Magox

The erosion of purchasing power is certainly not a new development. What I'm saying is that it has accelerated over the past 5-10 years. It's not so much an argument of QE, but of loose monetary policy. Of course, this has nothing to do with Obama, so I don't know why you made that point, it has to do with Central bankers more than anything else. And secondly, I'm not going to defend their actions, I believe the cost of QE and loose monetary policy has been more detrimental than good. It has hurt lower to middle income familes. It has eroded their purchasing power of their dollars, while their wages have stagnated. These are the people who get hurt the most as a result of QE. They don't have much in stocks. If they are already employed it doesn't affect their pay. All it did was raise the cost of some of the things they need.

I don't know. And I don't believe there is such a thing as a "correct price". It is what it is. All I'm saying is that if we didn't have QE throughout the world, the price would be lower. If I had to give my best guess, I would say without QE and the massive lowering of global interest rates we'd probably see at least $20 off the price of Crude Oil. Most likely more than that. Remember, it's not just the currency impact, we are also talking about all the collateral impacts that QE has had through out the world. You know, the "wealth effects" it has had to equities, the consumer confidence surges it has had as a result of that effect. Lower rates for refinancing and purchases of new homes, and the added disposable cash people have had because of it. Lower corporate borrowing rates. All the things I mentioned in the previous post in response to Lybob.

It's not just the dollar, it's a number of currencies. If you have three other major currencies such as Euro, Pound and Yen that are all devaluing their currency, and then the Yuan which is basically pegged to the dollar, you aren't going to see the dollar vs. these currencies make a pronounced drop because they are all basically engaging in the same monetary policy. Looking at Gold and oil are the best ways to witness the devaluation of currencies world wide. Gold is an alternate currency, when investors believe inflation or currency devaluation is going on, they flock to gold. In regards to your statement of "printing a trillion dollars and keeping it in my basement". This is not what is going on. Granted, the efficiency or velocity of that cash being circulated isn't happening at an enormous pace, but make no mistake, it is happening. And I already answered this point. In regards to your comment regarding stagnant wages. That is an entirely different point. Yes, globalization is a huge reason why wages have stagnated. However on the flip side, globalization has been broadly negative for the average manufacturing worker in developed nations such as the U.S, but has been an extremely positive development for Emerging nations such as China, India and south east Asia. Those guys are employing massive amounts of people because of it. Globalization was bound to happen, it's not a nefarious policy. It's just evolution, businesses are made not primarily to cater to their workers, but to turn a profit. If you opened up a Pizza shop or any business, why are opening up that business? And don't tell me so that you can pay your employees good money. You open up that business to make an honest buck. So part of the process in achieving that is reducing your costs as much as possible while increasing efficiency. So when CEO's close shop in the U.S to build the same product over seas in the name of creating more profits, that is completely legitimate. So when people B word about CEO's making huge bonuses, well, that is also another collateral impact of Globalization. Profits are higher and if profits are higher than so is CEO compensation. Where I have a problem with CEO compensation is if that particular corporation is losing money or profit growth is slowing down and they still get huge payouts. Or if they make terrible decisions that impact their company in the future and by the time they receive their golden parachute, and the company is crumbling, they still make out like bandits. There should be some sort of claw back clause in their compensation. The best way I can think of is tying their bonuses to company stock. Much of their bonuses should be paid out in stock bonuses. And that they shouldn't be able to cash out on those stocks for X amount of years. I'm not advocating for legislation to make this happen, but rather it should be done organically. It should be part of the culture of CEO payout. I didn't say, the IEA says that the gap between consumption and production has narrowed. And I brought up the Saudi's shrinking capacity to refute your point, which is that they don't have nearly as much control over prices as they use to, not without self-inflicting damage anyway. You seem to believe that everything is a one way street. I'm telling you that there is a lot of push and pull in the markets. There are many factors that are constantly working for and against oil prices. Supply and Demand over the past year have been an influence that have impacted oil prices to the downside. Monetary policy has been a large influence that has kept prices higher. That's it. And in regards to this: You are one thick-headed dude. You simply just don't get it. I just provided you proof that Supply/Demand picture is much worse in 2012 than it was in 2011, with the price of crude being 3.5% higher. it's as if you ignored that part Jeez More proof that you don't have a good grasp of what we are talking about.

