Economics

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Kevin Solway
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Economics

Post by Kevin Solway » Wed Jan 11, 2006 1:43 pm

I was looking up information on how governments simply print more money when they need it - including developed countries - and found the following web page:

http://ask.metafilter.com/mefi/22819

It isn't philosophy as such, but it is mentally stimulating, is quite funny, and is a good lesson in economics.

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Post by LooF » Wed Jan 11, 2006 7:06 pm

huh?

do you believe he is right?

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Post by Kevin Solway » Wed Jan 11, 2006 8:28 pm

LooF wrote:do you believe he is right?
I agree more with the respondents. Printing more money to create wealth is crazy. But the US is doing it right now. Every country does it.

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Jamesh
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Post by Jamesh » Thu Jan 12, 2006 10:59 am

My guess is that it is probably not crazy if productivity gains eat up much of the inflationary potential. A loose money supply fosters development as it allows more folk to have access to resources. Naturally if it is too loose then waste will be the result. It isn't good if they print money that mainly is used for consumption, and most western societies seem to be doing this (even the Iraq war could be considered as consumption, kind of like a substitute tax).

I haven't got a clue about economics - never was able to see how everything fits together.

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Economics

Post by DHodges » Fri Jan 13, 2006 1:37 am

I work in the financial services industry, so I may be able to give you some answers, although certainly I am not an expert. If you understand supply and demand curves, you understand a great deal of what there is to understand in economics. Supply and demand of limited resources is the essence of what economics is about.


Money can be understood as a commodity, like any other commodity. There is a supply of money, and there is a certain demand.

What happens when you increase the money supply is exactly what happens when you increase the supply of any other commodity, and depends on corresponding supply and demand curves, which means that it depends on the elasticity of the supply and demand for that particular commodity.

What gives money its value as a commodity is the expectation - the confidence - that you can exchange it for other goods. If you suddenly print up a bunch more of it, this directly impacts the perception of how that currency is being handled. One thing that is highly prised in the financial world is stability and predictibility. It has a real value, especially in a currency, which has no intrinsic value. It trades on the expection that it will hold its value. The business world would much prefer that the currency is not being manipulated.

Outside the country, the demand for a specific currency is generally pretty elastic, because in an international market you can easily trade yen for dollars, or pesos for lira. If a country has a large preceived inflation rate, then that will tend to make other, more stable currencies more attractive. A high inflation rate means that you expect that currency to lose value over time - it will be worth less tomorrow than it is today, relative to other currencies and relative to other goods.

But some countries peg the value of their currency to the value of some other currency by fiat. Let's say I am king of Hodgsylvania, and I decree an official, fixed exchange rate of, lets say for simplicity, one H-peso equals one dollar, and that works fine for a while, possibly a very long time.

What happens if I then suddenly print up a bunch more H-pesos? Let's say I double the number of them. If I did not have my currency tied to the dollar, in the short term I would have created a bunch of money to spend - but in the longer term the value of the H-peso would decrease, and probably trade around 2 H-pesos to the dollar.

But having done that, I have also created the expection that it's the sort of thing I might be expected to do again, and that uncertainty will decrease the value of the H-peso. I have put some additional risk into holding H-pesos (relative to holding some other commodity or financial instrument), and risk has associated with it a cost - it reduces the value of that thing.

Ah, but being king, I have decreed that the H-peso is worth a dollar! Which means somewhere, people have to be able to trade in their H-pesos and get a dollar for it. But with the propped-up, artificial price of the H-peso, people will want to do that. Eventually, to maintain the currency at that exchange rate, I will have to buy back the H-pesos I have printed up. If I want to maintain my currency, I must treat the created money as a loan that must be paid back.

If I don't do that, then a black market will open in trading H-pesos. As king, I can declare that illegal and clamp down on it, but this will have an effect on the business world as well, which prefers open markets without this sort of tampering going on. In an extreme case, the currency may be abandoned altogether, and the businessmen of Hodgsylvania will no longer exchange things denominated in H-pesos, but will make agreements and payments in dollars, which is not being manipulated. The H-peso becomes worthless. The people of my country, and anywone else who is holding my currency, have been screwed.

You can see how this whole process would work in theory in terms of supply and demand curves, and you can also see how it has happened historically in various countries that have screwed around with their currencies. See, for instance, http://www2.sjsu.edu/faculty/watkins/hyper.htm

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Re: Economics

Post by Rhett » Sat Jan 14, 2006 1:27 pm

.

