the concept of "peak Oil " is blarney

[ChazInMT]

Originally Posted by Fat Charlie

Since we're not slaughtering and burying dinosaurs, our current use is unsustainable. Sorry if that makes me sound like a nut.

Man, I'm so late to this conversation. But, as a point of fact.

97% of the crude oil once lived as Algae....dinosaurs need not apply. We can grow and slaughter algae without retribution from PETA, unless they amend their mission statement to insert "Algae" for "Animals"....knowing them, they would.

[NachtRitter]

Originally Posted by ChazInMT

Just for discussions sake.

On point 1, where does the money go? Do the Arabs just bury the 5 billion dollars a week in the sand?

Sorry, but when people make this myopic point it sort of gets me going. Economics 101 taught me, US dollars are only good in the US. Japan has Yen, Europe Euros, Mexican Pesos....etc. You can't walk into a Saudi coffee shop and pay $5 for your morning joe, you gotta spend 20 Riyal for that.

So what's an Arab supposed to do with the US$ cash? Spend it in America. This means that a foreigner is the one buying real estate and shopping at expensive stores and eating really good meals, In the USA.

I could be wrong, but I don't believe the $5 billion a week has to stay US$... It can be converted to whatever currency desired in order to do things like build the tallest building in the world (Burj Khalifa - Wikipedia, the free encyclopedia), or build schools that teach extremist views or purchase (or make) weapons that are used to kill soldiers and aid workers. Would it matter to the aid worker if the weapon that killed him (or her) was purchased in the US with US$? Probably not. Once the $5 billion a week is out of the US, it is a bit more difficult to get it back in the US to do usable work than if it never left here to begin with.

[ecomodded]

Then the Gas stations sell it to us and make 10 billion a week.

[IamIan]

Originally Posted by ChazInMT

So what's an Arab supposed to do with the US$ cash? Spend it in America.

Currency exchange ... Cash money is interchangeable ... it's credit is worth ___ of a different kind of currency ... so if you buy $5 Billion US worth of oil from country X , that has a 'credit' value of ___ in that other country X's currency ... which they keep and spend in their own country.

The general concept of they spend it in US ... would only hold true if the total value exported to a country is equal to the total value imported from the same place... that doesn't happen either ... it's called a trade deficit.

When the trade deficit goes + or - ... one country is transferring it's wealth to the other... poor country gets richer ... rich country gets poorer... etc.

As the relative richness and poorness of the countries change ... the exchange rate for the credit value of the currency changes.

[user removed]

5 billion a week. Let's use a hypothetical millionaire for an example. This person is worth exactly 1 million dollars. That means we are confiscating the total net worth of 5000 hypothetical millionaires every week, and this money is gone, every week. The debt the US has accumulated is the total net worth of 16,000,000 of our hypothetical milionaires.

Maybe it is better understood in this context, the US has spent that much net worth and we are bleeding net worth at the rate of 1,000,000 a year in Federal deficit and 5000 more a week in trade deficits. A lot of those recieveing this cash influx are converting it to gold and the price of oil versus gold has been fairly consistent for a long time.

What is the solution? Elimination of the 5000 a week deficit and elimination of the 1 trillion a year in unfunded spending. The accomplishment of those two losses would result in a capital influx of substantial proportions. This is cash, and when cash is infused into our economy, the banking systen multiplies that cash tenfold.

Now we are talking about 5 trillion in new capital every year in the US economy. The result of this influx would be a transformation of our economy, with new capital available for all kinds of investments.

I find it hard to believe that we continue the process of bleeding our national net worth without a real policy of an unbiased effort to find any and every way of reducing the outflow of national net worth. I guess the only justification is that capital represents a windfall for almost every other nation on the planet, but at what point do we become impoverished by the outflow itself. Only recently we have seen a substantial reduction in national net worth but it is something we need to understand and resist, with our best efforts at every technology that would stem the flow.

regards
Mech

[ChazInMT]

Originally Posted by IamIan

Currency exchange ... Cash money is interchangeable ... it's credit is worth ___ of a different kind of currency ... so if you buy $5 Billion US worth of oil from country X , that has a 'credit' value of ___ in that other country X's currency ... which they keep and spend in their own country.

