 US dollars, per ton starting this Friday. According to an industry report, hot-rolled steel coils will now be close to 15-hundred dollars per ton, cold-rolled steel at nearly 11-hundred dollars per ton, and thick steel plates at just over a thousand dollars.

The steelmaker says it had refrained from raising prices in the past in efforts to prevent a domino effect from taking place in other manufacturing sectors, but that it was inevitable due to the rising cost of raw materials.

Obama Blames Speculators For Rising Fuel Prices

President Barack Obama on Tuesday blamed speculators for driving gasoline prices higher and straining American consumers, saying there was enough oil in world markets to meet demand.

The problem is ... speculators and people make various bets, and they say, you know what, we think that maybe there's a 20 percent chance that something might happen in the Middle East that might disrupt oil supply, so we're going to bet that oil is going to go up real high. And that spikes up prices significantly."

China Crops in Shortest Supply as Vanishing Farms Spur Rising Food Futures

Across the road from Zhao Yuanyi’s wheat field in China’s Shandong province, Chonche Group is expanding a rail-car factory on what used to be 227 hectares of farms. Nearby, Geely Automobile Holdings Ltd. (175) makes sedans on an 87 hectare site that four years ago was covered by crops.

The factories sprawling from Jinan city, 350 kilometers (220 miles) south of Beijing, put Zhao on the front line of a clash between a policy of food self-sufficiency and industrial growth that made China the world’s second-biggest economy. Industrialization is winning, signaling prices for crops like wheat and corn will rise as China is increasingly unable to feed itself and vies for supplies on global markets.

Clothing Costs Rise As Cotton Prices Soar

The price of cotton has more than doubled in the past year because of bad weather and increasing demand, and consumers and retailers in Central Florida are feeling the pinch. For Moon, it means T-shirts for her 7-year-old daughter now cost $10, when she is used to paying about $6. If prices go much higher, she said she would probably go to consignment shops.

30 Mobile Homes Involved In Overnight Copper Theft (Georgia)

“It's very unusual that we would have this much occur in a small time frame like that,” says Sexton.

What is becoming less unusual for the police department is copper theft cases. DCP officials say they have been dealing with copper thefts almost on a daily basis, which they say is due to the fact that the price of copper has increased to $3.50 per pound. “We're having a terrible time with copper thefts,” says Sexton. “We're having copper thefts reported on a daily basis now. It's really escalating.”

Law Enforcement Reports 15 Cases Of Stolen Catalytic Converters In Cameron Park Area

Catalytic converters are reportedly choice pickings because they contain trace amounts of platinum and palladium metals that are currently selling for somewhere between $777 and $1,700 per ounce to recyclers, according to officials. It is nearly impossible for someone to remove the metals from a catalytic converter without specialized equipment, Golmitz said.

It is believed the suspects can receive anywhere from $100 to $200 per converter. The replacement cost for the victim can range from several hundred dollars to several thousand dollars, depending on the year, make and model of the vehicle, Golmitz said.

EU-IMF Face Portuguese Pressures On Debt Rescue

Top EU and IMF officials working on a debt rescue for Portugal worth some 80 billion euros Tuesday met leading unions and politicians who said new austerity measures should not kill off firms or lead to unemployment. The country is eight weeks away from a risk of defaulting on its debt and faces a general election on June 5.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

34 Comments

saxplayer00o1's picture
saxplayer00o1
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SingleSpeak's picture
SingleSpeak
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Obama Blames Speculators For Rising Fuel Prices

LOL, he can look in the mirror if he wants to blame someone, because his policies will determine their bets.

SS

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SingleSpeak wrote: LOL, he
SingleSpeak wrote:

LOL, he can look in the mirror if he wants to blame someone, because his policies will determine their bets.

SS

This was also mentioned as the cause on ABC news the other night. At one point, the reporter remarked that the market is well supplied and if need be, there is another 200 million barrels a day of oil that can be added to the market. Uh, hello, anyone home? The world only uses 85 million barrels a day!

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Speculation Has No Influence?
joemanc wrote:
SingleSpeak wrote:

LOL, he can look in the mirror if he wants to blame someone, because his policies will determine their bets.

