Real has a tendency to turn any topic into its bush's fault. My suggestion would be to ignor him and continue on with the topic at hand. He has no idea what a "Redneck" is he just used the term because he thought it sounded good, not knowing that a large portion of southern people consider themselves Redneck's and are proud of the fact.

 

The opening post of this thread is lamenting the fact that the dollar has lost a lot of value over the last 42 years. That is only a concern if you store your cash in a mattress for 42 years. If you invest it at a rate higher than inflation, you will build wealth.

A redneck is someone who stores all their extra cash in their mattress because they don't trust dem damn banks or dem gov'mint securities.

I did alright but it was a tough environment for an investor who is retired and not into highly speculative investments. That's because just about everything went down in value between 2001 and 2009. Gold was the notable exception and much of that gain was due to the dollar's steady slide. The Dollar Index (value of the dollar as measured against a basket of six freely traded foreign currencies) dropped at a rate not seen since the dollar was decoupled from gold by Nixon and stock indexes ended up lower than they started. That is very unusual over an 8-year period. Speculators and market timers can do well in that environment, investors generally do not. This was very good for the very wealthy, small investors such as myself struggled to eke out small returns that were eaten up by the devaluation of the dollar and inflation.

The Obama administration has stabilized the value of the dollar (it has actually been showing impressive strength since last November). When Bush was campaigning and the first few months after he was elected he was often touting his administrations "strong dollar policy". But it did not take the markets long to figure out this rhetoric was a head fake. Shortly after taking office in 2001 the dollar went from $120 and gradually slid to an all-time record low around $73 for most of 2008. It has not been that low since. As usual, the Bush administration was saying one thing (strong dollar policy) while doing the opposite (decimating the value of the U.S. dollar). This was very good for the Bush family's huge banking, finance and oil interests and very bad for the average American. By the end of 2008 the entire system was in chaos.

Fortunately, I did not suffer because I had less than 1% of my liquid assests in stocks and held no speculative real estate or mortgage securities. But I think I was far more fortunate than the average American my age. I am of an age and financial position in which it does not make a lot of sense to be in highly speculative positions and the financial system is still very fragile so I'm at a point in my financial life where I'm playing it safe with Treasuries and the like. But the short answer is that yes, I have done better in the first year of the Obama administration than all eight years of the Bush administration. But one year is not long enough to judge an administrations economic policies based upon returns. We will have to wait and see but one would require a vivid imagination to think it will not be better than the last administration.

But the real subject here is that gradual inflation is normal and not something to wring your hands over as long as the economy is healthy and vibrant and there are good places to put extra capital to work. The same cannot be said about a weak dollar when measured against other world currencies.

 

Shh, shhh, shhh. It's all Obama's fault, it's all his fault, LALALALALALA!

 

Only Real could turn a thread about the debasement of the dollar by the Federal Reserve into a political thread.

 

Ok, so not YOUR economists, but why do you put faith in what they say? Anybody that says gas should be around 10-20 cents, clearly doesn't fully understand oil recovery.

Speaking of oil recoverability, there are varying degree's of recoverability as I was trying to say. To put some numbers on it, in strong water drive reservoirs, in high permeability areas with high porosity, we can prodice 70-90% of the original oil in place using conventional recovery methods. The remaining 10-30% is not recoverable by any means. In formations like the Bakken (what they are drilling in ND) we are only capable of producing 20-50% of the original oil with conventional recovery even with the best fracs. A good portion of the remainder is able to be produced using enhanced recovery methods, but of course these cost a lot of money. So not only do these wells produce at a much slower rate, they require more money to produce.

So here is my (and a few of my professors, including a Phd in Pet Eng) reasoning on why we would still import most of our oil. As stated above, wells in "tight" formations produce at slower rates. Even if we drilled at the fastest rate possible with all our equipment it would be VERY unlikely we'd be able to fully keep up with US demand. Wells in tight formations also require more work/money to recover comparable amounts of oil.
These wells are still profitable, but not as much. Fortunately, we know these reservoirs very well and are easily predicted. They are kind of a safety net to some of the higher risk gambles oil companies make. But these higher risk gambles (like many offshore areas) are generally much more profitable when they do come in as producers.
Now to the Gulf. No one is drilling "our" oil. All the drilling that was referred to is being done in international waters, which is why the US can't stop a foreign country from drilling there. They do however prevent companies that operate in the US from drilling there because of the environmentalists. I agree it makes more sense for us to be drilling there, but not much we can do. Also we are drilling in the Gulf in our waters and in international waters, there are just a few areas that the gov't said are off limits.

