Forum Post: The Real Reason for High Oil Prices - What you won't hear
Posted 11 years ago on July 20, 2012, 11:04 a.m. EST by john23
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Really want to understand why oil prices are so high? Watch this reality check by Ben Swann...this story was "fact checked" by the Washington Times (4 minutes):
http://www.youtube.com/watch?v=1UH6hzAQdSE&feature=player_embedded#!
This is how a gold standard protects you...the consumer.
For a graphical picture of this check this out:
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Gold standard existed, but runaway railroad speculation, housing speculation and others took place.
http://en.wikipedia.org/wiki/Panic_of_1893
"The classic account of financial contagions, Kindleberger’s Manias, Panics, and Crashes (2000), presents a standard pattern in which speculative fevers are caused by the appearance of new, unusually profitable investment opportunities. Often, the new opportunities accompany movements toward globalization as new markets or technologies appear that can be exploited by a given country or by an economic sector in several countries.
Prices of the new assets that are created in response to the new opportunity are driven to unsustainable heights; panic eventually occurs and investors then scramble to withdraw their funds, not only from the original market but also from any other market that resembles it."
Crises in the Global Economy from Tulips to Today Contagion and Consequences Larry Neal and Marc Weidenmier
http://www.nber.org/chapters/c9596.pdf
Under this theory the new markets for oil and the speculation generated for them has been the developing nations like China and India, and our push to globalization.
1893 wasn't under a pure gold standard, and the decades leading up to it saw similar events that created the housing bubble. The creation of credit...and credit through fractional reserves. Goverment intervention to cause overinvestment in railroads such as government land grants, subsidies to the railroads and low interest loans (to lower interest rates there needs to be an increase in credit provided to the banks). Finance professor Michael Rozeff compares it to the artificial boom in housing that busted in 2008.
Seems someone doesn't like either one of our answers and has taken points from the both of us...
Which has always been my point... its banking practices and monetary policy that is at fault, not the currency, when looking at events closely.
Yeah i agree with you....we just disagree at how to achieve that..my view is that without a commodity standard there is almost no way to stop horrible monetary policy by government.