SS

This was also mentioned as the cause on ABC news the other night. At one point, the reporter remarked that the market is well supplied and if need be, there is another 200 million barrels a day of oil that can be added to the market. Uh, hello, anyone home? The world only uses 85 million barrels a day!

I don't quite understand. Are we saying speculators have no influence on oil prices? If it's not speculators, what caused prices to soar to $147 per barrel, then plunge?

Poet

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Greece to Sell Bills With

Greece to Sell Bills With Two-Year Note Yields Exceeding 20%: Euro Credit
Greece’s two-year bond yield exceeded 20 percent yesterday, as official denials that the nation was preparing a restructuring failed to convince investors. The yield on 10-year debt has jumped more than 300 basis points since Feb. 15 when Greece last sold 13-week bills at a yield 3.85 percent.

Bernanke May Sustain Stimulus to Avoid ‘Cold Turkey’ End to Aid
Federal Reserve Chairman Ben S. Bernanke may keep reinvesting maturing debt into Treasuries to maintain record stimulus even after making good on a pledge to complete $600 billion in bond purchases by the end of June.

Canadian Inflation at 30-Month High of 3.3% Outstrips Central Bank Outlook
Canada
’s inflation rate accelerated in March to the fastest in 2 1/2 years, exceeding all economist forecasts, with widespread increases led by energy costs.
Consumer prices rose 3.3 percent from a year earlier after a 2.2 percent gain in February, Statistics Canada said today in Ottawa.

Japan’s Exports Fall a More-Than-Expected 2.2% After Quake
Car exports fell 28 percent from a year earlier and shipments for electronic devices also slid as the disaster prevented companies from transporting goods. Automakers including Toyota Motor Corp. and Honda Motor Co. were forced to reduce production after the March 11 disaster.

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We are all speculators.
Poet wrote:

I don't quite understand. Are we saying speculators have no influence on oil prices? If it's not speculators, what caused prices to soar to $147 per barrel, then plunge?

Speculators are just another place for politicians to put blame instead of looking at their own destablizing policies.   Speculators are good, they send a signal as to what might happen in the market.   As Dr. M has pointed out, we are all speculators and have had to be for a while now.  We are forced to speculate to try and protect our wealth due to the debasement of our currencies.

Most on this site would be consider speculators in precious metals, food, energy and any other thing you happen to be stocking up.  After all if you weren't speculating that prices are going to rise, then you would delay as long as possible any purchases.

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Poet wrote: joemanc
Poet wrote:
joemanc wrote:
SingleSpeak wrote:

LOL, he can look in the mirror if he wants to blame someone, because his policies will determine their bets.

SS

This was also mentioned as the cause on ABC news the other night. At one point, the reporter remarked that the market is well supplied and if need be, there is another 200 million barrels a day of oil that can be added to the market. Uh, hello, anyone home? The world only uses 85 million barrels a day!

I don't quite understand. Are we saying speculators have no influence on oil prices? If it's not speculators, what caused prices to soar to $147 per barrel, then plunge?

Poet

I think the speculators get unfairly blamed when it doesn't suit the media/government's agenda. Speculators were blamed for driving oil to $147, but not when it plunged to $30. But then speculators were blamed when they shorted banks and other stocks in late '08/early '09 when the market was plunging. It's always the speculators fault, until it isn't.

Mark_BC's picture
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joemanc wrote: SingleSpeak
joemanc wrote:
SingleSpeak wrote:

LOL, he can look in the mirror if he wants to blame someone, because his policies will determine their bets.

SS

This was also mentioned as the cause on ABC news the other night. At one point, the reporter remarked that the market is well supplied and if need be, there is another 200 million barrels a day of oil that can be added to the market. Uh, hello, anyone home? The world only uses 85 million barrels a day!

Any thoughts on Saudi Arabia's announcement that they may scale back oil production because the world is apparently well supplied? Or is that an excuse covering up what's really happening -- that they are running out of oil?

Mark_BC's picture
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joemanc wrote: I think the
joemanc wrote:

I think the speculators get unfairly blamed when it doesn't suit the media/government's agenda. Speculators were blamed for driving oil to $147, but not when it plunged to $30. But then speculators were blamed when they shorted banks and other stocks in late '08/early '09 when the market was plunging. It's always the speculators fault, until it isn't.

