----- Original Message -----
From: Al Gray (Dragon)
Sent: Friday, October 03, 2014
Subject: The Jackpot Club Meeting; 3 October, 2014.........
I found myself standing next to Professor Gladstone in the rush to load up on Liza's cookies before the meeting began.
"What's with the commodities markets?" I didn't ask him until I had grabbed my share of cookies. Priorities, you know.
"Beats me, Dragon," he said. "Conventional wisdom said that as the dollar became less and less attractive because of BRICS and other inputs, we were going to see prices increase on everything. The fear porn peddlers like to remind us all of Wiemar Germany. I swear, if Jesus was to return, they'd have some sort of fear porn message over that!"
"They'd demand a birth certificate!" Granny Smith was standing across the table from us.
"They'd quarantine him as an Ebola suspect!" P.T. chimed in.
"I want to discuss this Ebola thing later on if we have time. Right now, Professor Gladstone brought up an interesting question. What is going on in the commodity markets?"
"Well, it's a puzzle to me, y'all," said the professor. The professor came from England but he speaks the local language like a native. "Oil has been dropping faster than the Tea Party's reputation. It's a bit above $89 last time I looked. And precious metals! There's a story! A real puzzle. The price never did go through the roof like Lindsey Williams said. Actually, not long after he said that, the price began to slowly drop. And the last few days, gold is well under $1200. Silver, it's gonna get cheap again, looks like. Used to be $3 an ounce. It's at $16 now, from a high of $30 back in Lindsey's day."
"So where does all this loose capital go when it gets out of metals and oil? Newton's Fourth Law of Physics says, 'we all gotta be somewhere'. That goes for moola, too." Liza was speaking as she checked the sound system. I have a request for her later. But for right now........
The professor had his cookies, his cup of coffee, and had found a place to sit. He took a couple of bites to prime his thinking machine, and said: "Not only are those prices going down, I've heard that in some parts of the country gasoline is now under $3 a gallon. I keep my ear to the ground, so to speak, and I'm hearing faint rumbles of deflation talk."
"That makes sense," I told him. "It's like it was back in the Depression days. Things were cheap, but no one had any money. Things were cheap because no one had any money. Look at unemployment and underemployment here. All over the Western world, really. No one's got any money to spend."
"Except the rich!" The professor then added, "I've read the history of the Depression. I do teach economics, after all. Back in those days, only the rich had money and they spent some of it on those fabulous cars that we call classics now. Auburns. Cords. Duesenebergs. Packards. Custom bodied Cadillac touring cars, 16 cylinder engine cars and names I can't recall. Today the rich have more money and more choices, so Mitt Romney has multiple homes and a garage with an elevator. John McCain has multiple houses, too. So we have all these rich people with more money than they know what to do with, including Sheldon Adelson. Some of them, like old Sheldon, are dual citizens. The income disparity is greater now than it was in Depression days."
Pixel had a question. "Is this the coming new economic system casting a shadow in advance of its appearance? There has been speculation for years that the new currency would be backed by gold. And now the price of gold is falling. What's that say about the new currency?"
"Yeah, I think it's a coming event casting its shadow, as you said. As for a gold backed currency, I just don't see how it would be possible to do. Not anywhere in the world. Getting back to Liza's question; last I heard this liquid capital was going into - who'd have thunk it? - US dollars. The dollar has risen against other currencies in the past few days."
The professor paused briefly to finish off his cookies. Everyone kept quiet because he was holding their interest. He brushed the cookie crumbs off his hands into the paper napkin which then went into a nearby waste basket. "It's a question of safety, or in this case, relative safety. While the dollar is not earning much, if anything, in interest, it is still considered the safest of all Western currencies. So as Newton said, 'we all gotta be somewhere', and the dollar is a relatively safe hidey-hole when nothing else is making much money. The stock market is over-priced, but that was acceptable when there was always the possibility that an even bigger sucker would come along and buy your over-priced shares for an even bigger price.
