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The Looming Fiat Currency Train Wreck

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Worth a read,

if you want to see where we are all headed this year....

THE LOOMING FIAT CURRENCY TRAIN WRECK

by Rob Kirby

January 16, 2006

While the bulk of the Western World’s main stream media continues to make pronouncements about the price of both crude oil and gold continuing to rise as a result of Iran’s nuclear aspirations – they have completely and utterly ignored the stark, dark reality of the currency train wreck [that is empirically only beginning to unfold] right in front of our eyes.

Iran’s Potential Influence

So Just How Much Oil Does Iran Produce Per Day Anyway? Well, let’s ask the experts over at the U.S. Department of Energy [DOE] – shall we?

In 2003, Persian Gulf countries had estimated net oil exports of 17.2 million bbl/d of oil (see pie chart). Saudi Arabia exported the most oil of any Persian Gulf country in 2003, with an estimated 8.40 million bbl/d (49% of the total). Also, Iran had estimated net exports of about 2.6 million bbl/d (15%), followed by the United Arab Emirates (2.4 million bbl/d -- 14%), Kuwait (2.0 million bbl/d -- 12%), Iraq (0.9 million bbl/d -- 9%), Qatar (0.9 million bbl/d -- 5%), and Bahrain (0.01 million bbl/d -- 0.1%).

Now let’s take a look at what 2.6 million barrels of oil per day is really worth in term of “potential new Euro demand” anyway? Here is the math:

2,600,0000 x 60.00/barrel x 30 [days per month.] x 12 [months per yr.]

TOTAL = 56.16 BILLION [ANNUALIZED] WORTH OF NEW EURO DEMAND

Now I don’t know about you folks, but where I come from, 56 Billion still buys a whole lot of love and respect.

Now, Let’s Take A Look At Venezuela

Let’s get the lay of the land, so to speak, right from the horse’s [Chavez’s] mouth – 1.5 million barrels of Venezuelan crude [60 % of production] is currently purchased by the US of A each and every day. At 60.00 per barrel, this amounts to 60 x 1,500,000 x 30 [days per month] = 2.7 billion per month Worth of EUROS [32.4 BILLION WORTH ANNUALIZED]. This is simply the amount of Euros the US will need to purchase [read: print] or borrow to maintain its current quota of Venezuelan crude should Chavez sell all output for Euros. Additionally, the balance of Venezuelan crude will fetch another [60.00 x 1,000,000 x 30] = 1.8 billion per month worth of Euros the rest of the world will need to purchase said oil, or, A FURTHER 21.6 BILLION ANNUALIZED. So folks, cumulatively – in the case of Venezuela alone – we are potentially talking somewhere in the neighborhood of NEW DEMAND FOR EUROS OF 54 BILLION US DOLLAR EQUIVALENT PER YEAR.

Oh well, at least the Fed will save a few nickels and will no longer be publishing M3 [money supply] data. If you can’t see the money printing – I guess it can’t hurt you, eh?

Step A Little Further Back, Shall We?

In big round numbers, daily global oil production runs in the area of 82 million barrels of oil per day. The U.S. consumes approximately 20 million barrels of oil per day – yet only produces [domestically] about 5.4 million.

How often are we bombarded with the “clap trap” – not to worry - that rising crude oil prices self serve to reduce demand [consumption]? Seems to me, forever! Meanwhile, the empirical realities suggest COMPLETELY THE OPPOSITE where oil is concerned. LOOK AT THE GRAPH!

Compliments: M.W.Hodges, The Grandfather Report

While the price of crude oil has increased dramatically over the past 5 years – U.S. consumption has factually grown. Also, by looking at the production line in the chart above – we have a crystal clear illustration of exactly what “Peak Oil” really is – right in front of our noses!

Imagine, main stream pundits continue to speak of interest rate conundrums without even mentioning the 300+ TRILLION U.S. GORILLA [interest rate derivatives – swaps] sitting on top of the interest rate complex. Why has no one stopped to investigate or explain the cancerous growth [123 Trillion at Q3/03 – now exceeding 300 Trillion [Q3/05] - pg. 47 of 126]? Also, the most recent rise in the price of gold – the main stream media would have us believe it is wholly attributable to increased nuclear tensions with Iran – failing to mention a well documented 16,000ish ton short of physical metal on the part of Western Central Banks?