It''s the CB that sets loose monetary policies (artificially low interest rates) to provide an environment for speculative bubbles to form.

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Here Nixon talks about

Here Nixon talks about International Money Speculators....Speculators....

He also mentions "Bugaboo" LOL

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Wall Street’s Private Casino is Only Open to Super-rich Clients

Ian Masters interviews Michael Greenberger, former director of the Division of Trading and Markets at the Commodity Futures Commission on 3/16/11, on the radio KPFK - Los Angeles.

http://archive.kpfk.org/parchive/mp3/kpfk_110316_170004bbriefing.MP3

Unless folks on this site are the super duper rich I don't think any of you will qualify as being "speculators" in the sense of the word as Greenberger tells it.  But you'll have to hear for yourselves what he has to explain to you. The interview was the last segment of the show.

Ian Masters blogged about it the following day http://ianmasters.com/content/wall-street-strikes-again

He writes, "Michael Greenberger made it clear, just as "60 Minutes" did in their investigation following the price run up in 2008, that it is the speculators who are driving up the price, not unrest in foreign lands as is so ritually reported. Apparently the big banks we bailed out after they ripped us off and devastated our economy, like bookies, offer to take bets on whether vital commodities like oil and grain will rise or fall".

"But the window of opportunity at Wall Street’s private casino is only open to their big super-rich clients who have placed a $40 billion bet that oil will go up. Well guess what? It will go up because the price is being driven up and it’s the average working stiff on Main Street who is reeling from the recession that feels the pain, as he and she gets gouged at the pump as a result".

Broadspectrum

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Estimates say it could

Estimates say it could produce another 200 million barrels a day if needed and U.S. oil refineries are only operating at 81 percent of capacity.

 Holy Crap !! That guy musta got a ride to the interview on the "Short Bus"

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Commentary: We are past the point of no return, thanks to Super

It looks like Paul Farrell at MarketWatch is up in arms today, railing mainly against the 1%.


10 Doomsday Trends America Can't Survive
:
Commentary: We are past the point of no return, thanks to Super Rich
"In 'The Battle for Soul of Capitalism,' Bogle warned us the 'Invisible Hand' no longer serves 'We the People' nor the public welfare. Today, Wall Street and the insatiable Super Rich 1% rule America. And they are obsessed with restoring the same unregulated free-market Reaganomics that loves gambling in the same speculative $580 trillion derivatives casino that triggered the 2008 meltdown."
http://www.marketwatch.com/story/10-doomsday-trends-america-cant-survive...

Poet

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Poet wrote: joemanc
Poet wrote:
joemanc wrote:
SingleSpeak wrote:

LOL, he can look in the mirror if he wants to blame someone, because his policies will determine their bets.

SS

This was also mentioned as the cause on ABC news the other night. At one point, the reporter remarked that the market is well supplied and if need be, there is another 200 million barrels a day of oil that can be added to the market. Uh, hello, anyone home? The world only uses 85 million barrels a day!

I don't quite understand. Are we saying speculators have no influence on oil prices? If it's not speculators, what caused prices to soar to $147 per barrel, then plunge?

Poet

 

Depends on who you listen to. Does it make sense that we would have a spike, a bubble, to $147 per barrel, then crash down to $30 per barrel and now back up to $122 per barrel within a three year period. Does that sound like an 'efficient market' to you?

...Most economists agree that some speculation brings stability to commodity markets. But in an interview with Dan Rather, hedge fund manager Michael Masters claims that a recent surge in speculation has thrown the oil market out of balance making prices at the pump rise and fall at the whim of Wall Street. "Speculators today have about 70 percent of the open interest in the commodity markets," explains Masters. "Ten years ago - they controlled roughly 30 percent of the market."

...

"Dan Rather Reports: Gas Pains" premiering on HDNet, TONIGHT, Tuesday, April 19 [2011] at 8:00 p.m. ET with an encore at 11:00 p.m. ET.

 

And here is Mike in an older video(last year) talking about it:

 

 

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Poet wrote:

I don't quite understand. Are we saying speculators have no influence on oil prices? If it's not speculators, what caused prices to soar to $147 per barrel, then plunge?

