User 206954

What Can Possibly Explain the Price of Oil?

Oil and money are commodities, one in the earth -- oil -- and the other made by man -- (paper) money.

Men swap commodities. Some call this swap an exchange. In truth, men swap rights, one right for another right. With oil and money, men swap the right of owning oil for the right of owning money.

All swaps must have one commodity exchanged for another. When one thing gets calculated in terms of another, we call this a ratio. The result of the ratio, we call it a value. When we use money as one commodity in the swap, we give another name to the word value -- PRICE.

The ratio of one commodity (oil) to another (money) expresses a value, which we call a price (of oil).

A rise in price means a change in the ratio has happened calculated at one time from being calculated at another time.

Only two ways can achieve a price rise:

[1] money rising quicker than oil
[2] oil falling quicker than money

Each year, a RECORD AMOUNT of oil gets pumped. Since the price (the value) of the ratio is rising, only one cause can be true -- a RISE IN MONEY quicker than a rise in oil.

Sellers sell to the highest bidder. When folks have more money bidding for a near fixed amount of oil (slightly growing in amount year-to-year), prices rise.


There isn't a global oil shortage. There's a GLOBAL GLUT of MONEY.

What caused the Global Glut of Money?


Money is the highest form of Credit and Credit is another word for Debt. Credit and Debt are other names for Capital.

As credit (=debt, =capital) grows for bad products that nobody wants, a collapse of trust follows. Deals get broken and folks walk away paying on debt. Yet, the money created for this debt stays in the pockets of some folks.

It is the default on credit (=debt, =capital) that causes problems. This increases money at a rate quicker than credit for good products, good invention.

When credit (debt) defaults rise, the paper money and coins issued go into the pockets of winners. These winners begin to bid up prices on existing things, typically commodities of energy, metals, food.

Why? Simply, these winners cannot find worthy investments to make, which would turn their notes and coins into capital paying a return.

Money flows into oil futures games because those with money cannot find other games worthy to play.