Old stuff??? it shows the spare capacity of 2011 and 2012. That's relevant to the discussion

Of course, but that doesn't support your argument. http://online.wsj.com/article/SB10000872396390444358804578016140459750174.html The Saudis don't have as much spare capacity as they use to. 2011 http://news.xinhuanet.com/english2010/business/2011-04/18/c_13834359.htm 2012 http://www.theoildrum.com/tag/spare_capacity Here is a little something on what I was talking about earlier regarding Spare Capacity and it's impact on pricing. http://www.eia.gov/finance/markets/supply-opec.cfm

This statement could of been made from Jay Carney, official mouth piece of Obama http://www.politico.com/politico44/2013/02/wh-rubio-response-could-have-been-delivered-by-gov-156911.html How coincidental

Ok, so you don't understand "Spare Capacity" and it's impact on pricing. So in order to grasp this, you first must understand the term "Spare Capacity". Simply put, spare capacity is Readily, available oil that can be pumped, that isn't. Or you can take this from Investopedia: Read more: http://www.investope...p#ixzz2Kz5uSs7F You see, IEA counts supply data of oil that is being pumped. Since most of the world that produces oil only pumps the oil based off existing CONTRACTS, they don't pump to capacity, unless demand dictates so. So what do I mean by "existing contracts"? Usually many oil producing countries produce enough oil to meet existing demand, and that is done through Contracts between supplier and user. In other words, Demand through contracts dictates production from many of these countries. When you see IEA demand data, that for the most part is pretty cut and dry. The numbers shown there is pretty close to actual world wide demand. However, supply data from IEA do not paint the entire picture for the status of global oil supplies. You have to look at differential from one year to another and spare capacity. If you want to get a better gauge of world wide supply and it's capabilities, then you have to delve deeper into the numbers, which obviously you weren't aware of. 2011 Total world consumption according to the IEA was at 88.29 yet Total world production was at 87.08 That's a net difference of 1.21 Million barrels of shortage, daily. 2012 Consumption at 89.16 and production was at 88.97 .http://www.eia.gov/f.../global_oil.cfm So production grew by 1.91 M Barrels per day yet Consumption only grew by .87M Barrels per day. That's a net difference of .19 Million barrels of shortage, daily That means the supply conditions were CONSIDERABLY better this past year than it was in 2011, yet the average price of crude oil was 3.5% higher in 2012 than it was in 2011.

What a bunch of poppy rooster. Brent is used to price 2/3 of the world's internationally traded crude oil supplies. You didn't know that? talk about ignorant And why is the OPEC price of oil basically at par with Brent rather than WTI? And you really shouldn't talk about oil, or for that matter currencies, every time you do, you come away looking like a dumbass. And how is it that you don't understand "Spare Capacity"? Do you even know what this means? Do you understand it's impact on pricing? I'm guessing you don't, actually I'm not, I'm pretty damn sure that you don't. And what's saddest of all, is that you don't understand the impacts of currency devaluation to commodities. How in the world do you not understand this? This is economics 101 and you don't even understand this concept Pretty pathetic Get back to me when you learn this concept More poppy rooster

That's not what I said. Generally speaking, markets are driven on growth. When growth slows, and supply continues to increase, prices usually drop. And yes, supply has been "chugging along". Excess capacity factors in to prices, you didn't know that.

Ok, that's not the answer.

Simple question, since we know that supply has continued to increase at a healthy rate, yet demand growth for oil both here and in the rest of the world has significantly dropped off, what do you believe is propping up prices? And btw, oil prices are not flat the past two years. Brent Crude oil is the most used oil in the world. And there is no close second.