 The simple answer is yes there is speculation, but only because people are trying to protect their wealth in an ever increasing enviroment of currency debasement. The price plunged once demand dropped off dramatically. It didn't take long for the price to start rising again after the Fed started running the printing press at full speed no holds barred. Since the Gov. is going to blame speculators I suspect next we will hear of talk of some kind of regulations/ price controls...

 Eric

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Paul B. Farrell - another statist hack


Poet quoting Paul Farrell wrote:

insatiable Super Rich 1% rule America. And they are obsessed with restoring the same unregulated free-market Reaganomics that loves gambling in the same speculative $580 trillion derivatives casino that triggered the 2008 meltdown."

Hmm, that would be the same free market with massive manipulation of the Fed and regulatory agencies he talks about in this paragraph

Paul Farrell wrote:

 

Why? Wealth can easily buy favorable laws, making even the most unethical, selfish, corrupt behavior legal by fiat. And their high-priced lobbyists all over Washington, Congress, government regulatory agencies and the Fed all have the power to grab the rewards of capitalism for the Super Rich, while transferring the liabilities to the other, clueless 99% of America’s taxpayers.

So, let me get this straight, it's all the people who are taking advantage of the power of government to confiscate and print money that is the problem.  I look at this as the problem is we the people have given power to the govenrnment to favor the wealthy in the first place, but no.. it just evil capitalism that's to blame even though what we have is not captalism, since for ture capitalism to occur you have to have sound money to measure the value of capital!

At this point I don't think it matters what happens, we are going to crash, the only question is what will the surviors do afterward, will we say ooh look, that giving government the power over citizens and power to print money wasn't such a  good idea, perhaps we should get back to sound money and power in the individual, or will we go where this guy clearly thinks we should go, which is hope and trust in a even more invasive benevolent government.

GRRRR....

 

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there are two sides to the speculation coin..
Poet wrote:

[I don't quite understand. Are we saying speculators have no influence on oil prices? If it's not speculators, what caused prices to soar to $147 per barrel, then plunge?

Poet

by my understanding of the futures markets, for every long contract, there has to be a short; which means that someone had to have written a contract to sell that imaginary oil to those speculators who owned it...that means that at any given price there are equal numbers of speculators betting that oil would go down from that price as there are betting that it would go up...for the "speculators", its always a zero-sum game; some win, some lose, but by the time the contracts in this casino expire, the only one who collects the vigorish is the bookie...

if you recall the bankruptcy talk around the time of the oil spill, we heard that because it's presence in the energy markets, BP was also too big to fail; i recall that BP's "paper oil" in the derivatives market was about 10 times their known real reserves, but couldnt find a link to that, but did find that BP makes about $3 billion annually from trading operations alone...

so all these "speculators" are involved in setting the price on any given day, moving ten or more times paper oil daily than any physical oil is ever moved, but we still come back to the nature of the futures contract; for everyone buying a contract, there has to be someone willing to write that contract to sell imaginary oil at that same price, both parties to the speculation are at risk and large amount can be made or lost in a day, and traders like BP can even make more money by driving prices down than they can by selling oil...

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What Is Capitalism? Thought Experiment
rhare wrote:

...what we have is not captalism, since for ture capitalism to occur you have to have sound money to measure the value of capital!

At this point I don't think it matters what happens, we are going to crash, the only question is what will the surviors do afterward, will we say ooh look, that giving government the power over citizens and power to print money wasn't such a  good idea, perhaps we should get back to sound money and power in the individual, or will we go where this guy clearly thinks we should go, which is hope and trust in a even more invasive benevolent government.

Rhare

Maybe I'm confused and just need some enlightenment from you. Here are some questions I have, and your answers may help me to better understand.

I agree that what we have here in the U.S. isn't capitalism.

But suppose we're in a medieval desert town 1,000 miles from the nearest source of water, (there is no water table to speak of and the next rains are months away). There are no beasts of burden and all the water is in a large cistern that I was smart enough to have built for me under my house. Now I refuse to sell you any more water - or you could no longer afford water at the prices I am selling it. (Though I am quite willing to pay the local cop and local judge to enforce my property rights.) Are we still living under capitalism? And what would you do about it as a capitalist if you can't afford my water? Does not having a major moat and barriers to entry provide a valid form of capitalism that eventually accrues all wealth to me and those I choose to support me?