I once heard that a basic structure of most financial markets, that being that interest can be earned and that greater quantities of wealth attract higher rates of interest, means that the rich will get richer and the poor will remain poor. Thus there will be an ever-expanding gap under the present system.

I also heard that this can be counteracted by the government giving interest free loans to poor people, and that this was being trialled in Bolivia or Brazil i think.

.

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Post by LooF » Sat Jan 14, 2006 6:55 pm

yea, but old money dissappear over time

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Re: Economics

Post by Kevin Solway » Sat Jan 14, 2006 8:39 pm

Rhett Hamilton wrote:I once heard that a basic structure of most financial markets, that being that interest can be earned and that greater quantities of wealth attract higher rates of interest, means that the rich will get richer and the poor will remain poor.
That's basically because you need money to make money. The more money you have, the more opportunities you have to make money, and the better you can absorb downturns, and insure yourself against losses.
I also heard that this can be counteracted by the government giving interest free loans to poor people
Yes, but let's say the government can earn 20% by investing in, say, shares, but only gets back, say, 5% by investing in its poor people (from future taxes, well-being of the population, etc), then the richer taxpayers will be footing the bill. That would be a case of taking from the rich to give to the poor.

I'm amazed that all these financial systems work at all. Very possibly, one day, they won't.

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Post by avidaloca » Sat Jan 14, 2006 9:38 pm

The big news in Australia at the moment is that single, childless, low-income earners are paying massive amounts of tax compared to families with children: $9,000/year tax for a single person earning $30,000/year while a family on $53,000/year pays literally no tax after the family tax benefit and other concessions.

So the government is forcing those who don't partake in child rearing to foot the bill for those who do. The underlying agenda is to reward those who participate in the machinery of topping up the flagging population rate. There is also no doubt an ideological bent in that the government doesn't want singles to have it too good or they might be more inclined to forgoe family life, meaning trouble finding taxpayers in the future for all the pensioners. Effectively though it comes down to single low-income earners not being part of the club and so not getting the perks from it.

Singles, childless overburdened with tax

SINGLE people and childless couples on low and middle incomes face a growing tax burden that must be addressed in the federal Budget, Labor said.

Treasurer Peter Costello favours increased family payments for families earning up to $50,000 a year in the May budget, but Dr Emerson said that did not address the problems faced by people without children.

"They are John Howard's battlers, but the Howard battlers have become the forgotten people – the Government has forgotten to give them a tax cut," he said.

"The only tax cut they will have had between 2001 and 2008 is the $4 a week tax cut that (Immigration Minister) Amanda Vanstone described as the sandwich and milkshake tax cut.

"With a projected surplus of at least $12 billion, the Government is going to provide some sort of tax cut, but what they're talking about is an increase in family payments," he said.

"Labor strongly supports family payments for lower and middle income families, but the truth is the Government is making family payments to millionaire couples and is getting the money from single people and couples without children who are on lower to middle incomes.

The research commissioned by Dr Emerson shows that a single person with a 2001 salary of $30,000 would pay an extra $25 a week after bracket creep by 2008, while someone earning $50,000 would pay an extra $49.

However, a family earning $50,000 effectively pays no tax after family tax benefits are taken into account.

The Nationals this week called for the top personal tax rate to be cut to 35 per cent instead of increasing family payments.

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Post by Kevin Solway » Sun Jan 15, 2006 12:43 am

avidaloca wrote:Single, childless, low-income earners are paying massive amounts of tax compared to families with children: $9,000/year tax for a single person earning $30,000/year while a family on $53,000/year pays literally no tax
These low income single people are in reality being parents to the children in a very real way whether they like it or not. They pay the bills of parents, but don't have any rights as parents.

Interestingly those families earning $53,000/year, paying no tax and being supported by low-income single people, often put down others as bludging off the system.

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Post by Leyla Shen » Sun Jan 15, 2006 3:41 am

Whilst it is true that there are considerable tax breaks and concessions for families, I don't know where you get your figures from.

It's my understanding that a single on $30k/pa would be paying around $5,170/pa tax. $2,650 (in 05/06 that reduces to $2,340) odd on the first $21,600, and 30c in the dollar for each dollar of the balance, which (in this case) is 30c X $8,400/pa = $2,520.