In addition, has anyone not noticed that while “officially” inflation continues to be reported in benign terms [around 2% - core rate?] – the cost of virtually EVERYTHING [except DVD players] from health care to insurance/professional premiums to copper to real estate and municipal taxes keeps going up?

Misreporting, denial and refusal to admit that our markets have been hijacked - rigged and ‘stick handled’ is EXACTLY WHAT HAS CREATED THE BULK OF THE PROBLEMS WE NOW FIND OURSELVES FACING. Oil is slated to begin trading for Petro-Euros on March 20, 2006.

Put simply, we just don’t have much time left to “start getting it right”. In Fed ‘baseball parlance’ – it’s the bottom of the ninth, the count is full and the sacs are drunk - but does anyone really know what the score is?

© 2006 Rob Kirby

Editorial Archive

CONTACT INFORMATION

Rob Kirby

Kirby Analytics

Toronto, Ontario, Canada

Email

The Looming Fiat Currency Train Wreck

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Worth a read,

if you want to see where we are all headed this year....

THE LOOMING FIAT CURRENCY TRAIN WRECK

by Rob Kirby

January 16, 2006

While the bulk of the Western World’s main stream media continues to make pronouncements about the price of both crude oil and gold continuing to rise as a result of Iran’s nuclear aspirations – they have completely and utterly ignored the stark, dark reality of the currency train wreck [that is empirically only beginning to unfold] right in front of our eyes.

Iran’s Potential Influence

So Just How Much Oil Does Iran Produce Per Day Anyway? Well, let’s ask the experts over at the U.S. Department of Energy [DOE] – shall we?

In 2003, Persian Gulf countries had estimated net oil exports of 17.2 million bbl/d of oil (see pie chart). Saudi Arabia exported the most oil of any Persian Gulf country in 2003, with an estimated 8.40 million bbl/d (49% of the total). Also, Iran had estimated net exports of about 2.6 million bbl/d (15%), followed by the United Arab Emirates (2.4 million bbl/d -- 14%), Kuwait (2.0 million bbl/d -- 12%), Iraq (0.9 million bbl/d -- 9%), Qatar (0.9 million bbl/d -- 5%), and Bahrain (0.01 million bbl/d -- 0.1%).

Now let’s take a look at what 2.6 million barrels of oil per day is really worth in term of “potential new Euro demand” anyway? Here is the math:

2,600,0000 x 60.00/barrel x 30 [days per month.] x 12 [months per yr.]

TOTAL = 56.16 BILLION [ANNUALIZED] WORTH OF NEW EURO DEMAND

Now I don’t know about you folks, but where I come from, 56 Billion still buys a whole lot of love and respect.

Now, Let’s Take A Look At Venezuela

Let’s get the lay of the land, so to speak, right from the horse’s [Chavez’s] mouth – 1.5 million barrels of Venezuelan crude [60 % of production] is currently purchased by the US of A each and every day. At 60.00 per barrel, this amounts to 60 x 1,500,000 x 30 [days per month] = 2.7 billion per month Worth of EUROS [32.4 BILLION WORTH ANNUALIZED]. This is simply the amount of Euros the US will need to purchase [read: print] or borrow to maintain its current quota of Venezuelan crude should Chavez sell all output for Euros. Additionally, the balance of Venezuelan crude will fetch another [60.00 x 1,000,000 x 30] = 1.8 billion per month worth of Euros the rest of the world will need to purchase said oil, or, A FURTHER 21.6 BILLION ANNUALIZED. So folks, cumulatively – in the case of Venezuela alone – we are potentially talking somewhere in the neighborhood of NEW DEMAND FOR EUROS OF 54 BILLION US DOLLAR EQUIVALENT PER YEAR.