Now what if I'm not the only water storer? There are 4 others in this medieval desert town, who also have large cisterns of water stored. What if instead of making water immediately unaffordable, I and the 4 others merely made it less and less affordable to the other 95 inhabitants of this town by charging - as we wish to do - more and more each year so that the other 95 inhabitants are less and less able to afford water each day until a majority becomes destitute and are subsisting on water purchased daily with the bargain of their daily hard labor (just a sick day away from dying of thirst) and a few of the rest (primarily the warriors and priests, but also a few entertainers and doctors) - continue to be able to afford extra water. Is that still a capitalistic system?

Yes, I agree we will collapse. I just believe that all economic systems - whether capitalist or socialist or communist - tend to collapse due to human nature and especially in times of resource scarcity.

Poet

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Broadspectrum wrote:

"But the window of opportunity at Wall Street’s private casino is only open to their big super-rich clients who have placed a $40 billion bet that oil will go up. Well guess what? It will go up because the price is being driven up and it’s the average working stiff on Main Street who is reeling from the recession that feels the pain, as he and she gets gouged at the pump as a result".

Broadspectrum

 I spoke a little too soon in answering Poet. Wallstreet's big players such as Goldman Sachs, JP Morgan and the like do play a huge role in the price spikes. They are also the first ones to get the cheap easy money from the Fed's discount window.The money has to go somewhere and commodities is where it's going. Their access to the easy money from the Fed is the driving force and every trader and fund manager worth his salt is jumping on for the ride. When the Gov. calls for regulations/price controls the only ones that won't get their hands slapped will be the To Big To Fails.... The Fed and them are the thieves in this Kleptocracy

Eric

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Iran Central Banker: Lift Sanctions Or Face Spike In Oil Prices

I don't know about anyone else, but there is something fishy about this story, it has a foul stench that I can't quite put my finger on.

Eric

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Poet wrote: rhare
Poet wrote:
rhare wrote:

...what we have is not captalism, since for ture capitalism to occur you have to have sound money to measure the value of capital!

At this point I don't think it matters what happens, we are going to crash, the only question is what will the surviors do afterward, will we say ooh look, that giving government the power over citizens and power to print money wasn't such a  good idea, perhaps we should get back to sound money and power in the individual, or will we go where this guy clearly thinks we should go, which is hope and trust in a even more invasive benevolent government.

Rhare

Maybe I'm confused and just need some enlightenment from you. Here are some questions I have, and your answers may help me to better understand.

I agree that what we have here in the U.S. isn't capitalism.

But suppose we're in a medieval desert town 1,000 miles from the nearest source of water, (there is no water table to speak of and the next rains are months away). There are no beasts of burden and all the water is in a large cistern that I was smart enough to have built for me under my house. Now I refuse to sell you any more water - or you could no longer afford water at the prices I am selling it. (Though I am quite willing to pay the local cop and local judge to enforce my property rights.) Are we still living under capitalism? And what would you do about it as a capitalist if you can't afford my water? Does not having a major moat and barriers to entry provide a valid form of capitalism that eventually accrues all wealth to me and those I choose to support me?

Now what if I'm not the only water storer? There are 4 others in this medieval desert town, who also have large cisterns of water stored. What if instead of making water immediately unaffordable, I and the 4 others merely made it less and less affordable to the other 95 inhabitants of this town by charging - as we wish to do - more and more each year so that the other 95 inhabitants are less and less able to afford water each day until a majority becomes destitute and are subsisting on water purchased daily with the bargain of their daily hard labor (just a sick day away from dying of thirst) and a few of the rest (primarily the warriors and priests, but also a few entertainers and doctors) - continue to be able to afford extra water. Is that still a capitalistic system?

Yes, I agree we will collapse. I just believe that all economic systems - whether capitalist or socialist or communist - tend to collapse due to human nature and especially in times of resource scarcity.