Speculators aren't responsible for the rising trend in oil prices. And again you misplace the blame for the commodity inflation we have today, it's not because of the "speculators", it's because of the economic conditions that we have and the response from monetary policy makers. Once monetary policy changes and becomes more hawkish, then we will see prices drop off for a sustained period of time. Until that happens, prices will continue to remain high, and even climb to higher levels once we have decent domestic/global growth. Speculators will only place bullish bets for a sustained period if the conditions indicate an environment for rising prices. Simply put, your blame is misguided, if you want to find the culprit, look no further than the central banks.

Ok, I'm gonna with that you're not pretending, just simply that you are one. You desperately are trying to find any article to support your views and every time you think you have, you produce one that supports my argument. The term "correction" implies short-term pull back in an UPWARD trend. Look it up You keep posting short-term analysis, while I talk about the long-term. You don't need to drop this paper because of them, the problem is that the person reading it is clueless. Thanks for posting this. lol

Geez

I'm not going to comment on what "should be", but it certainly would be if we weren't printing money, yes.

Seriously. Are you a dumbass or you do you pretend to be one on this message board? Did we not just have this discussion?

In the markets, dipshit.

Again, you simply don't have a decent understanding of how the markets work. Who care's that position limits on non-commercials were ended? I'm going to make this very simple for you, if the prices get too high, people will not buy at those levels for a sustained period of time. If the prices are deemed reasonable, then they will. It's as simple as that. You just can't fathom the thought that the price of oil has continued it's upward trajectory for more than a decade now. Face it, prices will continue to go higher as long as monetary policy remains extremely loose.

Imagine that, attempting to create a contrast from one of the worst economic minded presidents in U.S history, is considered "bashing"

I don't know why I bother. I think it's just that I like to talk about economics and sometimes when I make mention of certain hot button issues for him, he engages. But seriously, for someone who is as involved in economics as he is, I have a hard time understanding how he believes that speculation doesn't cut both ways. He seems to believe that "Speculation" is responsible for the high prices that we are seeing today. That is absurd. First off, speculators are involved in every single equity on this planet. Speculators buy when conditions indicate that prices seem primed to go higher. Speculators sell when conditions change and indicate worsening fundamentals. Sometimes speculators go wild and prices get too pricey, which of course ALWAYS leads to a sell off, in which many of those speculators get hammered. Same for the inverse, speculators sometimes get too scared and prices sell off and become extremely oversold. In his mind, he somehow has this notion that Speculators in the oil markets are a different breed. That they have been buying oil irrationally for almost 10 years now. He also believes that people buying oil or commodities because of currency devaluation are some odd group of cockamamie investors, that at some point are going to be proven wrong. Well that's utterly ridiculous. Conditions are ripe for higher tangible assets, currencies are weak and as long as monetary policy remains extremely loose, prices will remain high. And you can take that to the bank, unless of course the world falls into another recession, in which of course the response from monetary policy makers will be to only further erode their currencies, which will lead to future inflation.

Obama's economic Growth record, the worst in 60 years Obama's first term legacy is 1) That he was incapable of ushering us into a decent recovery and oversaw one of the most anemic economies in modern day U.S history 2) Exploded the U.S deficit with 4 straight Trillion dollar deficits. No sitting president even achieved half that amount. 3) Signed into law one of the largest and unpopular pieces of legislation in U.S history.

Oh Geez! How many times have we talked about this? We've even spoken about these studies before. No one denies that speculation can add froth to the price or for that matter cause excessive selling leading to oversold markets. What you don't understand, is that the overall rising trend or the baselines that i was talking about the other day, has virtually nothing to do with the rising price. Why can't you get that through your head?

What? So you have the market rising up in a direct line for almost one straight month, and predicting a pull back within a month or two is some sort of amazing prediction?

Why should the R's agree to anything Obama proposes? Virtually everything he has passed has or is destined to failed. The economy sucks, debt is exploding, government is continuing to grow at an exorbitant rate, entitlements are being ignored and he passed a health care bill that is going to seriously !@#$ up the entire system come here shortly. Sorry, but everything the fool proposes ends up being detrimental to the economy. No thanks