Healthcare "Reform": the State and Plutocracy Stripmine the Middle Class (Again)

Healthcare" a.k.a. sickcare is not about health at all, it's about profit and power. The State and the sickcare cartels have partnered to transfer more of the nation's wealth to their Power Elites.

One of the primary themes of Survival+ is that the State and the Plutocracy are partners, and their joint goal is to divert an ever-greater share of the nation's income into their own pockets.

From the Survival+ point of view, all the ideological positions on "healthcare" which are being sold like commodities are laughably detached from reality. "Healthcare reform" has nothing to do with either socialism or capitalism. Socialism is the Veterans Administration system (owned lock, stock and barrel by the government and run by the government) which offers remarkably cost-effective if basic care to millions of vets, and capitalism is cash-only clinics like those offered in Mexico, India and Thailand and in some Wal-Mart walk-in clinics.

The entire "healthcare reform" enterprise is not about providing care to all--that is the sales pitch. It is about milking the entire populace so more of the national income is transferred to the "healthcare" cartels and State (central government) Elites.

Here are the three key realities which are not addressed by "healthcare reform":

1. The "healthcare" cartel (and thus its partner the State) is not interested in health because health is horribly unprofitable. People who eat well and are mentally and physically fit have no need for costly procedures, treatments, tests and pharmaceuticals, hence they cannot generate revenues or profits.

Managing diseases is what's profitable, so the system is oriented not at prevention or nurturing health but at enabling chronic disease which is very profitably managed with pharmaceutcals, surgeries, etc.

2. Once the connection between service and customer is broken and the money to pay for all products and services is printed or borrowed in essentially unlimited quantities, ontologically (inherently) there are no possible price controls. This is why an elderly gent like my friend's father can enter the hospital with a non-life threating issue (gallstone), receive treatment which didn't really resolve his health issue and then Medicare is billed $120,000 for one week of "care" regardless of the efficacy.

When the service is "free" (that is, payment is borrowed/printed in unlimited quantities), then the cost of care will necessarily push up to the ultimate limit of the system's ability to pay. Medicare and Medicaid already exceed the Pentagon's budget, and they are growing three times faster than the long-term trend rate of the U.S. economy.

3. There is no "fair" way to ration care; the U.S. simply rations it by essentially random "legal lottery" payouts/jackpots/penalties and other regulatory means. The bottom line is "healthcare for all" without limits is unaffordable everywhere--it is simply more unaffordable in the U.S. system. The wealthy in rationed-care systems simply opt out and go buy "unrationed care" elsewhere, cash on the barrelhead.

The dirty little secret of supposedly "model" State healthcare plans in Europe and Japan is that they are running up against the limits of what those economies can afford. If you disagree, go ask the State finance ministries of France, the U.K., Germany and Japan for their 10 and 20-year projections of national healthcare costs.

No nation can increase healthcare spending 6% while its underlying economy grows 2%. In a mere 8 years, healthcare costs will rise over 50% while the GDP will rise (at best) 15-20%. That is the essence of unsustainability.

Medical Care Prices Are Rising Faster Than Overall Inflation (BusinessWeek)

The U.S. spent an estimated $2.4 trillion on health care in 2008, about 16.5% of gross domestic product and a 6% increase from a year earlier. Medical care prices are rising faster than overall inflation, and the burden on consumers continues to grow.

When everything is "free to all" then technologies and medications quickly reach marginal returns: yes, this drug is only effective in 15% of the case, and yes, it costs $10,000 a month, and might actually hurt some patients; but since the State is paying for everything, why not give it to everyone who might be helped? And if it's restricted, then isn't that rationed?

The "healthcare" cartels' goal is to carve off a greater share of national income for themselves. This isn't capitalism; it's monopoly capital-crony capitalism, the very opposite of free-market capitalism. The State's political class is a willing partner in this transfer of wealth to Elites because it welcomes the hundreds of millions of dollars in donations offered up by tort attorneys, Big Pharma, and all the other players milking the "healthcare" system for billions.

So who ultimately pays for "free" "sickcare"? The productive middle class and working poor. Healthcare which doesn't actually improve health but simply profitably manages chronic illnesses is in essence a stupendous tax on the productive class of the nation. The healthcare cartels are delighted that "healthcare" has climbed from 6% of GDP to 17%, and they will be delighted to see it rise to 20%, then 25% and 30%, until at some point it bankrupts the nation, as it most certainly will for the above reasons.

