Sunday, February 7, 2010

Does $4.00 a gallon gas help with our Creditors?

Just finished reading a VERY interesting article RIGHT HERE..... You can read for yourself (I know you can read) but for you lazy twerps, this is the quick synopsis....

There is the Greenspan-Guidotti Rule which "predicts" when a Government will go "bankrupt." In order to keep afloat (and creditors happy), the USA must keep 100% of our short term (12 months) debt in gold/oil/foreign currencies. READ THE ARTICLE for the full explanation, but suffice it to say, we are short....duh....

Nicely, the USA is the largest holder of gold: 8,133.5 metric tonnes of gold (it is the world's largest holder). That's 16,267,000 pounds. At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger.

It became obvious that the speculation of Gold rising to $2000+ and the price of gas rising in the current summer months is good for our short term debt future. The problem is that we do not have in control of the finances, an administration that is looking to solve the problem.

Our short term debt crisis will be exacerbated by an Administration that has an even shorter-term vision....Election in 2010.....


Add to this a looming crisis between Iran and Israel during which the price of a barrel of oil will natural rise and this could help in easing our credit crisis, but destabilizing our National economy.

I dont have any answers - I can see a potential way out - a way to avoid a Wiemar Republic-like scenario which is interesting as monetizing the debt has NEVER NOT resulted in exorbitantly high interest rates.... But that would depend, again, on an Administration that would be proactive in solving this problem and not propagating is evil agenda.


May November, 2010 come quickly - May Citizens/Patriots wake fully up - May God bless America

Pray - Praise - Prepare

3 comments:

Mayberry said...

I hadn't considered that aspect (stupid me). Yep, looks like $4 gas.... Again.... Damn I wish I bought a diesel to run on waste veggie oil!

Samuel said...

Inflation = good for debtor, bad for creditors.

Deflation = bad for debtor, good for creditor.

Either way - land and houses, especially when not bought with debt (or as little as possible) = win for responsible folks.

Diversified portfolio also = win for responsible folks.

The Hermit said...

I work for a guy who has been in oil and gas for more than 30 years (I've been there 17 years). He says we are pretty much sunk. Production in this country has been in decline for twenty years, and there's no sign we are going to use our off shore resources that are currently off limits any time soon. So inflation will eat up buying power, and the energy source that we use for virtually everything will become so costly the average citizen can afford it. Doesn't look like a very promising scenario.