Either you're out by around $3,830/pa, or I'm missing some information.

Not to mention how GST affects families at the cash register on a weekly basis...

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Post by avidaloca » Sun Jan 15, 2006 10:14 am

$9,720 is over two years - click the article title to see it.

Singles 'pay' for family tax relief
From: By Elizabeth Colman
January 14, 2006

A NATIONAL underclass of single low-income earners will pay for Peter Costello's tax relief for families at the May budget as poor and middle-income workers face a growing tax burden despite the budget surplus windfall.

Families earning up to $50,000 a year, who pay no net tax after receiving family benefits, have again been earmarked for federal government help in the form of tax relief and other family assistance payments.

But research commissioned by the Opposition shows a single worker on $30,000 will pay $9720 total tax in the next two years, while a family earning $53,000 effectively pays nothing.

A week after the Treasurer pledged to give a "helping hand" to families earning between $40,000 and $50,000 a year, The Weekend Australian can reveal single and childless taxpayers in the same and lower income tax brackets face a rising tax burden in the next two years as wage rises to match inflation push them into higher tax brackets.

Labourers, hairdressers, cleaners and clerks - among other low-income workers - will pay up to $45 a week more tax by 2008 through so-called bracket creep alone, without including any real wage increases.

A single worker or childless couple on $50,000 a year will pay $50 a week more tax in the next two years through bracket creep, research commissioned by Labor MP Craig Emerson from the Parliamentary Library shows.

Younger, poorer singles earning less than $52,000 a year - a group that traditionally lacks a tertiary degree and that doesn't own a home or have children - have received minimal tax relief since 2000.

The group includes young married couples trying to save for their own home. They have missed out on substantial tax cuts since measures were introduced to compensate for the launch of the GST.

If they are given no assistance in the May budget they will have received only an average of $4 a week - the so-called sandwich-and-milkshake tax cut - since 2000.

In contrast, a couple with two children aged under 13 and who receive rental assistance will pay no net tax until their income reaches $53,293 a year.

Dr Emerson - who supports giving family tax benefits to low- and middle-income families - said the figures revealed the exploding welfare state was being paid for by single low- and middle-income earners.

"A decade from now taxpayers will have to cough up an extra $27 billion ... to feed the ravenous welfare monster created by the Howard Government," Dr Emerson said. "It's only a matter of time before taxpayers without children organise a tax revolt."

The Government claims these people are being compensated through the $14 billion family payments system. Mr Costello has foreshadowed further increases in family payments as part tax relief for these people in the forthcoming budget.

Mr Costello is under increasing pressure from the Opposition, business and a ginger group of Coalition MPs to use an $11.5billion budget surplus in 2005-06 for more fundamental tax reform.

Growing government expenditure on family welfare payments has been targeted by reform advocates as a possible source of funding for an overhaul of the personal income tax system.

Institute for Private Enterprise director and former Treasury deputy secretary Des Moore said yesterday there was a "serious churning problem with the present tax and welfare arrangements".

"Nearly half the taxes paid by households with incomes in the top two quintiles are paid back to them as benefits," he said. "Indeed, those households receive some 30 per cent of such benefits.

"The reason why Treasurer Costello and his colleagues do nothing about it is simple: it provides a way of buying votes. Until Australia gets a leading politician with the courage to expose and tackle the dysfunctionality of present arrangements, we remain landed with taxes and welfare payments that are much higher than they should be."

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Re: Economics

Post by Rhett » Sun Jan 15, 2006 10:46 am

Rhett: I once heard that a basic structure of most financial markets, that being that interest can be earned and that greater quantities of wealth attract higher rates of interest, means that the rich will get richer and the poor will remain poor.

Kevin: that's basically because you need money to make money. The more money you have, the more opportunities you have to make money, and the better you can absorb downturns, and insure yourself against losses.
Yes, you need money to start with for it to make you money. Makes sense.


Rhett: I also heard that this can be counteracted by the government giving interest free loans to poor people.

Kevin: Yes, but let's say the government can earn 20% by investing in, say, shares, but only gets back, say, 5% by investing in its poor people (from future taxes, well-being of the population, etc), then the richer taxpayers will be footing the bill. That would be a case of taking from the rich to give to the poor.
By your analysis we should provide a return to each taxpayer proportionate to their taxes paid. Do you think this is occurring? Where is the current balance? It's a very complex judgement to make. Consider that addressing gross wealth and opportunity inequalities reduces crime of the rich.