Oh well, at least the Fed will save a few nickels and will no longer be publishing M3 [money supply] data. If you can’t see the money printing – I guess it can’t hurt you, eh?

Step A Little Further Back, Shall We?

In big round numbers, daily global oil production runs in the area of 82 million barrels of oil per day. The U.S. consumes approximately 20 million barrels of oil per day – yet only produces [domestically] about 5.4 million.

How often are we bombarded with the “clap trap” – not to worry - that rising crude oil prices self serve to reduce demand [consumption]? Seems to me, forever! Meanwhile, the empirical realities suggest COMPLETELY THE OPPOSITE where oil is concerned. LOOK AT THE GRAPH!

Compliments: M.W.Hodges, The Grandfather Report

While the price of crude oil has increased dramatically over the past 5 years – U.S. consumption has factually grown. Also, by looking at the production line in the chart above – we have a crystal clear illustration of exactly what “Peak Oil” really is – right in front of our noses!

Imagine, main stream pundits continue to speak of interest rate conundrums without even mentioning the 300+ TRILLION U.S. GORILLA [interest rate derivatives – swaps] sitting on top of the interest rate complex. Why has no one stopped to investigate or explain the cancerous growth [123 Trillion at Q3/03 – now exceeding 300 Trillion [Q3/05] - pg. 47 of 126]? Also, the most recent rise in the price of gold – the main stream media would have us believe it is wholly attributable to increased nuclear tensions with Iran – failing to mention a well documented 16,000ish ton short of physical metal on the part of Western Central Banks?

In addition, has anyone not noticed that while “officially” inflation continues to be reported in benign terms [around 2% - core rate?] – the cost of virtually EVERYTHING [except DVD players] from health care to insurance/professional premiums to copper to real estate and municipal taxes keeps going up?

Misreporting, denial and refusal to admit that our markets have been hijacked - rigged and ‘stick handled’ is EXACTLY WHAT HAS CREATED THE BULK OF THE PROBLEMS WE NOW FIND OURSELVES FACING. Oil is slated to begin trading for Petro-Euros on March 20, 2006.

Put simply, we just don’t have much time left to “start getting it right”. In Fed ‘baseball parlance’ – it’s the bottom of the ninth, the count is full and the sacs are drunk - but does anyone really know what the score is?

© 2006 Rob Kirby

Editorial Archive

CONTACT INFORMATION

Rob Kirby

Kirby Analytics

Toronto, Ontario, Canada

Email

The Looming Fiat Currency Train Wreck

Superb rant... :)

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For a Canadian author, you would have thought he'd be good enough to point out that Canada has 4 times the reserves of Saudi Arabia.

It's largely been left alone because it cost $15 a barrel to extract, but at the current prices, oil producers are falling over themselves to bring the full potential of that supply online.

Edited by Time to raise the rents.

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Looks like Brown has got his orders to support the Dollar at all costs:

The UK bought over $30 Billion dollars worth of US debt in November alone representing over half of all foreign investment supporting te Dollar. We are now the proud owners of $223 Billion worth of Fiat crap which would send us under should the dollar collapse. Nice one Gordon.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

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Looks like Brown has got his orders to support the Dollar at all costs:

The UK bought over $30 Billion dollars worth of US debt in November alone representing over half of all foreign investment supporting te Dollar. We are now the proud owners of $223 Billion worth of Fiat crap which would send us under should the dollar collapse. Nice one Gordon.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

So we've doubled our dollar reserves over the last 12 months. We appear to be the only country to have done this.

Why?

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So we've doubled our dollar reserves over the last 12 months. We appear to be the only country to have done this.

Why?

Our ongoing historical "relationship"?

Or the threat of big bills still left from the past.

Iirc, we still owe from WW1.

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Looks like Brown has got his orders to support the Dollar at all costs:

The UK bought over $30 Billion dollars worth of US debt in November alone representing over half of all foreign investment supporting te Dollar. We are now the proud owners of $223 Billion worth of Fiat crap which would send us under should the dollar collapse. Nice one Gordon.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

What else can you expect from the dickhead who sold off most of our gold reserves at about half the current price. The man is the worst Chancellor of all time, by a margin so vast as to defy all known measurements. He has personally wiped out several hundred billions of pounds of UK PLC bottom line.

