Oil, Dollars, speculation, and Sprawl
- A quote:
> There has been a growing dollar glut in the world. Now, China andAnd a link:
> Saudi Arabia have no reason to either consume too much or to dump
> dollars wholesale; it would hurt them more than it would help them.
> Their willingness to park dollars in low interest rate treasuries
> is what keeps the whole system afloat. As long as there was no
> "gold window" in which those betting against the US currency could
> cash out, the federal deficit and trade deficit could seemingly
> float in mid-air.
> However, there is a gold window, or rather, a black gold
> window: oil. You see, oil is cheap compared to what you can do with
> it. Specifically, you can build houses farther out and speculate on
> real estate, and you can move production to cheaper areas and ship
> the goods. The bigger the difference between the price of oil and
> the profits from moving housing and production, the bigger the gap.