I think i'd prefer a system that rewards people in proportion to how much benefit they provide to society.

I'm amazed that all these financial systems work at all. Very possibly, one day, they won't.
Whilst i'm quite open to serious failures in future, i can also see that these systems have developed so much complexity and so many safeguards they can steer a course through almost anything. They're like an organism that is constantly tending it's wounds and adapting to new circumstance.

.

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Re: Economics

Post by Kevin Solway » Sun Jan 15, 2006 2:43 pm

Rhett Hamilton wrote:It's a very complex judgement to make. Consider that addressing gross wealth and opportunity inequalities reduces crime of the rich.
Yes, it's very complex and hard to evaluate. There's an element of holding the rich to ransom: "Pay up, or we'll steal what you have". So the rich have no choice but to pay. Sometimes they are willing to pay for humanitarian reasons.
I think i'd prefer a system that rewards people in proportion to how much benefit they provide to society.
Certainly. In that case we thinkers would probably be earning more than anyone else.

I'm amazed that all these financial systems work at all. Very possibly, one day, they won't.
Whilst i'm quite open to serious failures in future, i can also see that these systems have developed so much complexity and so many safeguards they can steer a course through almost anything. They're like an organism that is constantly tending it's wounds and adapting to new circumstance.
Yes, economies are surprisingly resilient. But I think one day everyone will be shocked by just how fragile economies can all be. Perhaps that'll happen when some crucial natural resource, like oil, runs out.

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Post by avidaloca » Sun Jan 15, 2006 3:33 pm

shocked by just how fragile economies can all be. Perhaps that'll happen when some crucial natural resource, like oil, runs out.
When the traditional supplies of oil start waning (Middle East, North Sea) it actually has the reverse effect on supplies. Previously uneconomical oil regions like Central Asia (Russia, Kazakhstan, Uzbekistan) now become viable. Although that oil is more expensive to extract and freight, there is a lot of it, and it will definitely reduce oil prices as the glut ensues.

While more regions are opening up, investment in alternative energies and hybrid or high-efficiency vehicles is accelerated massively, so that within a few decades the level of oil dependency could be reduced to the point where it isn't even essential for most uses.

It's crazy to think that one day the world will just run out of oil and be left high and dry. There are too many alternative energy sources and long-range indicators to warn of that before it happens.

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Post by Kevin Solway » Sun Jan 15, 2006 6:47 pm

When the traditional supplies of oil start waning (Middle East, North Sea) it actually has the reverse effect on supplies. Previously uneconomical oil regions like Central Asia (Russia, Kazakhstan, Uzbekistan) now become viable. Although that oil is more expensive to extract and freight, there is a lot of it, and it will definitely reduce oil prices as the glut ensues.


Since it is more expensive to extract and freight, I doubt that it will reduce oil prices. But it depends what price oil already is. If oil costs $300 per barrel, it might reduce oil prices.
While more regions are opening up, investment in alternative energies and hybrid or high-efficiency vehicles is accelerated massively, so that within a few decades the level of oil dependency could be reduced to the point where it isn't even essential for most uses.


In an ideal world it will be an easy transition. But oil is a cheap source of energy (since we aren't paying the full cost, in terms of environmental damage, etc). Alternative energies might be a lot more expensive than oil. Perhaps only millionaires will be able to afford it. That will have a big impact on the economy. The price of food will also rise dramatically, since it depends on transport costs.
It's crazy to think that one day the world will just run out of oil and be left high and dry. There are too many alternative energy sources and long-range indicators to warn of that before it happens.
There is a finite amount of oil, and some experts think we have already exhausted most of it. Oil is used for a lot more than energy and transport. It is also used to create things like plastics and fabrics. As far as I know there is no alternative to oil for creating plastic.

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Post by Lennyrizzo » Sun Jan 15, 2006 7:30 pm

I think the most serious consequence of depleting the worlds oil fields is far removed from man's consciousness at this time. I don't see anyone talking about a potential irreversible inbalance to the planet itself, the possibility of disturbing the status quo so severely that all hell breaks loose here on the surface. We're already beginning to see big changes, such as the increased intensity of storms, more earthquakes.
Just seems to me the oil is there below us for a reason, and that reason is not to satisfy our energy needs. Pumping it all out is probably going to have a huge impact, most likely bad for us.
Is anyone aware of any discussion of this subject, or any predictions? I can't believe no one on my tv or newspapers or magazines has had the balls to mention it.