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One problem with Canada's reserves is that tar-sands aren't just expensive to produce ($15/barrel was mentioned) they are energy-intensive.

I've read elsewhere that it takes about half a barrel of oil to recover one barrel. As the price of oil rises, the price to extract tar sands rises too.

Saudi oil costs less than a dollar a barrel to extract.

North Sea oil costs a few dollars per barrel.

I think by the time Canada's tar sands become commercial we will find that almost any kind of energy generation will also be commercial - nuclear, tidal, wave, wind, solar.

Of course the prices of some of these are also dependent on oil - making solar panels is extremely energy intensive, as is making cement for windmill towers.

I should point out that I work for a Canadian oil company with large reserves of tar-sands and the company is doing lots of expensive research into steam injection to get the tar out without digging up the whole landscape (normal method) in order to cook the tar out of the sand.

We've made good progress, but my impression is that we aren't staking the company's future on these reserves. The Kyoto treaty, if signed by Canada, would severely limit its ability to exploit the tarsands anyway - it is not an environmentally friendly process.

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Looks like Brown has got his orders to support the Dollar at all costs:

The UK bought over $30 Billion dollars worth of US debt in November alone representing over half of all foreign investment supporting te Dollar. We are now the proud owners of $223 Billion worth of Fiat crap which would send us under should the dollar collapse. Nice one Gordon.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

I don't think it's the UK government (we don't have the money too!). A lot of wealthy countries hold their money in the UK so it would be registered here.

Note China and Japan have stopped buying and then the UK and Carribean kick in. Maybe the US are buying it themselves as some people have suggested. Scarey!

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Maybe the US are buying it themselves as some people have suggested. Scarey!

Yep, the fed buy debt from the government, it is secured against the income tax of the people, it's no secret, the 16th amendment.

The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest.

http://www.worldnewsstand.net/today/articl...vatelyowned.htm

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In big round numbers, daily global oil production runs in the area of 82 million barrels of oil per day. The U.S. consumes approximately 20 million barrels of oil per day – yet only produces [domestically] about 5.4 million.

So the world needs $3.6bn a day to buy the oil as we are not allowed to use euros and this is what creates

the Petrodollar and keeps the US afloat.

This arrangement dates back a long time but now it’s looking like it’s about to break and this results in a situation where the oil producing nations dare not cash in too many USD$ at the same time as this will devalue the USD$ and make the USD$ they have left worthless.

Bit like a good old western where no one dares walk away from the table.

America is now using the cover of the Caribbean to purchase bonds themselves to try and keep the process going a little longer but the markets are starting to smell a rat but whilst they can make just a few more bucks they all pretend that all is fine and all hope to diversify out of the game later but as we all know if we all went to the bank at the same time and asked for our money the bank would lock it doors very fast indeed.

Derivatives are weapons of mass financial destruction and the USA has $300,000,000,000,000 worth of gambling chips on the table.

Gentlemen you are all privileged to be witnessing the beginning of the end game

You will see USA attacks on foreign lands, white flag attacks using bio-weapons in the near future and possibly a reduction in the worlds population that will be nearly as fast as the dwindling money supplies.

I don’t blame the America people where anyone could be the president as they know this is no longer true and are waking up to the fact that there country has been kidnapped.

Edited by Justice

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For a Canadian author, you would have thought he'd be good enough to point out that Canada has 4 times the reserves of Saudi Arabia.

It's largely been left alone because it cost $15 a barrel to extract, but at the current prices, oil producers are falling over themselves to bring the full potential of that supply online.

Ahhh.... not quite. Tar sands don't pour up a pipe under natural pressure, nor can you sweep them out with water injection. The project requires a long investment in machinery to physically extract the sands in 400 - tonne trucks and take it to big cookers where the oil is separated from the sand. The process requires a lot of heat and work input. That is why it takes a long time to increase production and a lot of energy to sustain production. Currently, the energy comes from nat gas, but as that is also in short supply there are other ideas. Nuclear plant is one. Coal another. It is foreseen that production might reach about 3Mb/day by 2020. It might save Canada, it won't do much to cope with Peak Oil once we hit it.

