From: ems@Apple.COM (Mike Smith)
Newsgroups: sci.energy
Subject: Re: Running out of oil  -
Date: 16 Sep 92 00:48:14 GMT
Distribution: na
Organization: Apple Computer Inc., Cupertino, CA

In article <2855.1460.uupcb@spacebbs.com> howard.smith@spacebbs.com (Howard Smith) writes:
>GC>You have this backward I think. In the past thirty years we've seen a
>GC>barrel of oil go from $2 to the current $18 with a short period around
>GC>$30 engineered by OPEC. The reality was that OPEC couldn't hold the
>GC>line at $30 no matter how hard they tried, somebody always decided to
>GC>cheat and turn a fast buck. Supply and demand really did break OPEC's
>GC>stranglehold on world oil prices. Current price is slightly lower than
>GC>the price 30 years ago when inflation is factored in.
>
>Don't we have a "chicken vrs. the egg" situation here. I'm under the
>impression that a large chunk of inflation is due to rising energy
>prices; so if our economy is based on an increasingly scarce form of
>energy, we can expect inflation to increase proportionally. Thus the
>price of the energy would not seem to rise, when adjusted for inflation.

The reason for inflation is that we print more money.  That is all.
You increase the money supply, you get inflation.  IFF the rate of
increase in money supply matches the real increase in productivity
are you 'in balance'.  (i.e. money supply growth of about 1.5%).

WHY do we print more money than that?  Because excess money, leading
to inflation, is a tax on holding dollars.  A tax that noone has to 
vote for in congress.  Who pays this tax?  Folks holding dollar
denominated assets.  Who is that?  Pension funds, OIL COUNTRIES,
JAPAN, bond holders, Banks and S&Ls, drug runners with large cash 
holdings, and to a small extent John Q. Public.  Who benefits?  
Folks holding land (like homeowners who's mortgage is denominated in $$$),
or otherwise oweing $$$ denominated debt like bond issuers.  Who are
the bond issuers?  Why Corporations and Governments.

Get the picture?  With NO VOTE BY ANYONE and NOONE TO BLAME, you can
plunder the folks who have loaned out money; to the benefit of the
government and corporate contributors.  And since the Banks and S&Ls
are insured, the public will bail them out when the piper has to be paid...

The snag?  After a few years the 'marks' catch on and you have to 
have a period of 'recession' to clear the decks for the next round 
of inflation.  That is what is happening now.  The oil Shieks and
retirees are being coaxed back into dollar denominated assests, the
banks and S&Ls are being liquidated and the public soaked to pay for
it, the pension funds are being given enough of a breather to not look
TOO insolvent and to get back into long term bonds. Etc.

Look for another high inflation cycle in about, oh, 3-5 years time
when the 'marks' are ready to be fleeced again.  Someone has to make
the national debt go away, and taxing the holders of bonds seems to
be the easiest way ... noone even has to vote for the tax ...

So the oil countries give a convenient excuse for the process to be
started.  So the massive price hikes by OPEC convince the govt to 
give them a pile of dollars, then inflate them away before someone
catches on.  So what?  Even with massive price hikes for oil, one
need not have inflation if one doesn't print more money.  (vis.
the Swiss and German experiences).  One then has to actually PAY
for the oil, though ... while inflating the debt away is SOOO much
easier to do...  

We also had the unfortunate luck to have the price of oil denominated
in US $$$, so we were 'elected' by the rest of the world to cheapen
our dollar so that they could pay for their oil debt in ever fewer
DM and Swiss Francs...  We not only inflated away a chunk of our
oil debt, but did much the same thing for the rest of the world
by letting our exchange rate hit the basement.

>But then I'm just a dumb engineer and can't fathom the real mistery of
>the universe - Economics.

It isn't that much of a mystery, just remember that the folks who
tell you most of the things about Economics that you hear on the 
nightly news have a vested interest in having you think there is 
something going on that isn't ...  If a Government Economist is
telling you something is just great with the Cost of Living Index,
you can bet that he knows that Ronny Reagan had the Index redefined
to make it rise less, but that he isn't going to tell you that since
he knows that the Government pays his salary.

Ever wonder why, in a staunchly capitalist country, Economics isn't
taught in High School?  Or earlier?  You would expect that business
economics would be central to our educational system just as it is
central to our dogma.  But what if, just maybe, it was more convenient
to have the labor pool think that Economics was HARD and CONFUSING
so that they wouldn't question why some things were being done ...
Kind of like forbidding Blacks to learn reading and writing in the
Old South ...  Take a long hard look at the power elite in the 
country and what they spend alot of time studying.  Law, Political
Economy, Business.  Then look at the instruments of control used to
'manage' the population:  The Legal System, Govt economic policy,
Business structures and their political economy...

Then look at what the 'labor pool' is advised to study:  Engineering,
Science, Biology, Accounting, ... 

You aren't a 'dumb engineer', you are just one that has been mis-lead.
Econ is easier than any Engineering classes I've taken, you just have
to know how to look for who's bread is being buttered in the 
presentations...  If you expect Econ to come right out and say:  Here
is how the world works!  You will find it confusing.  If you expect it
to say:  Here are some interesting tools and observations presented
in such a way as to mislead the masses from understanding what the 
power elite is up to, yet be relatively clear to those from that social
structure who really need to know how to use those tools to control
the masses.  You will find it an excellent excercise in discovery.

If this all sounds cynical, well, it is.  There are some wonderful
Economists who represent the average Joe.  (Heck, there are even
a bunch of radical Marxist Economists).  The problem is one of number
and position.  Who do economists work for?  Who decides what gets
published?  Who controls the ability of those economists to gain
grants and funding?  So they work and publish, but always with the
understanding that they have to be careful not to offend the Patrons...
Government and Business.

Due to this, you get Economics taking a very dispassionate position
much of the time, careful to only describe the organs of control of the 
economy in abstruse and technical ways; prefering to leave the 
interpretation of that control to the Political Economy classes
(for the 'Why it is good' spin) and the Sociology classes (for the
'Why it is evil' spin).   (Though most of the Econ texts seem to like 
to get in a bit of snide sniping when they think they can ...)

Sometimes you even get the token 'radical left' class, text, or presenter;
but the bottom line for Government doesn't change.  Never let the 'mark' 
know they have been had...  leave 'em laughing or baffle 'em with BullShit,
but don't let on that they have been purposfully had.

-- 
E. Michael Smith  ems@apple.COM

"Nothing can keep an argument going like two persons who aren't
sure what they're arguing about."   O.A.Battista
Newsgroups: sci.energy