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Post by Kevin Solway » Sun Jan 15, 2006 7:47 pm

Lennyrizzo wrote:Is anyone aware of any discussion of this subject, or any predictions? I can't believe no one on my tv or newspapers or magazines has had the balls to mention it.
I saw a documentary recently that had some experts saying that in their view there is a lot less oil available than is officially reported. This is because those who own oil in the middle east won't let anyone from outside see how they arrived at their estimates of how much oil they have. It is thought that the estimates are exaggerated, perhaps to discourage the development of alternative energy sources.

Once those oil-countries run out of oil, they will probably go broke.

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Post by avidaloca » Sun Jan 15, 2006 9:30 pm

The reason its expensive to extract and freight is due to initial setup costs to account for things like more overland transport, deeper drilling and establishing wells. Once those costs are paid the cost of extracting it will be the same if the scale is large enough. It's only "expensive" now relative to the Middle East and other long-established oil-rich regions.

You have to bear in mind that the Community of Independent States (CIS) which is Russia and its former socialist republics, makes up 1/6th of the land area of the entire earth. Russia is already the world's 4th or 5th largest oil exporter, with only the bare minimum of oil sources being tapped.

Once the Middle East runs out of oil, there will be plenty of investment worldwide in hydrogen powered vehicles, wind and solar power, natural fuels and other energy sources. This is already happening now. This process will be long and give plenty of time for competing and increasingly economically viable alternatives to arise. The only reason oil is so successful now is because it is the cheapest, but we are already seeing that end with record crude oil prices, so the shift is already on the way.

Also there are fully biodegradable plasticscreated from biological (bacterial engineering) processes (i.e. corn sugar).
But it depends what price oil already is. If oil costs $300 per barrel, it might reduce oil prices.
It's all supply and demand. If there's enough oil produced and the demand remains, the price falls, because it can't be stockpiled ad infinitum, it would cost too much to warehouse it all.

It's the same with renting housing. If there were 10,000 potential renters and 12,000 rental properties, the prices would fall because 2,000 properties would always be vacant.

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Re: Economics

Post by Rhett » Mon Jan 16, 2006 8:40 am

.
Rhett: It's a very complex judgement to make. Consider that addressing gross wealth and opportunity inequalities reduces crime of the rich.

Kevin: Yes, it's very complex and hard to evaluate. There's an element of holding the rich to ransom: "Pay up, or we'll steal what you have". So the rich have no choice but to pay. Sometimes they are willing to pay for humanitarian reasons.
I see another element counteracting that point. A poor person may do a hard days work 6 days per week, providing the resources for themselves as well as the rich.


Rhett: I think i'd prefer a system that rewards people in proportion to how much benefit they provide to society.

Kevin: Certainly. In that case we thinkers would probably be earning more than anyone else.
Bucketloads more. And not being interesting in squandering it on shiny things we'd turn most of it back into the system, generating even more thinking.


Kevin: I'm amazed that all these financial systems work at all. Very possibly, one day, they won't.

Rhett: Whilst i'm quite open to serious failures in future, i can also see that these systems have developed so much complexity and so many safeguards they can steer a course through almost anything. They're like an organism that is constantly tending it's wounds and adapting to new circumstance.

Kevin: Yes, economies are surprisingly resilient. But I think one day everyone will be shocked by just how fragile economies can all be. Perhaps that'll happen when some crucial natural resource, like oil, runs out.
Oil will never run out. It's price will simply rise in proportion to it's scarcity. It may one day be worth more than diamonds.

.

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Post by Rhett » Mon Jan 16, 2006 8:46 am

.
avidaloca wrote:It's crazy to think that one day the world will just run out of oil and be left high and dry. There are too many alternative energy sources and long-range indicators to warn of that before it happens.
It may be that global warming will be a problem to the foundations of financial markets before oil scarcity gets a chance.

.

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Post by Rhett » Mon Jan 16, 2006 9:16 am

.
Avidaloca: While more regions are opening up, investment in alternative energies and hybrid or high-efficiency vehicles is accelerated massively, so that within a few decades the level of oil dependency could be reduced to the point where it isn't even essential for most uses.

