Economist says 'Don't worry, be happy'

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Tuesday, December 11, 2007
By Yokota Fritz


Dr.Thomas Palley is a Yale educated published economist. I'm just a guy who blogs about bikes. He's evidently a smart guy, but I think Palley misses the point in his essay in Foreign Policy in which he reassures investors that the U.S. dollar will remain the reserve currency of choice around the world. In spite of a growing chorus of doubt around the world on the value of the dollar, Palley tells us that the falling dollar is merely a correction rather than a symptom of something fundamental about the world economy. Here's what he writes: I think every nation that depends heavily on imported oil has significant economic challenges, and these challenges are coming sooner rather than later. The mother of all paradigm shifts will soon be on us, but with increased awareness of our reliance on a scarce resource I'm hopeful we can rise to the challenge to soften the landing.

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You are dead on the money. Our economic basis has been the petro-dollar for decades. Schoolkids who were paying attention in the 1960s were being taught that oil was running out. That means someone realized it even then. But people only respond to a crisis, and then only long enough to be able to get back to rationalizing their way out of meaningful, long-term change.
 
Yep. U.S. peak production was in the early 70s, but then foreign production came online and made up the difference. This seemingly discredited the "Peak Oil Theory" to many many people. We'll always find more!

Maybe we will. Oil companies continue scouring the world for new fields, but the returns our diminishing.
 
Hey, if you combine this post with that post, what happens to the US dollar? Gah, now I'm going spend the rest of the evening trying to invent a hopelessly uninformed radical new economic theory.
 
It's all connected. The result is hyperinflation in the U.S. in the short term.
 
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