The general concept of they spend it in US ... would only hold true if the total value exported to a country is equal to the total value imported from the same place... that doesn't happen either ... it's called a trade deficit.

When the trade deficit goes + or - ... one country is transferring it's wealth to the other... poor country gets richer ... rich country gets poorer... etc.

As the relative richness and poorness of the countries change ... the exchange rate for the credit value of the currency changes.

Nice try. If the banker gets the US$ in exchange for the Saudi Riyal, then the Banker has the US$ and he's the one who comes over and buys half of Corn City Nebraska.

Yes, Saudi's do get richer in the sense that they own lots of US stuff, they have to buy their stuff from the US, or give their US$ to someone else, who then must buy something from the US.

Also, don't forget, when the US oil companies make something like gasoline, motor oil, diesel, or tar out of the crude oil they import, they sell this and get money for it....a lot of money, enough to support many jobs and they provide these products to us. So the US citizens get a lot out of the trade as well, and on it goes.

So essentially, at the end of the day, the Saudis just have more stuff. If this is upsetting to you that Saudis have stuff, that's your problem. Maybe you should figure out something the Saudis want to buy and sell it to them, then you'll have the money, and you can buy some stuff. This is my main point.

I brought up my point because it sounded as if people were upset that we just send $5 billion overseas and a) the money never comes back, b) the statement does not recognize that we get a HUGE benefit out of having the oil to run through our refineries here in the US.

People should keep in mind how things work in the big picture. The points you write about above are small details that do not form a complete picture of what goes on, you discuss an exchange rate, then you say essentially what I do, the Saudis have more stuff, are richer.

I learned what I'm writing in college economics at Western Michigan, now if my professor was wrong, or I got the A in the class and somehow misunderstood it, then by all means, show me where I went wrong.

If you fail to understand the fundamental concept that US dollars are only good in the US, then there really isn't any further point in trying to discuss this. It would be like someone failing to understand that they can't breathe water and you are trying to rationalize why they aren't able to live underwater for a few days and hang out with squid or something.

Oh, and FWIW, I looked into the big picture of what the US imports in oil, and it is more like $7 Billion per week from everywhere, 40% comes from Opec nations so we give them $2.8 Billion/week. For any single country, we get the most out of Canada at $1.7 Billion/week, that's a serious amount of jelly donuts eh? Saudis export $800 million/week to the US. All our oil imports are equal to 1.7% of the Total GDP here in the US.

Oil Data

[ChazInMT]

Originally Posted by Old Mechanic

5 billion a week. Let's use a hypothetical millionaire for an example. This person is worth exactly 1 million dollars. That means we are confiscating the total net worth of 5000 hypothetical millionaires every week, and this money is gone, every week. The debt the US has accumulated is the total net worth of 16,000,000 of our hypothetical milionaires.

Maybe it is better understood in this context, the US has spent that much net worth and we are bleeding net worth at the rate of 1,000,000 a year in Federal deficit and 5000 more a week in trade deficits. A lot of those recieveing this cash influx are converting it to gold and the price of oil versus gold has been fairly consistent for a long time.

What is the solution? Elimination of the 5000 a week deficit and elimination of the 1 trillion a year in unfunded spending. The accomplishment of those two losses would result in a capital influx of substantial proportions. This is cash, and when cash is infused into our economy, the banking systen multiplies that cash tenfold.

Now we are talking about 5 trillion in new capital every year in the US economy. The result of this influx would be a transformation of our economy, with new capital available for all kinds of investments.

I find it hard to believe that we continue the process of bleeding our national net worth without a real policy of an unbiased effort to find any and every way of reducing the outflow of national net worth. I guess the only justification is that capital represents a windfall for almost every other nation on the planet, but at what point do we become impoverished by the outflow itself. Only recently we have seen a substantial reduction in national net worth but it is something we need to understand and resist, with our best efforts at every technology that would stem the flow.

regards
Mech

What? Mech, you've clearly crossed a line here into pure politics. The issues regarding the public debt in this country are so insanely complicated it boggles the mind, religion and politics have nothing on the debt issue.