Until the State collapses in insolvency, "healthcare" acts as a giant machine which diverts money from the middle class and working poor into the coffers of the sickcare cartels and their State-Elites partners.

You want a system that works? Then depoliticize and de-cartel the system entirely. Jettison the entire sickcare system and revert to cash-only for every product and service, and offer a voluntary VA-type system which people can opt into if they choose to pay the insurance and co-payments (which VA does not have) and live with the defacto rationing of long waits and basic care which is limited by the budget alloted. There is no "entitlement," only whatever care which can be distributed for a given amount of money. Thus it's not the budget which can rise but the efficiency of the system in doing the most possible with a set sum of money.

This is the only sustainable way to provide care without bankrupting the nation.

These two systems--"pure socialism" and "pure free-market capitalism"--can co-exist quite amiably as long as people get to choose from a range of imperfect choices. If health were more profitable (to providers and to consumers) than managing disease, then entirely different choices and incentives would arise.

Permanent link: Healthcare "Reform": the State and Plutocracy Stripmine the Middle Class (Again)

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When Things Fall Apart

Two new books authored within the circle of oftwominds.com address the coming unraveling: one speculative fiction, the other an analysis of devolution and prosperity.

Let's start When Things Fall Apart by referencing the source:
(tip o' the tam to Nina)

THE SECOND COMING
by William Butler Yeats (1865-1939)

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

Though the poem was penned in 1919, doesn't it speak presciently to our era, too? The falconer circling ever farther away from the voice of its master could be interpreted as a spiritual metaphor for a culture lost in self-absorption, self-medication, greed and resentful entitlement, or politically as a metaphor for a populace slipping away from the voices of the Founding Fathers' principles.

In a nation increasingly diverging into hackneyed, hardened ideological camps, clearly the center (common ground, common sense) is not holding.

Author Chris Sullins' book, Operation SERF, a strategic action thriller serialized here earlier this year, imagines a future U.S.A. which has split into warring factions, and a blood-dimmed tide is loosed.

Here is Chris's summary of the scenario/plot:

Operation SERF is a Strategic Action Thriller set in the Unites States of America in the year 2023. After many years of economic depression, a terrorist act fractures the country. The stage is set for another Civil War as three factions battle for control of the pieces. The story takes place in many areas across the country, but centers on one extended family caught between the struggles of the rival factions. The reader will glimpse into the minds of both the leaders of the factions as well as the common person and travel along with them. "Operation SERF" is Part 1 of a forthcoming 3 part series.

You can read the first sample chapters on the Operation SERF home page.

A few readers objected to the violence depicted in the book, and I sympathize with the general view that we as a culture are drenched in endless depictions of violence as "the answer" to whatever problem is at hand.

Yet the terrible reality is civil wars are often horrifically violent events, and we should understand that is one outcome of many should things truly fall apart.

I think Operation SERF is unique in a number of ways, all of which stem from Chris's deep knowledge of history, his unconventional skepticism of the status quo understanding of our situation and his experience in the U.S. Army on the ground in Iraq.

While on one level the book is entertaining, on another level it is a serious exploration of human nature, patterns of history and the political culture of our nation.

Chris has a deft descriptive touch, and the book reads like a multi-threaded mystery. If you start Chapter 1, I think you'll be hooked.

My own book Survival+: Structuring Prosperity for Yourself and the Nation, explains why devolution of the status quo is predictable and irreversible, and how we can create a new prosperity for ourselves and the nation.

While I am enthusiastic about the ideas presented in the book, I'll let others supply a bit of praise (ahem):

"I've been a big fan of Charles Hugh Smith's insights since the day I first stumbled across his Of Two Minds blog. InSurvival+, he sets out a thoughtful and provocative vision of our future that should not be missed." Michael J. Panzner, author of When Giants Fall and Financial Armageddon

"Charles Hugh Smith is the savviest blogger in the USA these strange days. Nobody puts out a consistently wiser, truer, better-written message, day after day, than CHS. His views on surviving the hardships we face in economy and society are of the highest value and could not be more timely or astute." James Howard Kunstler, author of The Long Emergency and World Made by Hand

"Charles Smith provides a balanced, thoughtful, and prescient view regarding the dilemmas facing our fragile economy. From the collapse in the housing market to the growing power of the banking sector, our economic landscape is changing. Mr. Smith’s credibility comes from years of work and unlike other prognosticators, he has been right. His illuminating arguments and insights provide readers a glimpse into the challenging world we will now enter." Dr. Housing Bubble

"Your book is truly a revolutionary act." Kenneth Robertson

OK, now that we got that over with--let's talk money. The exchange value of theSurvival+ book ($19.95) is approximately one meal for a family at a fast-food restaurant or two tickets to a first-run movie. The price of the ebook (downloadable) versions is $11.95 or about one standard cheese takeout pizza.