Gold and silver are out because they won't be in demand for currency. Oil is out, in part because of reduced demand, in part because of increased supply. And it may be in part because someone has leaked to the Koch brothers that that 'Hey! You ain't getting that pipeline'. I am told that the Koch brothers artificially inflated oil prices so as to increase the need for their oil pipeline. I have no information to indicate that they won't get their pipeline. This is my optimistic side talking, here."
"Dragon said that a psychic told him that there was something coming on the economic front late this year. I listened to the radio show that night, but that topic never came up." Patty Cake had a second question, too. "If and when the US changes its currency, won't other countries have to change theirs, too? I read that there are 66 countries around the world who use the dollar as a reserve currency. If the dollar value changes, their currency value will change, too, will it not?"
The professor sipped his coffee, looked around the room as if to gauge whether he should get into a discussion about reserve currency. He took a long sip of coffee, almost as if to brace himself, and then began. "Ah! Reserve currency. There's a topic no one really talks about. To hear it mentioned in an interview, or read it in a news story, it sounds reassuring. It's a real confidence builder for the image of the US dollar. We're so good that everyone wants to use our money to back their money. Yeah. Sounds good. Let's dissect that reserve currency frog and see what it's made of.
As you know, our dollar is not backed by anything. Well, actually it sort of is, because it's the petro-dollar, at least for a while longer. In practical terms, you can't present a paper dollar to the bank and demand payment in specie or anything else. Best you can get is a newer dollar, or a small number of coins. And it's an IOU. A debt. An interest-bearing debt instrument. Which means that the issuer is an economic vampire, sucking your virtual blood every time you use that dollar bill. It's a debt.
Now, suppose we buy something from Carjackistan. Suppose we buy whole Wal-Marts full of stuff from Carjackistan. We pay them in dollars. They don't spend all of them. The dollars that Carjackistan has on deposit add value to the local currency, and increase its convertibility into other regional currencies. Those other regional currencies, they have dollars on deposit, too.
Everything is cool and serene. Commerce flows as it should. Some of those dollars are used to pay for oil. This is what puzzles me. If BRICS is going to bust the petro-dollar with its new economic system, why is the dollar still holding its value, even increasing a bit in value?"
The professor was deep into his subject matter. For a moment or two, I thought he might get out of his chair and go into his student lecture mode. If there'd have been something handy to use for a lectern, I'm sure he would have. He did continue, though he had a hard time staying composed.
"Here's the thing about reserve currency that no one talks about. In order for the US dollar to function as a reserve currency, we have to have a trade imbalance. If we sell Carjackistan 300 million gizmos, they have to buy an equal value of franistans from us, or else there's a trade deficit. No way we'd ever have a trade deficit in Carjackistan's favor. For one thing, their Premier's picture is on every one of their bills, and he's an ugly S.O.B. No one would want to carry that around in their pocket. For another thing, their money is only redeemable in Carjackistan. The US dollar is accepted everywhere."
Patty Cake was still a bit puzzled. "This is all new to me, this aspect of the trade deficit. The news reporters all leave us feeling that somehow the US is inadequate, economically at risk, and somehow taking advantage of other countries. What's gonna happen to those dollars held by other countries when the new economic system is in effect?"
"The short answer is," the professor said, "I don't know. But I'll guess with you," he said with a grin. It looked like he had at least temporarily conquered his urge to stand up and talk to us. Then he got really serious.
"The long answer is that it depends on who is in control of the new currency. If Goldman Sachs and the Federal Reserve are still around after the new economic system is in place, then we've lost the war. It's time to look for another Class M planet and get there if we can. If the bankers have not been turned into Soylent Green or placed in jail, it means that the Dark Side has won this war. If the Dark Side wins, then you and me and this country and the rest of the world are going to be under a techno-tyranny the likes of which the world has never seen."