Your fast and loose utilization of numbers here make no sense whatsoever, you completely take things out of context.

I would get into it a lot further with you, but, I will not because of the wishes of the forum founders that this discussion has no place here in the ecomodder lounge as has been pointed out to us previously.

Originally Posted by MetroMPG

Just a proactive reminder that the forum has a policy of non-political subject matter, and also ... civil discourse! (Mwebb, please keep that in mind. Thanks.)

No problem with this thread's subject matter, otherwise.

But I have a prediction (based on years of experience!) of where this is going.

[ChazInMT]

Originally Posted by NachtRitter

I could be wrong, but I don't believe the $5 billion a week has to stay US$... It can be converted to whatever currency desired in order to do things like build the tallest building in the world (Burj Khalifa - Wikipedia, the free encyclopedia), or build schools that teach extremist views or purchase (or make) weapons that are used to kill soldiers and aid workers. Would it matter to the aid worker if the weapon that killed him (or her) was purchased in the US with US$? Probably not. Once the $5 billion a week is out of the US, it is a bit more difficult to get it back in the US to do usable work than if it never left here to begin with.

This is called the price of freedom. We get oil for the money and make money with it. We could choose to buy our oil elsewhere I suppose, but don't. If you want to focus on the negative issues "extemist views" "Guns to kill" & such, that is your freedom.

I choose to be grateful for the fact that I can participate in a global market place that provides me with things I want at I price I consider fair. It makes no sense to me to worry about if someone is going to use the money in a negative way, particularly when 99.999999% of it isn't. You make it sound like every penny that leaves the US goes into a "Kill All Americans Jihad Fund", which is fine if that's what you want to believe.

I choose not to concern myself with the potential negative consequences because that has no end. You could just as well buy your gas from a gas station that employs an American guy who off and decides to pull a James Holmes. How is that different than the US giving Arabs money for oil? You supported a 7-Eleven that had a guy working nights who goes nuts and kills a bunch of people. People are gonna do what they're gonna do. Freedom.

[IamIan]

Originally Posted by ChazInMT

If the banker gets the US$ in exchange for the Saudi Riyal, then the Banker has the US$ and he's the one who comes over and buys half of Corn City Nebraska.

The Foreign currency they give you in exchange for the US currency you give them ... that foreign currency was not free ... anymore than US currency is free for a similar bank in the other country to give out in exchange for that other countries currency.

US Currency has value ... Foreign currency has value ... you walk in with x value ... you exchange that form to another form ... and walk out with x(-fees) value in a different form... you did not loose all the value of the US Currency you exchanged.

Originally Posted by ChazInMT

Yes, Saudi's do get richer in the sense that they own lots of US stuff, they have to buy their stuff from the US, or give their US$ to someone else, who then must buy something from the US.

You are still missing the currency exchange concept ... and you are incorrectly assuming a perfectly balanced trade ( as if magically there were always a zero trade deficit )

The value of a US$ does not stay as cash ... All Currency has a value ... that value is exchanged for a equal value ( minus fees ) of a different currency.

That exchanged value ... does not have to come back to the US... it only comes back when there is a true zero trade deficit ... and a complete even balance from import value to export value ... that perfect balanced trade assumption you are making does not exist in the real world.

Originally Posted by ChazInMT

Also, don't forget, when the US oil companies make something like gasoline, motor oil, diesel, or tar out of the crude oil they import, they sell this and get money for it....a lot of money, enough to support many jobs and they provide these products to us. So the US citizens get a lot out of the trade as well, and on it goes.

I agree there are domestic jobs as part of the equation ... but that is a separate issue from what I am disagreeing with you about.

Originally Posted by ChazInMT

So essentially, at the end of the day, the Saudis just have more stuff. If this is upsetting to you that Saudis have stuff, that's your problem. Maybe you should figure out something the Saudis want to buy and sell it to them, then you'll have the money, and you can buy some stuff. This is my main point.

I don't have a problem with the Saudis having stuff.
I'm disagreeing with you about a different issue than that.

