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Unfortunately, inflation is not lower, its been masked by utilizing the Strategic Petroleum Reserve to offset price inflation in energy on the CPI. As that is

by than3 4y ago

Unfortunately, inflation is not lower, its been masked by utilizing the Strategic Petroleum Reserve to offset price inflation in energy on the CPI. As that is now at 1984 levels, we should be seeing a massive surge in energy when they can no longer hold it down due to depleted capacity. Normal inflationary/deflationary mechanics rely on a fine balance between diverse aspects of the economy. With regard to the banks who enforce changes in behavior to the general public through the loans they provide, that is levered by depository requirements when the default rate changes. With depository requirements set permanently at 0% by the Fed, we are unlikely to be able to predict what will or won't happen. I say permanently, because if it were temporary, they would have rolled it back to the the normal percentage at the beginning of 2022, and they did not do that. You can verify that yourself here at, https://www.federalreserve.gov/monetarypolicy/reservereq.htm https://www.federalreserve.gov/monetarypolicy/reservereq.htm . They are still required to account for depository levels you'll see the banks won't be able to curb that back in line anytime soon (2-3x over the limit), and worse they are now so monopolized because of changes to banking law in 2008 (with almost no new banks being chartered thereafter), that we are in for a painful ride. They can't be brought back in line without potentially causing contagion events in the financial market. So technically everything you've ever been taught about a fractional reserve banking system and its mechanics no longer applies because its no longer fractional reserve. In effect, anyone holding USD has been trapped on a runaway train, with the throttle now stuck all the way down. It was changed silently, without fanfare, or real representation, in 2020 by the same group of people that commmit high crimes to enrich themselves personally using privileged information to trade against the open market (the public). The way the markets work, any actual trade represents a winner and a loser, and if you have direct control or can impact the outcomes due to a trusted position, you shouldn't be able to participate, to the publics detriment. I hope I'm wrong, but so very few people are properly educated about these things. I don't think I am wrong, and I would desperately like to be wrong, but because the subject is taught in a vacuum without a fundamental understanding of why the division of labor allowed it to work in the first place, the everything ponzi bubble is likely to end poorly.

dragontamer 4y ago
You're in a 1970s mindset when you need to be in a 2020+ mindset. The USA is now a net exporter in oil. We were making more crude oil in 2020 than today. Even with the Russian / Ukraine war, the oil makers in the USA were too afraid to open up the wells, because COVID19 crashed the oil market so hard, that oil prices went _NEGATIVE_ (-$40 per barrel of oil). Oil drillers don't want to be burned again. So what's the solution? 1. USA Supplies a ton of oil this year. 2. When the US Oil reserves are empty, then we can "guarantee the purchase" of oil. Meaning we can afford to keep oil wells open next disaster (instead of forcibly closing them down like in 2020). ------ Strategic oil reserves were too full. We had no place to put the oil in 2020 / as COVID19 hit us, so a ton of oil wells had to be sealed shut. Spending oil, and making sure we have enough "spare space" for our reserves, only makes sense moving forward. Its not 1970s anymore. USA makes more than enough oil for ourselves... assuming that we can keep the markets happy. The strategic oil reserve is a good tool for that, a huge cavern able to hold hundreds-of-millions of barrels of oil. USA has bought oil futures (encouraging the opening of new oil wells), while selling oil from our strategic oil reserves (aka: opening up more room for later). It just makes sense given our economy today.
- than3 4y ago
  If that were true, then why was Chevron allowed the Venezuela license. If we don't need it as you say, why are our gas prices above $6/gallon... why do it if we don't need it as you say? We are not on good terms with them, they nationalize regularly, and our own oil refining capacity has been significantly lowered. The negative 40 a barrel you refer to was caused by several events, one of which was market manipulation by a hedgefund illegally, and then other failures/fraud found on the part of the same ETF (USO) by the SEC. When the Oil reserves are empty, we can guarantee only one thing, a complete breakdown of our modern civilization as we know it. Energy is intimately linked with food security, and we won't have anything to exchange for it because we pay our bills with toilet paper hot off the presses, and everyone we might trade with knows this now, we have little credibility thanks to the Fed, and are stuck in a cycle that will only keep getting worse according to the history. You seem to think the problem is that no ones willing to take the risk, when in fact, a large part of the problem is a monopoly problem. There are no companies left that will take the risk because the ones that did went out of business, or were leverage buyout'ed after taking such a risk, and in monopoly you just have to get certain companies, stifle entry, lever them up with hotels to charge whatever you want, and collect your money until the games over. Reducing the supply simply raises the price, just like the baby formula in Florida. The problem starts with the banks funding this behavior, and other malfeasance which they have been allowed to craft for decades.

by than3 4y ago

dragontamer 4y ago

You're in a 1970s mindset when you need to be in a 2020+ mindset. The USA is now a net exporter in oil. We were making more crude oil in 2020 than today. Even with the Russian / Ukraine war, the oil makers in the USA were too afraid to open up the wells, because COVID19 crashed the oil market so hard, that oil prices went _NEGATIVE_ (-$40 per barrel of oil). Oil drillers don't want to be burned again. So what's the solution? 1. USA Supplies a ton of oil this year. 2. When the US Oil reserves are empty, then we can "guarantee the purchase" of oil. Meaning we can afford to keep oil wells open next disaster (instead of forcibly closing them down like in 2020). ------ Strategic oil reserves were too full. We had no place to put the oil in 2020 / as COVID19 hit us, so a ton of oil wells had to be sealed shut. Spending oil, and making sure we have enough "spare space" for our reserves, only makes sense moving forward. Its not 1970s anymore. USA makes more than enough oil for ourselves... assuming that we can keep the markets happy. The strategic oil reserve is a good tool for that, a huge cavern able to hold hundreds-of-millions of barrels of oil. USA has bought oil futures (encouraging the opening of new oil wells), while selling oil from our strategic oil reserves (aka: opening up more room for later). It just makes sense given our economy today.

than3 4y ago
If that were true, then why was Chevron allowed the Venezuela license. If we don't need it as you say, why are our gas prices above $6/gallon... why do it if we don't need it as you say? We are not on good terms with them, they nationalize regularly, and our own oil refining capacity has been significantly lowered. The negative 40 a barrel you refer to was caused by several events, one of which was market manipulation by a hedgefund illegally, and then other failures/fraud found on the part of the same ETF (USO) by the SEC. When the Oil reserves are empty, we can guarantee only one thing, a complete breakdown of our modern civilization as we know it. Energy is intimately linked with food security, and we won't have anything to exchange for it because we pay our bills with toilet paper hot off the presses, and everyone we might trade with knows this now, we have little credibility thanks to the Fed, and are stuck in a cycle that will only keep getting worse according to the history. You seem to think the problem is that no ones willing to take the risk, when in fact, a large part of the problem is a monopoly problem. There are no companies left that will take the risk because the ones that did went out of business, or were leverage buyout'ed after taking such a risk, and in monopoly you just have to get certain companies, stifle entry, lever them up with hotels to charge whatever you want, and collect your money until the games over. Reducing the supply simply raises the price, just like the baby formula in Florida. The problem starts with the banks funding this behavior, and other malfeasance which they have been allowed to craft for decades.