Kevin: In an ideal world it will be an easy transition. But oil is a cheap source of energy (since we aren't paying the full cost, in terms of environmental damage, etc). Alternative energies might be a lot more expensive than oil. Perhaps only millionaires will be able to afford it. That will have a big impact on the economy. The price of food will also rise dramatically, since it depends on transport costs.
It's important to recognise, and i haven't heard this said in recent time in respect to such discussions, that humans are currently still squandering oil. To give some examples; people currently go on jet-boat rides on Sydney Harbour, a very consumptive way to get water blasted in your face. And before i left Sydney i started seeing trucks being driven around purely for advertising purposes, often three in a line. As if there aren't enough trucks running around with advertising space as it is. The rich there don't care, their mums drive their kids to school with turbocharged V8 4wd's that use twice as much fuel as a conventional car.

It's important to recognise how little consciousness there is about the place, and how much that level determines our collective capacity to adapt. People could easily cut their usage in half without affecting the provision of basic needs. This would slow down the rate of global warming and air pollution. It would also double the life of remaining oil reserves, but if we use them all then global warming will likely stuff us.


Avidaloca: It's crazy to think that one day the world will just run out of oil and be left high and dry. There are too many alternative energy sources and long-range indicators to warn of that before it happens.

Kevin: There is a finite amount of oil, and some experts think we have already exhausted most of it. Oil is used for a lot more than energy and transport. It is also used to create things like plastics and fabrics. As far as I know there is no alternative to oil for creating plastic.
Our survival and health is determined by how quickly we can adapt.

There are alternative renewable sources for oil, such as canola, but if we get to a point of needing to use them then we've probably already heated ourselves up to much and there may not be much scope for a future.


.

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Post by Rhett » Mon Jan 16, 2006 9:30 am

.
ksolway wrote:I saw a documentary recently that had some experts saying that in their view there is a lot less oil available than is officially reported. This is because those who own oil in the middle east won't let anyone from outside see how they arrived at their estimates of how much oil they have. It is thought that the estimates are exaggerated, perhaps to discourage the development of alternative energy sources.

Once those oil-countries run out of oil, they will probably go broke.
If they are downplaying their reserves i find it tenable that the arab moguls are just predicting how long they have to live, and playing the markets to suit, maximising their wealth in their life. From what i've seen they're more interested in having a garage full of Mercedes each painted a colour of the rainbow than tending to the future of humanity. Their culture hasn't evolved in concert with their rapid increase in free time.

They might even be silly enough to extract the last drops and miss out on the windfall of future high prices.

.

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wil Earth crack apart or implode?

Post by Lennyrizzo » Wed Jan 18, 2006 3:07 am

Lennyrizzo wrote:
Is anyone aware of any discussion of this subject, or any predictions? I can't believe no one on my tv or newspapers or magazines has had the balls to mention it.

ksolway:
I saw a documentary recently that had some experts saying that in their view there is a lot less oil available than is officially reported. This is because those who own oil in the middle east won't let anyone from outside see how they arrived at their estimates of how much oil they have. It is thought that the estimates are exaggerated, perhaps to discourage the development of alternative energy sources.

Once those oil-countries run out of oil, they will probably go broke.
_________________
OK, but not my point.
Perhaps the best way to predict the impact to Earth (of pumping out all/most of the oil and gas), is to build, with all we know thus far about the make-up of the planet, an actual working model. Then you suck out the liquid content, give it a spin, and see what happens!

Personally, I have a gnawing feeling that we're in for some serious stability problems, that we're on the way to destroying the planet as we know it, all things taken together, though removing the oil (and ensuing effects) in and of itself may be all that it takes.

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Re: wil Earth crack apart or implode?

Post by Kevin Solway » Wed Jan 18, 2006 11:18 am

Lennyrizzo wrote:Personally, I have a gnawing feeling that we're in for some serious stability problems, that we're on the way to destroying the planet as we know it, all things taken together, though removing the oil (and ensuing effects) in and of itself may be all that it takes.
I think the most common way of extracting the oil is pump water underground, to where the oil is. Since oil floats, it is concentrated on top of the water.

So the oil is basically being replaced by water. Who knows what the long-term effects will be?

As the oil reserves are diminished, less and less oil can be pumped out. For example, in Western Australia, there are oil wells where 99% of what they pump from the well is water, and only 1% of it is oil.

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