I'd forget about it, TTRTR. Buy a push-bike if it worries you.

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Ahhh.... not quite. Tar sands don't pour up a pipe under natural pressure, nor can you sweep them out with water injection. The project requires a long investment in machinery to physically extract the sands in 400 - tonne trucks and take it to big cookers where the oil is separated from the sand. The process requires a lot of heat and work input. That is why it takes a long time to increase production and a lot of energy to sustain production. Currently, the energy comes from nat gas, but as that is also in short supply there are other ideas. Nuclear plant is one. Coal another. It is foreseen that production might reach about 3Mb/day by 2020. It might save Canada, it won't do much to cope with Peak Oil once we hit it.

I'd forget about it, TTRTR. Buy a push-bike if it worries you.

Some Nickle producers employ a heap leaching extraction process rather than heat as it is more cost effective. Could a similar process not be applied to the extraction of oil from sands, are you aware of any Canadian oil companies looking at this process. The cost of extraction may not stack up at the moment but at $100 oil who knows.

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I also visit a forum at www.forexfactory.com

There is a small debate about Iran and the Petro dollar/euro.

thread here: http://www.forexfactory.com/forexforum/sho...69&page=1&pp=15

One argument against the dollar doomsday theory within that thread:

I think this argument defies all economic reason. I had already heard something along the lines that the real reason for invading Irak was that Saddam allegedly threatened to only receive euros for selling oil. Now, I don't know if he actually said this, but I'm almost certain that even if he had, the impact on the dollar would have been minimum, at most.

Why?

* Oil trade is less than 5% of the total world trade.

* There is currently no "international law" that forces companies to buy oil in dollars. If Exxon wants to buy 1 million barrels of oil from some Saudi prince, upon mutual agreement, they can make the exchange in dollars, euros, paraguayan pesos, or pork belly futures. The "bourses" are either for speculators, hedgers, or to accomodate excess demand of oil. Why would a big company that buys millions of barrels per years be bothered with going through an exchange and pay commisions to brokers or agents? They agree a supply with their preferred oil extraction company; and, if they find they need more oil (or have excess), then they do go to the bourse.

* The "power of the dollar" comes more from its use as a store of value rather than as a medium of exchange. Let's assume we're forced to buy oil in dollars (which is not the case). So what? If I don't like dollars, I will have my savings in yuans, and exchange a fraction for dollars only when I need oil. If the OPEC doesn't want dollars, they will exchange it for zlotys as soon as they receive them in exchange for the oil.

Anyway, it's a good idea for them if they want to establish this bourse. They will probably obtain big profits from it, just as with any other bourse. But will it affect the dollar? Don't think so.

I guess we will wait and see, certainly interesting times ahead in all kinds of markets for all kinds of reasons!

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Looks like Brown has got his orders to support the Dollar at all costs:

The UK bought over $30 Billion dollars worth of US debt in November alone representing over half of all foreign investment supporting te Dollar. We are now the proud owners of $223 Billion worth of Fiat crap which would send us under should the dollar collapse. Nice one Gordon.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

interestingly that was on a turnover of $712 Bn (we bought $373bn but sold $339bn just in November. Was wondering where all this money really is, but then I remembered there's £30m just lying around like piles of bricks on my humble street alone (if you use the asking prices)

http://www.ustreas.gov/tic/s1_13005.txt

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Looks like Brown has got his orders to support the Dollar at all costs:

The UK bought over $30 Billion dollars worth of US debt in November alone representing over half of all foreign investment supporting te Dollar. We are now the proud owners of $223 Billion worth of Fiat crap which would send us under should the dollar collapse. Nice one Gordon.

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

He sold gold at its low. So maybe buying US treasuries at their highest would also be his style?

It looks like serious doodoo somewhere to me...

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