gasoline prices monetary unit gold stimulus

Prices Are Not Rising, the Dollar Is Falling -- Fixable?
military alternative budget

Labourite Advises a Location Fee and Citizens Income

Is there a role for gold? An alternative to left and right? Enough money for us all? We trim, blend, and append three 2012 articles from: (1) Forbes, Feb 22, on the dollar by L. Woodhill; (2) Truthout, Feb 25, on stimulus by S. Hill (ex at the New America Foundation, author of Europe's Promise: Why the European Way Is the Best Hope for an Insecure Age); and (3) The Huffington Post, Feb 13, on a budget by M. Morgan-Giles (Ex aide to MP).

by Louis Woodhill, by Steven Hill, and by Mike Morgan-Giles

Panic is in the air as gasoline prices move above $4.00 per gallon. Yet the politicians and pundits who’re looking for someone or something to blame are missing something. Oil prices aren’t high right now. In fact, they are low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more -- perhaps a lot more.

Gasoline prices reflect crude oil prices. As this is written, West Texas Intermediate crude oil (WTI) is trading at $105.88/bbl, at €79.95/bbl, ¥8,439.69/barrel, and £67.13/bbl. In all of these cases, the market value of WTI is the same. What is different is the value of the monetary unit.

To judge whether the price of WTI is high or low, compare it to gold. Right now, a barrel of WTI has the same market value as 0.0602 ounces of gold. During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl. It has been higher than that during 225 of those months and lower than that during 268 of those months. Today’s WTI price is 82% of its average over the past 41+ years.

Over the centuries, gold has been “the golden constant”. Eventually, all prices equilibrate with gold. This is why gold represents the best available standard in terms of which to define the value of a monetary unit. Forty-one years ago, when the value of the dollar was defined in terms of gold at $35/oz, WTI was selling for $3.56/bbl.

After President Nixon abrogated the Bretton Woods monetary arrangement [that followed World War II] in stages starting in September 1971, both gold prices and oil prices started to rise. The government responded by imposing wage-price controls. This time around, politicians propose to “deal with” rising gasoline prices include additional cuts in payroll taxes and higher taxes on energy producers.

To see the whole article, click here .

JJS: Is there enough gold in the world to “back” all the money in the world? Would gold backing even be necessary if new money were issued by credit unions and/or if governments did not overspend? Especially on war?

The United States emerged from World War II as the world's conqueror, with virtually every economic competitor destroyed. Suddenly, America was the big boy on the block, leader of the Pax Americana, and our industries enjoyed numerous competitive advantages over international rivals. The dollar, suddenly, was the dominant global currency, and that granted Americans cheap money and influence that spurred unprecedented economic growth.

Today a lot of “stimulus” spending occurs courtesy of the US “defense” budget. The United States spends as much on its military as the next 20 nations combined, and three times more than all conceivable enemies combined. And the DOD’s annual $700 billion does not include spending for its war in Iraq, Afghanistan, and Libya, which amounts to another $1 to $3 trillion, nor does it include huge expenditures by the Department of Homeland Security (DHS), National Security Agency (NSA), the CIA, the Veterans Administration, or the parts of the National Aeronautics and Space Administration (NASA) and the Department of Energy used for military-related activities.

Vast sums are being spent on 11 large aircraft-carrier battle groups and other obsolete military hardware which military experts say are "still geared to fight the imperial navy of Japan." Even the Bush administration's top intelligence analyst concluded that US military superiority will "be the least significant" asset in the era that is unfolding.

Even a small reduction in military spending to the same share of GDP as it was in 2000 would save $240 billion a year, or 1.6 percent of GDP.

Merely spending more money that the government doesn’t have is not a solution to recession or poverty in the absence of a broader plan, an inspiring vision, and a bigger narrative that explains how not only more spending, but a rejiggering of budget priorities, will help.

To see the whole article, click here .

JJS: As for rejiggering of budget priorities, the Brit below is way ahead of the game.

With the UK budget due on March 21st, a tactic to gain economic credibility would be to propose a fully costed alternative. Here are some proposals for inclusion in an alternative:

* Greenpeace estimates that renewing the Trident nuclear weapons program could cost as much as £97 billion over 30 years, including upfront procurement costs of potentially £15-20 billion. This should be scrapped. In total, the Institute of Economic Affairs believes the defence budget can be cut by £17 billion per year.

* Housing bubbles in recent times have resulted in mountains of untaxed wealth. The long discussed Mansion Tax should be introduced on homes worth more than £2 million to reclaim some of this. The Institute for Fiscal Studies believes that this can raise £1.7 billion per year. The viability of a land value tax should be pursued and implemented if it is found that this could fairly take over from existing property taxes.

* The Citizen's Income Trust advocates paying everyone an unconditional 'Citizens Income', which would provide greater financial security and save around £10 billion per year. Increasing the Personal Allowance to £12,000 per year would put an extra £800 in the pockets of working people and the Adam Smith Institute believes that this will cost an extra £15 billion. The potentially cost-neutral move to a lower rate of VAT is part of Labour's five point plan, and this will increase economic activity as well as helping the lowest paid, who spend a higher proportion of their wages.

By setting out in detail new tax and spending policies, this will enhance the public's perception of the economic competence of the Labour top team.

To see the whole article, click here .

JJS: Some good ideas for a lefty. He might not see how unnecessary much bureaucratic spending becomes in a fair and efficient economy, as do many (if not all) taxes become superfluous. But if they win their geonomic proposals, they’ll have made the world a much better place.


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

The view of both us and a big newspaper

Just a two days later …

US debt concerns a major rating agency as …

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