The exchange value of the Operation SERF book ($13.99) is equivalent to a single pizza with one topping, or a sandwich and drink at a downtown restaurant. The Kindle version ($7.99) is equivalent to two coffee drinks at Starbucks or a single matinee ticket to a movie.

Oddly enough, people seem to have no problem spending $10 or $20 on coffee or a fast-food meal or a 90-minute movie, but a $20 book is "too expensive." Say what? Is something that might change your understanding of our society and economy "too expensive" at a mere $20?

You don't need to wonder if the books are any good or if they're your cup of tea: you can read huge swaths of them for free right now on the Operation SERF home pageand the Survival+ home page. It doesn't get any easier than this.

Chris has a family to support; he's not rich. I am self-employed; neither of us are "fortunate son" trust-funders. We get a few bucks from the sale of each book. If you buy the books, you can pass them on to other readers when you're done with them. Heck, read them carefully (don't bend the spine) and you can wrap them up and give them as a gift come Christmas.

My buddy G.F.B. reckons my book will be perfect for swatting cockroaches in his kitchen. Talk about multi-purpose! What are you waiting for?

Permanent link: When Things Fall Apart

Get Survival+: Structuring Prosperity for Yourself and the Nation on amazon.com or in ebook and Kindle formats. A 20% discount is available from the publisher.

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We Are What We Do Every Day

Thoughts on the passing of my stock market mentor, Stewart Pillette.

My stock market mentor and former boss, Stewart J. Pillette, passed away late last month at the age of 71. I worked for Stew for only a year and a half, Spring 1997 to Autumn 1998, but in that brief period I learned a lot from him about the market and quantitative analysis and about being a good boss.

I titled this entry We Are What We Do Every Day because it is a simple but profound statement. Stew was positive every day, even when things were going badly. Being positive was what he did every day. He was enthusiastic about the market, his weekly golf and his family, and lived his mission credo: "Get it early, get it right and make a difference."

We had a complex technology-dependent system to maintain, and snafus were constant. Market data came in via a satellite feed into a Linux box, and various processing steps required DOS and Linux line commands. When it all worked, Stew would exclaim, "I love technology!" And when it fizzled, he would exclaim with equal force, "I hate technology!"

His family recounted that Stew had been drawn to the priesthood as a young man, but ended up choosing to be a stockbroker. He worked at Drexel and other big houses until he struck out on his own in his 50s.

His system was based on plotting the second derivative of the rate of change in stocks' price movements rather than massaging the prices themselves. This created charts similar to MACD (moving average convergence/divergence) in appearance.

One of my jobs was to assemble the data to backtest the system, which had never been done. (It was basically a two-person office at this time.) The system identified the change in trend correctly about 80% of the time-- about the best that any system can manage over the long-term. The other 20% of the signals failed, often because of some unexpected news which sank the stock.

Stew was the sort of boss who would surprise you with a bonus check for a $170 on a Friday after a long hard week, shake your hand and thank you for your work. That is how I discovered the power of gratitude and unpredictable bonuses.

As his son Justin noted at Stew's memorial service, Stew would disagree and defend his view, but in ways which always respected others.

I think Stew could have become a millionaire many times over with his system but by his own account he was an impulsive trader who was drawn to the goal of "hitting one out of the ballpark." We learn not just from others' best traits but also from their weaknesses, and since I share these traits with Stew--perhaps that was part of our bond--then becoming a disciplined trader is what I am striving to "do every day."

Stew loved the market and golf, and though I don't play golf it is my observation that the market and golf share the characteristic of being fundamentally impossible in the sense that there is no perfect golf game and no perfect trade. A good game and a good trade are satisfying; aiming for perfection in either guarantees disappointment.

Justin told a story at Stew's memorial service which encapsulated his daily approach to life. When it was storming outside and heavy rain pelted down, Stew would bundle his young son and daughter into rain slickers and take them outside to splash around in the puddles and glory in the rain and wind.

The typical parental approach, of course, would be to prevent the kids from going outside in such foul weather. Stew was an exceptional parent and Justin observed that many of his friends were jealous of his relationship with his Dad.