Originally Posted by ChazInMT

I brought up my point because it sounded as if people were upset that we just send $5 billion overseas and a) the money never comes back, b) the statement does not recognize that we get a HUGE benefit out of having the oil to run through our refineries here in the US.

I agree we do get lots back ... that's why we do it ... I have no disagreement with that concept.

Originally Posted by ChazInMT

People should keep in mind how things work in the big picture. The points you write about above are small details that do not form a complete picture of what goes on, you discuss an exchange rate, then you say essentially what I do, the Saudis have more stuff, are richer.

If you actually want to look at the big picture ... that is were the transfer of wealth issue becomes important.

Originally Posted by ChazInMT

I learned what I'm writing in college economics at Western Michigan, now if my professor was wrong, or I got the A in the class and somehow misunderstood it, then by all means, show me where I went wrong.

Look up:
Currency exchange ... or currency exchange rates ... or trade deficit.
Any of those clearly violates and directly disagree with the concept you described.

Currency Exchange ... and the exchange rate ... violates your idea of it staying US dollars ... because it doesn't... the value can be exchanged into a different non-US Dollar form.

The Trade Deficit which does exist ... violates you idea of they have to buy our stuff with the money we spend buying their stuff.

You aren't the only person to have taken economics classes ... and you are not the professor of that class ... and even if you were ... the point I have been disagreeing with you about ... you are still wrong about ... and would still be wrong about even if you were that professor yourself ... like it or not trade deficits do exist ... what you described "who then must buy something from the US." ... is just not correct.

Originally Posted by ChazInMT

If you fail to understand the fundamental concept that US dollars are only good in the US, then there really isn't any further point in trying to discuss this. It would be like someone failing to understand that they can't breathe water and you are trying to rationalize why they aren't able to live underwater for a few days and hang out with squid or something.

You're still not understanding the concept of currency exchange rates... and incorrectly assuming zero trade deficit.

US Dollars have value anywhere in the world that there is an agreed value for the currency exchange rate... not just the US as you claim.

The Value of the US dollar can be exchanged for a value in a different currency.

Further ... the exchanged US dollar does not have to be spent in the US for something ... it never has to be spent in the US for it to have value in that other country.

Even if we wanted to forget for a moment the currency exchange and the trade deficit issues ... your claim of "US dollars are only good in the US" is still incorrect on it's own ... US dollars are good in Canada ( I've used them there. ) , and I know people who have used US dollars to buy stuff in Japan.

As long as the merchant recognizes the value of the currency ... it doesn't matter what country I am in ... that US dollar is still good... not because of the printed dollar ... but because of the recognized value ( which is related to the currency exchange rate ).

[ChazInMT]

Ian, I travel all over Europe. I'm aware of exchange rates. I think you have the concept of exchange rates for small sums of money confused with larger scale transfers.

Answer me this.

What does the Saudi bank do with the US currency? With billions of dollars, they get to a point where they can't just exchange it back to Riyal in the US because of the deficit you talk about. Saudis buy less from us than we do from them. So they have more dollars than we can exchange back. (Mind you I'm using the Saudi system as an example, it could just as easily be any country)

It doesn't matter what country we're talking, or how many times the US$ get exchanged, generally speaking, the only place the US$ can be spent in large quantities is in the US. Dollars don't just magically transform into other currencies, or evaporate after being turned into some other money. Eventually someone has a fistload of dollars and they have to come back to the US in exchange for their own currency, or a building, or a car, or a Boeing jet, or they hire US professionals to work for them, or they buy tons of building materials...... and they will be wealthier because of this stuff.

Can you buy a latte in Canada with $2us? Sure, but then the shop owner has to exchange that for Canadian dollars. Try and buy a house in Canada with US$.

You may continue to look at a little piece of the puzzle (currency exchange) and claim it covers everything if you wish I suppose. Your "transfer of wealth" statement still sounds to me like you resent foreigners from having stuff. I still contend it's just the way it goes when we trade dollars for oil, they're going to have our money, we have their oil, it is a trade, we aren't just throwing the money away.