Granny Smith interjected with the suggestion that we look on Netflix for movies like "They Live!" and similar ones. And the movie "V".
"In a perfect world," he continued, "there'd be no trade deficits and no need for a reserve currency. Every country's currency would be solid, based on the productivity of its workers. There'd have to be some sort of a clearing house so that if someone in Saudi Arabia wanted to buy a snowmobile from a dealer in Alaska, there would have to be a way of equalizing the exchange." The professor's eyes were twinkling at the absurdity of that idea.
Pixel kept the humor going. "No problem. Sell an equal value of dune buggies to the dealer in Alaska."
That bit of levity eased the tension. I looked at my watch. Yeah. There's time enough for Liza to sing a couple of songs before the lottery drawing.
"Hey Liza!" Liza was reading my mind. Or my body language. She was already at the microphone. "You got a request for me?" Liza knows me! I always have a request for her. Been trying to find one she doesn't know. No luck yet.
"Yeah, but first I have a question."
I could see her thinking. Uh, oh. Here it comes. Something.
"What do you get when you cross Lassie with a watermelon?"
Liza looked around for something to throw at me and said, "I give up. What?"
"You get a melancholy baby! And that's my request for tonight."
"I'm gonna get you for that, Dragon!" She was still looking for something to throw.
"I'm counting on it," I said with a grin, still ready to dodge if she threw something. But she didn't. She's a real sweetie. I tease her a lot, and it's all in fun. Then Barry appeared out of nowhere.
"Hey Barry! I'm feeling lucky. I'll give you even money that the Democrats control both houses of congress after the election. Are you on?"
"I'll go as high as five dollars," he said. "We'll get Granny Smith to hold the money. Put it with the money we bet on martial law by the end of the year. There's plenty of room in that big purse of hers!"
Liza was doing a bang-up job on Melancholy Baby. We found Granny Smith and told her the plan. She agreed to hold the stakes for us. I only got a brief glimpse of the inside of it when she opened her purse. It's dark and scary in there. Then I noticed what was written on her T-shirt.
Eat, Drink, and Be Scary
"We've got a great bunch of people here," I said to Barry.
He agreed. "What kind of shape would the world be in if it wasn't or us here solving the world's problems?"
"That's a scary thought," I replied. Then we focused on Liza's singing. No Ebola talk tonight. The world is just gonna have to endure until we can get around to it.
Original Message -----
From: Zuerrnnovahh-Starr Livingstone
To: Al Gray
Sent: Sunday, October 05, 2014
Subject: Oil Prices Dropping
It is a lot of fun reading The Jackpot Club Meeting(s).
Texas remembers $10,00 per barrel oil of 1981. The whole state went into a deep depression. Alberta did too. Every hotel and junior oil company went broke by Christmas 1981. Those with the deep pockets were able to buy up whatever they wanted pennies on the dollar and consolidate their wealth.
There was never a lack of oil. The oil embargo from OPEC was a scam.
During the time of $80.00 per barrel oil of the late 1970s enough wells were drilled to supply world needs for thirty years.
Following the drop of oil prices industries and consumers had more money in their pockets and production jumped except it was slower Texas. The industrial belt boomed.
Bankers said it was inflationary and said they had to raise interest rates to curb inflation and grab the surplus of money circulating. Mortgages went up to 22% and many walked away from their houses. It was another scam. The FED was creating the inflation not the consumer.
The Bankers brought in the bucks boom or bust. (Alliteration?)
With the Rockefellers announcing they were going away from oil and into renewable energy were they signalling to their minions a drop on the price of oil to 1981 prices? Again there is about thirty years of petroleum and natural gas available from deep wells.
The oil shocks of the 1970s and 80s consolidated the US petro-dollar. A similar shake-up now might be an attempt to firm up the dollar. It could have the reverse effect and collapse the dollar. Either way the Bankers and Oil companies will profit.
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