That is high praise indeed, and not something accomplished by occasional effort. It was what Stew did every day.

We miss you, Stew. You were a good man.

In memoriam: Stewart J. Pillette, 1938-2009.

Permanent link: We Are What We Do Every Day

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Is Oil "Cheap" When Priced in Euros or Gold?

Since fossil fuels are the essential commodity for modern civilization, reckoning their "cost" is critical.

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Fossil fuels can be regarded as "cheap" or costly, depending on the context.How much energy does it require to extract and process the oil and gas, and then clean up the toxic mess created by the extraction, processing and transport?

Yes, hydrocarbons are toxic. Perhaps that should be the initial context of calculating the "cost" of fossil fuels.

Frequent contributor Gene M. submitted this important article from Counterpunch.com: The Inflated Promise of Natural Gas (Counterpunch.com is asking readers for donations now lest they shrivel. I kicked in a few dollars, as we need an independent media so very desperately.)

It turns out the "happy story" presented in the mainstream media/propaganda stories listed here yesterday left out all the toxic bits of the "abundant cheap natural gas" bonanza. Here's a taste of what was not covered in the MSM:

Meanwhile, major fracturing-fluid manufacturers refuse to reveal their products’ ingredients. (Industry leader Halliburton maintains that to compel it to list the chemicals in its products would be an “unconstitutional taking” of its intellectual property.) Investigators have managed to identify many of compounds used in fluids, and many are toxic. Some, including benzene, formaldehyde, 1,4-dioxane, ethylene dioxide and nickel sulfate, are confirmed carcinogens.

The "happy story" is that the wells are miles deep and thus beyond ground water. But much of the water and chemicals pumped down a mile is returned to the surface and must be dealt with as industrial waste. So much for being "cheap."

Correspondent Daniel D. checked in with this eye-opening account:

Just read your post about oil and frac technology and thought I'd chime in with my two cents. In summer 2008 I was a student working for a woman in a McMansion neighborhood in the Dallas/Ft. Worth area. Ft. Worth (and much of Texas) is under the influence of natural gas co's who have recently developed a technique for drilling beneath urban areas. (We mounted a campaign to stop them from putting a well on the neighborhood's golf course and in the course of events discovered evidence indicating that some of the Homeowners' Association board members were probably on the take... But that's another story)

Back to your post: This stuff is anything but cheap OR safe. They have to buy mineral rights from every land-owner in an urban area or pay residents royalties -- not the same as dropping a pipe in a supergiant Saudi reserve. Neighborhoods caught on and learned that if they cooperated they could jack up their prices.

And the environmental damage is severe -- Parker County's water comes out of the tap ready to burn... videos on Youtube show news stories where the anchor lights a glass of tapwater on fire. As for the fraccing chemicals, they are conveniently labeled "proprietary" and so do not need to be disclosed to authorities. This stuff is not the way for us to go in the future, just an unnecessary extension of our energy past ...

Thank you, Gene and Daniel. The entire "natural gas is abundant, cheap and clean" story which is being hyped and propagated by the MSM is the purest propaganda, as it leaves out all the practical obstacles and the punishing costs of dealing with the toxins pumped out with the gas.

Just in straight money terms,let's extend our inquiry into the cost of oil by pricing it in non-U.S. dollar contexts: euros and gold. Frequent contributor B.C. generously provided this chart of oil priced in euros, adjusted for consumer price fluctuations (year 2000=100), plotted against the GDP of the Eurozone:

click on chart for a larger version in a new browser window

Strikingly, even when priced in euros, oil is rising in cost even as the Eurozone GDP languishes at recessionary levels. Many commentators believe that spikes in the cost of oil are the defining factors which trigger recessions. If this has any merit, we might ponder what effect the sharp rise in oil prices even in euros portends for the global economy.

I asked frequent contributor Harun I. for a chart of the oil/gold ratio, and he graciously submitted this chart:

click on chart for a larger version in a new browser window

Oil priced in dollars is in black, and the gold/oil ratio is in red. Many analysts state this ratio in terms of "one ounce of gold buys X barrels of oil."

When gold was around $300 an ounce and oil was about $15/barrel in the late 1990s, then one ounce of gold bought 20 barrels of oil. When oil spiked to $147/barrel and gold was approximately $900/oz, then one ounce of gold bought a mere 6 barrels of oil.

Now that gold is $1,090/oz and oil is about $80/barrel, then one ounce of gold buys about 13.5 barrels of oil--not much more than when oil was "cheap" in the 1990s.

