I have been challenging my readers, and people like Glenn Beck, Dan Bongino, Dennis Prager, and Carol Roth to engage me in a discussion, or debate over “inflation,” for years. For some reason, I have had no takers.
The closest anyone has come to a viable argument for the continued expansion of “money,” creation, is the concept of the petrodollar.
I ask you, is this practical? Is it reliable? Is it really understandable that the gold-backed medium of wealth exchange can be replaced with a fuel-based currency?
On its face this may seem equitable to many, and that is exactly why I believe it was done. The average American can see that whereas in times passed the most valuable substances to almost every society, of almost every generation, was gold, with silver in second place.
Surely, if we are to back our currency with the value inherent in a substance, if a more valuable, (and might I say more plentiful,) substance should emerge, why not shift the backing of our money from the less plentiful, to the less rare?
First of all, this reasoning is self defeating. The most important reason that gold and silver are suitable for means’ of exchange is their finite supply. The second most important reason is because of the main reason for their enduring value, their durability.
How does this compare with petroleum? While oil is of great, and increasing value among those that invent, design, and operate the drivers of our economy, its great value is not in its durability, rather in its function as fuel and material.
In other words, while gold and silver are passed down, from generation, to generation, petroleum is consumed at an alarming rate for everything from the fuel that runs the engines of nearly every modern industry, to the makeup of the fabrics, and materials that comprise nearly everything that we rely upon.
In other words, while gold and silver have been enjoyed for thousands of years, by people, their children, and their children’s children, in time memorial, we can not consume petroleum, and its byproducts fast enough.
Aha, therein we find the true reasoning behind the shift from gold and silver, to petrodollars for aspiring tyrants.
To be certain, if this faulty premiss were not unstable enough, we are presently at the stage where the creation of fiat currency outpaces the delivery, and consumption of oil.
I have heard it said that petrodollars have replaced gold. As I continually remind my readers, this is but one more shell added to the shell game to make it harder for everyone to keep their eye on the pea.
As you can read in this “Investopedia” article, There is no petroleum backing of the US dollar. “Economics experts” would like us to believe that there is some firming up of our currency, due to the prevalence of crude oil, and the use of the US dollar as reserve currency.
This is not supported by facts, as “Petrodollars” is a term that originated in the mid-1970’s, whereas the US deserted the gold standard on June 5th, 1933, when, “Congress enacted a joint resolution nullifying the right of creditors to demand payment in gold.” FDR had, “declared a nationwide bank moratorium in order to prevent a run on the banks by consumers lacking confidence in the economy.”
“FDR takes United States off gold standard,” Investopedia.
https://www.investopedia.com/terms/p/petrodollars.asp
“Just as the petrodollar is not a currency, neither is it a global trading system. The wide use of the U.S. dollar as payment for crude oil reflects the traditional preferences of non-U.S. oil suppliers.”
“Oil exporters prefer the U.S. dollar because it is the pre-eminent global currency for global investments. That makes it the most convenient store of value for accumulated oil revenue, which needs to earn a rate of return to be useful.”
I believe that anyone would be a fool to believe that petroleum has effectively replaced gold as the “coin of the American realm.”
The “petrodollar is but one more fly in the ointment of understanding the science of true economics.
Face it friends, the “economics experts” of today are con artists, hoping to humiliate the average American in order to soften us up for exploitation.
God bless you, Dave
Great think-piece. Makes me think. Oh, that was the point. Jewish saying: 2 Jews, 3 opinions. Well, 10 economists, at least 10 opinions. So why listen to them? I agree that a consumable can't be a store of value, but only an unstable and temporary index, and is little more than barter. As far as the dollar continuing to be the key currency, China, Russia and their new axis of totalitarians want to topple the dollar as key currency, and Biden is playing right into their plans. Prepare to be a second-tier country.