[quote=partypup]”Bernanke has completely lost control. The Fed is now at the mercy of the purchasers of our debt. And he won’t be able to restrain interest rates for long. So I believe we will be slipping into the extremis state within the next twelve (12) months, if not sooner. At that point I would expect exporters to begin requiring many more dollars for products sold to the U.S., and in the case of hard assets with higher *real* value (such as oil), dollars may not be accepted at all, and this is already the case with at least one OPEC country (Iran) that has recently decided that the greenback — no matter how many they receive — is simply too worthless to purchase their oil. Venezuela will probably follow suit, as Iran is putting pressure on other OPEC countries to ditch the dollar altogether. I wouldn’t expect this to happen overnight, but when the dollar collapse begins in earnest I wouldn’t count on being able to find $2.59 gas. Think more along the lines of $5.”
[quote=patientrenter]partypup, I assume you make these posts to entertain yourself. But if you are trying to figure out what’s most likely to happen, then your comment about the OPEC countries not taking any number of dollars in return for giving us their oil doesn’t fit with your conclusion that oil will be at $5. If people accept $5 in return for a gallon of gasoline, then that means oil exporters will accept dollars too. They may just want more of them.[/quote]
Sorry, I should have been more clear in my post. OPEC controls most (78%) but not all of the world’s oil reserves. So it’s entirely possible for (a) OPEC not to accept dollars and (b) for the U.S. to continue to purchase oil with dollars elsewhere (the U.S. has a share of the non-OPEC reserves, and I think Canada and Mexico would be hard-pressed not to sell to us). Obviously, the price would reflect the drastically reduced supply of available oil. So in fact, $5/gallon would probably be on the low side. But the bottom line is that it is extremely likely at some point in the not-so-distant future that global acceptance of the dollar will fall dramatically, and that will have unimaginable repercussions here for all of us.
[quote=patientrenter]There’s a difference between a 30% or even 50% devaluation of a currency and its complete collapse. One is Bladerunner, the other is Mad Max.[/quote]
I don’t see how “Bladerunner” represents a world with a dollar reduced by one-third, but I also don’t see our future neatly following one of two commercial films. But if you are trying to figure out which movie we will most likely be watching 5 years from now, I think it will end up borrowing bits and pieces of “Bladerunner” and “Mad Max”, with a few frames from “Minority Report” and “Children of Men” tossed in for good measure.