In other words: as all currencies depreciate against gold, then the cost of oil priced in those currencies rises even as it remains constant when priced in gold. But like all commodities, gold and oil fluctuate in relative value as well.

So are oil and natural gas "cheap" or "expensive"? That depends on what they're priced in and who's paying the hidden costs of the vast industry which extracts, processes and transports these fossil fuels.

Lastly, we might place the value of gas and oil in this context: how much will we be willing to pay if and when they become scarce?

"Just remember... the 5th of November." Have a pleasant Guy Fawkes Day.

Permanent link: Is Oil "Cheap" When Priced in Euros or Gold?

iPod and iPhone owners: Read Survival+ on your iPod or iPhone by downloading the Kindle app and then buying the book from the Kindle store. Here's how.

Buy the complete Survival+ in print, ebook or Kindle ebook formats.
Expanded free eBook now available: HTML: Survival+: Structuring Prosperity for Yourself and the Nation PDF version (85,300 words, 136 pages): Survival+)

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Oil to $20/barrel or $200/barrel?

If the U.S. dollar strengthens and the global economy weakens as government stimulus runs dry, oil could plummet in a massive "head-fake" to $20/barrel.

Survival+ is now available on amazon.com.

Any discussion of the price of oil must factor in the relative value of the petro-dollar, a.k.a. the U.S. dollar. If the dollar plummets in value against other major currencies and gold, then oil could double in nominal price even as it remained constant when priced in other currencies or gold.

Setting aside speculative positions, the other major factor in pricing oil is supply and demand. Recently, a spate of mainstream media article have heralded massive increases in supply in natural gas and oil.

America's Natural Gas Revolution (WSJ.com)

Betting Big on a Boom in Natural Gas (BusinessWeek)

In summer 2008 the U.S. and much of the rest of the world were consumed by talk of peak oil and natural gas and fears that high fuel prices would persist forever. Today analysts still worry about the oil supply but far less about natural gas. U.S. gas producers, capitalizing on a technological breakthrough, have in recent years unlocked an enormous volume of natural gas in the shale rock under Colorado, Oklahoma, Pennsylvania, Texas, and other states.

According to a July report by the Colorado School of Mines, the U.S. now holds 1,800 trillion cubic feet of natural gas, one third of it in shale, the equivalent of some 320 billion barrels of oil. That's more than Saudi Arabia's 264 billion barrels.

Whew--now that we have more fossil fuel than Saudi Arabia, I guess we have nothing more to worry about. Uh, count me skeptical. The technological breakthough is calling "fraccing" for hydraulic fracturing, a technique which has been around for decades.

Basically, water is used to fracture rock or shale, enabling the gas to seep to extraction wells. Chemicals pumped down the wells can also enhance recovery.

All this sounds fabulous--except for the practicalities which are glossed over.How do you collect gas flowing into hundreds of widely spaced wells? With a network of pipes. That isn't quite as easy or cheap as dropping a pipe into a supergiant Saudi reserve. So how much will it cost to tap these giant reserves of gas and feed the gas into existing networks of transport?

Exactly what chemicals are used? How much do they cost to pump down and extract? How do you get the water to the hundreds of wellheads?

And perhaps most remarkably absent from the happy news--how much of this new natural gas production will simply be offsetting declines in other mature fields?

Similar advances in oil recovery technologies promise another 100 years of oil--or so we are told here: Another Century of Oil? Getting More from Current Reserves (Scientific American October 2009; subscription required to read entire article online; visit your local library to read it for free)

Forecasts that global oil production will soon start to decline and that most oil will be gone within a few decades may be overly pessimistic.

The author predicts that by 2030, thanks to advanced technologies, wells will be able to extract half of the oil known to be underground, up from the current average of 35 percent.

Together with new discoveries, the increased productivity could make oil last at least another century.

Once again, the article (written by a global oil company executive) is heavy on promise and glowing hype and short on costs. Is all this fancy recovery technology free? If not, then how much does it add to the extraction cost of each barrel?

All this seems to suggest something which these articles avoid mentioning: there may be more fossil fuel that is recoverable, but it will no longer be cheap. None of these articles addressed the possibility that all this "new" production will simply offset declining production elsewhere, which means global production would simply stay constant rather than increase to match rising demand.