Poet

Poet,

     You also have to add that while resources are getting more scarce, we are also poisoning everybody and everything. You should watch Democracy Now's episode for today on the first anniversary of the Gulf of Mexico BP oil spill - an unmitigated disaster of biblical proportions. And we're poised to repeat the same accident again in our vain attempt to keep our fossil fuel economy going and "growing".

Part I

 

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What Is Capitalism? Thought Experiment

Poet, you would only have water. You wouldn't have my seeds for crops, you wouldn't have, Joe's wax for candles, you wouldn't have goat meat from sally's goat farm, ect, ect.... Free market Capitalism is a trade of goods or labor or profits from that labor. The others in the "community would rise up against your greed. Which will come to us soon enough..

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Peter Schiff's book "How an

Peter Schiff's book "How an Economy Grows and Why it Crashes" could be seen as an idealistic descriptiuon of how free market capitalism is supposed to bring wealth. However, he explicitly states that the more fish we catch, the more fish there are. This goes beyond all rational logic. I'm pretty sure that fish become less abundant after you catch them. That's why virtually all fish stocks are in decline or outright collapse.

Therefore, free market capitalism will not work under an increasingly constrained supply of resources. If I catch a fish, I have now diminished the ability of someone else to make money by catching a fish, because there are now less fish. Therefore, I should be paying something, or be regulated, to mitigate that damage I have inflicted on our resource base by taking the fish.

This is why free market capitalism worked well to bring about wealth a century ago, because there essentially were limitless resources. Now there are not.

Not to say that communism works either, in fact I don't think any single magic bullet "ism" will work because we are now beginning to understand how complex the world is, much more complex than can be described by any "ism".

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The ends do not show the means....
Poet wrote:

But suppose we're in a medieval desert town 1,000 miles from the nearest source of water, (there is no water table to speak of and the next rains are months away). There are no beasts of burden and all the water is in a large cistern that I was smart enough to have built for me under my house. Now I refuse to sell you any more water - or you could no longer afford water at the prices I am selling it. (Though I am quite willing to pay the local cop and local judge to enforce my property rights.) Are we still living under capitalism? And what would you do about it as a capitalist if you can't afford my water? Does not having a major moat and barriers to entry provide a valid form of capitalism that eventually accrues all wealth to me and those I choose to support me?

Your story suffers the same problem as Paul Farrell's.  You are starting at the end point after all the manipulation has already occured.  Why were you the only one to build a cistern?  Are you saying you are that much smarter than everyone else? Why would so many people be living around you in an unsustainable fashion unless forced or encouraged to do so?  Did you early on get some law passed by your friend the judge saying only you could have a cistern or perhaps more subtle like a large tax on any new comers?  Why did citizens not realize their peril early on and take action?  Was it because you promised to always supply water no matter what the conditions?  The problem with looking at the situation we have today and saying "evil capitalism" is that the results are not from captialism.  

In your story you would not be the only one with water.   As soon as you tried to charge too much for your water someone else would have built a cistern.   Early on people would not move to the area with inadequate water sources because  it would not be affordable.  Your situation is not describing a problem with capitalism, it's describing the end result of some other system masquerading as capitalism.

Poet wrote:

Now what if I'm not the only water storer? There are 4 others in this medieval desert town, who also have large cisterns of water stored. What if instead of making water immediately unaffordable, I and the 4 others merely made it less and less affordable to the other 95 inhabitants of this town by charging - as we wish to do - more and more each year so that the other 95 inhabitants are less and less able to afford water each day until a majority becomes destitute and are subsisting on water purchased daily with the bargain of their daily hard labor (just a sick day away from dying of thirst) and a few of the rest (primarily the warriors and priests, but also a few entertainers and doctors) - continue to be able to afford extra water. Is that still a capitalistic system?

Yes it is.  As soon as you decide to collude with others, someone would build a well, or at least the next year when the rains came people would remember that you screwed them, and would take action.  The problem with collusion is that it's human nature to compete.  Look at how successful OPEC has been (NOT) at colluding. As soon as the price gets high enough someone will cut their prices to gain a bit more of the pie.