 

There are just a few areas that are off limits is not true. Look it up.

I'm impressed you talked with your "professors". But your "professors" fail to give the true reasons why we are not drilling in ANWR and other areas in Alaska, the Gulf (China is, and it's not just because it is in international waters. Environmentalists and many Congressmen do not want us there) , N. Dakota, more exploration in Texas. Even Israel has just discovered large amounts of oil that we could easily purchase from that tiny nation that is a staunch ally.

Truth is, we buy most of our oil from nations that are only friendly as long as the money pours in, this is not debatable. It is a pure fact. Even Saudi Arabia, which produced the majority of the 9/11 hi-jackers, is only our friend because it benefits them financially.

I never once said that we could 'totally' supply ourselves. But when we import approximately 75% of our oil, it compromises national security and confiscates the wealth of our citizens through higher prices at the pump.

Read this story about Jeb Bush. We are getting it from both sides. Your professors are telling half-truths based on old information. We have "the most strict oil production regulations in the world."

http://www.foxnews.com/story/0,2933,193292,00.html

 

Shifting to the oil topic:

This is why I believe that we need to start investing more into ethanol production.

http://news.cnet.com/8301-11128_3-9966867-54.html

Algea ethanol, IMO might be the future. Engines that are built specifically for ethanol, yield more power and mileage than gas engines. No more dependence on foreign oil.

 

Ethanol would be a good idea, but it drives up the costs of food since corn is used in many products, even sodas.

 

I have looked up the areas where we can't drill offshore, I worked for a company doing offshore exploration. I say it really isn't that much, you think otherwise. Good for you, I still say its not much.

Now I am a bit confused, you say they aren't telling me the "true" reasons we aren't drilling in ANWAR, etc. Never did I claim it was anything other than environmentalists, or am I missing something? Also in that statement you implied we are not drilling in ND or doing further exploration in TX. Neither of which is even remotely true. The closest to truth is we aren't drilling as fast as we'd like in ND but the sole reason for that is a lack of manpower. Its funny that the unemployment rate is 10% or so and companies like Nabors drilling can't hire people fast enough in ND. My hometown, Williston for which the Williston Oil Basin was named, is only 12-13000 people and Nabors alone is trying to hire over 120 people today. Last time I was there they were starting at $28/hour. And that's just one company. Now for TX, or the other hotspot in oil and (especially) gas exploration. The company that I've been working for most recently has several teams consisting of 7-8 engineers, 2-3 geologists, land men, and others dedicated to Texas exploration. But that was only in our Denver office, I'm sure the Dallas office (1500 employees)isn't looking into any of that either. Gas is rediculously strong in Texas now despite the low price.

 

http://housingdoom.com/2010/02/04/is...ce-cream-cone/

 

I didn't mean to imply we weren't drilling at all in ND. I should've stated we needed more drilling there on a larger scale. My mistake.

The long and the short of this problem is that we do not drill more in the US because of ridiculous environmental regulations that other countries laugh at.

 

You are very naive to believe the subject matter (Federal Reserve) is not political.

Heck, you made the thread even more political in the very first post by writing:

To write that (and then accuse me of turning it political) is disingenuous at best and illustrates how people like you care are more about spin than the truth.

 

Wow. Ron Paul is one of the few in Congress who has the guts to take on the Fed. Everyone on this board knows you spin things Real. Please just go away and find a truly political thread. This one is about the destruction of the dollar since 1913.

 

Not corn ethanol, algea ethanol. Just set up a bunch of growing areas in the middle of the desert. It only effects the algea market.

 

You can't handle the truth!

Keep living in your dream world where the Federal Reserve and the value of the United States currency is not political! You sure can dish out your political theories but you can't handle it when someone brings a few facts to the table.

Debates on the function and utility of a central bank are old and have been hashed out many times. There will never be concensus on this but your view is in the fringe minority and has been for many years. There are more important things in life to get angry about.