Also left unsaid is the trivial amounts of oil and gas being recovered from aging fields by the costly new technologies. The example cited in the article is a large field in California that was expected to be depleted year ago which still produces 80,000 barrels a day. That is good news, to be sure, but the extraction only makes sense if oil is over $50 a barrel, and 80,000 barrels is a drop in the bucket of the 20 million barrels the U.S. uses each day.

It would take dozens of such vast fields to replace the sagging production from supergiant fields in Mexico, the North Sea and the Mideast.

With prices elevated to the $80/barrel level, constant supply (at high prices) has created a global glut in oil and natural gas--there are literally no storage facilities available to store more gas and oil. This suggests that if the global economy resumes its deflationary spiral down next year, then a grand imbalance between supply and dwindling demand might cause oil to crash in price--unless the U.S. dollar declined concurrently.

As readers know, I am expecting the dollar to actually rise, which would exert downward pressure on the price of oil (in dollars, of course).

Correspondent B.C. was kind enough to submit this chart and commentary.The chart displays the price of oil adjusted to the CPI (consumer price index) in which 1974=100. In other words, the price is in constant dollars, not nominal dollars; the chart removes inflation from the picture. Thus if today's dollar is worth 33 cents in 1974 dollars, then today's $3 a gallon gasoline would be $1 in 1974 dollars.

click on chart for a larger version in a new browser window

Adjusted for inflation, we see oil at its recent nadir in 1999 had returned to the price levels of the late 1960s. The cost spike created by the 1980 Iraq-Iran war was actually higher in real terms than the spike last year to $147/brl.

Here is B.C.'s commentary on how the dollar's rise or fall could drastically alter the price of oil.

US dollar (USD) and CPI constant, the nominal price of oil would need to fall back to the $40s to reach the CPI- and USD-adjusted level where recessions bottomed and new reflationary growth cycles commenced since the '90s.

However, were the USD to rally back to the earlier cyclical high or to par, for example, coincident with another deflationary episode, the nominal price of oil would have to fall to the low to mid-$30s, to as low as the low to mid-$20s, to reach the adjusted recession low since the '90s and before the early to mid-'70s.

That the nominal price of oil has generally tracked nominal trend GDP growth adjusted for the USD, all else equal, oil in the $20s would not surprise me over the next 1-5 years, especially if we see another deflationary scare and stock market crash and economic collapse in China-Asia.

Thank you, B.C. If the dollar strengthens substantially, as many of us expect in the short-term, then oil would drop in nominal price for U.S. residents and increase for those paying for oil in other currencies.

If deflation and global recession were to take hold--that is, if all the quantitiative easing and borrw-and-spend pump-priming fails to ignite "organic" (real) growth, then the price of oil could be hit with two deflators: the rise of the petro-dollar (USD) and a supply which greatly exceeds falling demand.

I illustrated this "head-fake" drop in prices before the final arrival of Peak Cheap Oil in 2008:

Many other observers are similarly alive to the possibility that oil could drop in nominal dollars to $20/barrel in a deflationary "head-fake" and then rise to $200/barrel once supply fell below demand and the dollar resumed its decline in purchasing power.

Frequent contributor Cheryl A. submitted an excellent interview with oil analyst Stoneleigh on the Automatic Earth blog. Stoneleigh suggested that oil could fall to $20 and then subsequently rise to $500 per barrel once demand exceeds supply.

What we need to keep in mind is the relative value in nominal dollars. If the dollar were to suddenly lose 2/3 of its value against gold and other currencies, oil would suddenly cost $200/barrel to U.S. residents even as it remained constant to those buying oil with other curencies.

Inversely, if the dollar were to strengthen, oil could fall in half when priced in U.S. dollars and skyrocket when priced in other currencies.

The main point is simple: tracking the price of oil in constant (adjusted) dollars illuminates the real cost of oil in purchasing power.

Permanent link: Oil to $20/barrel or $200/barrel?

Apple iPod and iPhone owners: There is an Amazon Kindle app for iPhone which enables you to view the Kindle ebook on your iPod or iPhone--I will try to post links to the app once I locate them.

Survival+ is now available on amazon.com.
Buy the complete Survival+ in print or ebook formats.
Expanded free eBook now available: HTML: Survival+: Structuring Prosperity for Yourself and the Nation PDF version (85,300 words, 136 pages): Survival+)

You can also find my work on AOL's Daily Finance and Seeking Alpha.

Of Two Minds is now available via Kindle: Of Two Minds blog-Kindle

Thank you, Susan M. ($5/month), for your exceedingly generous subscription to this site. I am greatly honored by your support and readership.

Read more...