You also talked about buying a judge off - that right their is where the citizens should have risen up and removed the judge.  It's why I promote less government to try to minimize corruption and I strongly advocate servere punishment for those that are corrupt.  The best thing however is to minimize the ability for corruption to occur in the first place.

Poet wrote:

Yes, I agree we will collapse. I just believe that all economic systems - whether capitalist or socialist or communist - tend to collapse due to human nature and especially in times of resource scarcity.

Mark_BC wrote:

Therefore, free market capitalism will not work under an increasingly constrained supply of resources.

I disagree, I think capitalism is one of the few things that will work in a world of diminishing resources.  It allows the market to determine the value of the scarce resources.  As the resources become limited the price goes up forcing consumers to choose what is important, find alternatives, or create something new.  It's only in the unlimited free money world do people not have to make the tough choices. 

xraymike wrote:

You also have to add that while resources are getting more scarce, we are also poisoning everybody and everything.

In your example on the BP poisioning our world.  Why was it so easy for it to happen?  Is part of it because the government limited responsibility to 75 million for damages through the Oil Spill Liability Trust Fund?  We fail to go back and look at what ramifications seemingly good actions like this have.  Would BP have been more careful if a accident could mean the end of the company when massive lawsuits are filed?  Did this give them incentive to cut corners because the liability limit was much cheaper than the costs to minimize risk?

 

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Peter Schiff's book "How an

Mark_BC wrote:

This is why free market capitalism worked well to bring about wealth a century ago, because there essentially were limitless resources. Now there are not.

I agree that now there is resource scarcity, I disagree that it was Free Market capitalism. The introduction of Fractional Reserve Banking and Fiat currencies allowed the human race to exploit the resourses of our planet to scarcity. It is not true free market capitalism. It talks like it, and walks like it, moves like it, but if you look closely there are strings attached and it is being manipulated. It is manipulated to move in the direction that outside entities want it to move. That's not free. Maybe call it Puppet Capitalism

Eric

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Sam Kinison has the solution

Sam Kinison has the solution to Poet's realistic scenario, about the 5:40 mark....

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ericg wrote: Mark_BC
ericg wrote:

Mark_BC wrote:

This is why free market capitalism worked well to bring about wealth a century ago, because there essentially were limitless resources. Now there are not.

I agree that now there is resource scarcity, I disagree that it was Free Market capitalism. The introduction of Fractional Reserve Banking and Fiat currencies allowed the human race to exploit the resourses of our planet to scarcity. It is not true free market capitalism. It talks like it, and walks like it, moves like it, but if you look closely there are strings attached and it is being manipulated. It is manipulated to move in the direction that outside entities want it to move. That's not free. Maybe call it Puppet Capitalism

Eric

But fractional reserve banking has only been here for a hundred years. For a few hundred before that the US had what could be considered free markets.

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Near Record High Gas Prices

Near Record High Gas Prices Emptying Pockets

The national average price for a gallon of gas is $3.83 and Americans are starting to cut back. In California, where the average price is above $4, drivers are running out of gas in record numbers.

"It's taking a toll on my funds right now, taking almost $200 to fill up. I'm not a six figure person,"

 

Maybe......  but what sort of car takes $200 to fill up @ $4/gall?  One with a 50 gallon tank that's what!!  That's three times the size of the tank in my car....  Can't feel sorry for anyone who drives a yank tank and then complains.

Mike

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Near Record High Gas Prices Emptying Pockets

Near Record High Gas Prices Emptying Pockets

"OPEC said on Monday there is a glut on the market."

Total BS of course........

"Estimates say it could produce another 200 million barrels a day if needed"

So why don't they.........?

"Speculators in the oil futures market bid prices up"

They bid the futures price up,but they don't bid the spot price up, and it is the spot price that counts.

If they bid the futures price up and the spot price stays the same, then they lose money.

 
 
 
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Mark_BC wrote: But

Mark_BC wrote:

But fractional reserve banking has only been here for a hundred years. For a few hundred before that the US had what could be considered free markets.

That is also when almost all our resourses started to be exploited exponentially. Fractional Reserve Banking requires constant growth and constant new debt issuance..

Eric 

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Probably not a 50 gal tank
Damnthematrix wrote:

Near Record High Gas Prices Emptying Pockets

The national average price for a gallon of gas is $3.83 and Americans are starting to cut back. In California, where the average price is above $4, drivers are running out of gas in record numbers.

"It's taking a toll on my funds right now, taking almost $200 to fill up. I'm not a six figure person,"

 

Maybe......  but what sort of car takes $200 to fill up @ $4/gall?  One with a 50 gallon tank that's what!!  That's three times the size of the tank in my car....  Can't feel sorry for anyone who drives a yank tank and then complains.

Mike

I suspect that there is a little exageration here. Not many vehicles aside from large trucks have 50 gal tanks. My 3/4 ton truck has a 34 gal tank. Also, many places in Calif. gas is closer to $5 per gallon than $4 per gallon. By the way my motorcycle has a one gal tank and gets 85 miles to the gal.

However, at $5 per gallon there will be many SUVs and big cars parked in the not too distant future.

 

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planned collapse 2012

I was just looking at a presentation by Lindsey Williams a pastor who back in the 70s worked as minister for the men who made the Alaska pipeline back in the 70s.  Short story is that he formed friendships with people on the inside of the oil industry.  He stated that he was told 4-5 mo prior to the revolutions in the middle east that there would be turmoil over there.  He insider friend wouldn't say where it would start but there would be "turmoil."  The point of this turmoil was hatched 30 yrs ago.  Apparently we may have more oil in this country then we are letting on though I have no way of validating this info.  There was a big discovery in Prudo (sp?)Bay in 70s which was soon after classified and not further developed.  The reason for this classification was that Kissinger was going over to the Middle Eastern countries and saying that the US would develop their oil fields & buy their oil if they would buy our debt.  Saudi Arabia & all other countries agreed except for Iran & Iraq.  Interesting no...

So it appears what's happening now is that we are backing out of this agreement & start developing our oil fields but not until oil hits $150-200 a barrell.  I'm guessing $200.  And not until they collapse the dollar.  This is planned for the end of 2012.  However, we will not have cheap oil again even if there are super-secret oil fields larger than Saudi Arabia.  This is bc the name of the game is control of the populace.  I know it sounds like an outlandish conspirary theory but to me it makes sense that there are just few hundred people in the world with half of the wealth and better believe that they have an agenda & it's not one of wealth/prosperity/power for everyone.

Yeah, and the oil will run out eventually.  We already have free energy technology available.  They're sitting on that too.   However, cheaters never prosper.  It's the universal rule.  

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Ol' Lindsey again
candasiri wrote:

I was just looking at a presentation by Lindsey Williams a pastor who back in the 70s worked as minister for the men who made the Alaska pipeline back in the 70s.  Short story is that he formed friendships with people on the inside of the oil industry.  He stated that he was told 4-5 mo prior to the revolutions in the middle east that there would be turmoil over there.  He insider friend wouldn't say where it would start but there would be "turmoil."  The point of this turmoil was hatched 30 yrs ago.  Apparently we may have more oil in this country then we are letting on though I have no way of validating this info.  There was a big discovery in Prudo (sp?)Bay in 70s which was soon after classified and not further developed.  The reason for this classification was that Kissinger was going over to the Middle Eastern countries and saying that the US would develop their oil fields & buy their oil if they would buy our debt.  Saudi Arabia & all other countries agreed except for Iran & Iraq.  Interesting no...

So it appears what's happening now is that we are backing out of this agreement & start developing our oil fields but not until oil hits $150-200 a barrell.  I'm guessing $200.  And not until they collapse the dollar.  This is planned for the end of 2012.  However, we will not have cheap oil again even if there are super-secret oil fields larger than Saudi Arabia.  This is bc the name of the game is control of the populace.  I know it sounds like an outlandish conspirary theory but to me it makes sense that there are just few hundred people in the world with half of the wealth and better believe that they have an agenda & it's not one of wealth/prosperity/power for everyone.

Yeah, and the oil will run out eventually.  We already have free energy technology available.  They're sitting on that too.   However, cheaters never prosper.  It's the universal rule.  

Ol' Lindsey again

Here is another thread about him.

http://www.peakprosperity.com/forum/lindsey-williams-confessions-elitist/49828

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