Text 23675, 253 rader
Skriven 2006-10-09 17:10:00 av Jeff Binkley (1:226/600)
Ärende: Steve Forbes
====================
http://www.forbes.com/forbes/2006/1016/023.html
Fact and Comment
Powerful Antiterror Weapon-Unused
Steve Forbes, 10.16.06, 12:00 AM ET
We have a powerful weapon we could wield against Islamic fanaticism but
won't: gold.
The near-tripling in the price of oil since 2002 has given terrorists
tens of billions of dollars to wreak havoc on civilization. Iran is the
biggest trainer, supplier and paymaster of Islamic terrorism. Its
economy is in shambles. Oil production there is about one-third less
than it would be had the mullahs not so mismanaged the industry. But the
post-2002 windfall has masked these shortcomings. The same is true of
Vene-zuela and its vehemently anti-American, terrorist-abetting
dictator, Hugo Chávez.
Imagine the setback the bad guys--Iran, Venezuela and other countries--
would suffer if oil went back to a price range of $30 to $35 a barrel.
Look at these graphs. When the dollar was fixed to gold between the mid-
1940s and 1971, the price of oil barely fluctuated. And look what has
happened since. In the late 1960s we began printing too many greenbacks,
which resulted in inflation, sending commodities, including oil, upward.
Before this inflationary era was ended by Ronald Reagan, the cost of oil
had risen tenfold.
The volatility in the value of the dollar has led to volatility in the
oil market. The result has been a boom-bust cycle that has been
disruptive--and now politically costly.
The history is instructive: The dollar's formal tie to gold was severed
in 1971, and since then we've fluctuated between periods of strength and
weakness. When inflation was firmly brought under control in the 1980s,
the cost of oil plummeted, reaching a brief low in 1986 of $10 a barrel.
Naturally, the unexpected price collapse saw the industry slash expenses
and exploration budgets, which set the stage for the subsequent rise to
almost $40 a barrel by the early 1990s. Then in the late 1990s the
Federal Reserve inadvertently tightened money again, sending the price
of oil crashing to $10 a barrel. The cycle repeated: Exploration was
sharply reduced, and the price of oil started moving up again. Then Fed
actions inspired a mini version of the 1970s-early- 1980s inflation, and
the price of black gold gushed up once more.
We are not running out of oil. The recent major discovery in the Gulf of
Mexico is the latest verification of this. Experts estimate that in the
U.S. Outer Continental Shelf, where oil exploration is mostly banned,
there are more than 85 billion barrels in reserves. As monetary expert
John Tamny recently wrote in National Review Online: "Amidst oil's
impressive price rise in recent years, we've predictably been assaulted
with provocative books such as The Party's Over: Oil, War and the Fate
of Industrial Societies and Twilight in the Desert: The Coming Saudi Oil
Shock and the World Economy, which herald the coming decline of
worldwide oil reserves. In the 1970s, [publications] such as The Limits
to Growth and The Oil Crisis: This Time the Wolf Is Here were released
amid much fanfare, similarly suggesting that 'scarcity and shortages'
were part of our future."
Cutting the dollar-gold connection has played hob with the economy in
other ways. The resulting turmoil in commodity markets led a number of
hedge funds to speculate widely. There will be more debacles like the
now notorious Amaranth Advisors before this inflation unwinds.
A lot of money is being invested in alternative energy sources, and many
of these endeavors will come a cropper if the assumption of ever-higher
oil prices proves false. Then there will be ever-louder cries for
expensive government subsidies to help out.
This bout of inflation has been devastating for Detroit. The surge in
the cost of gasoline KO'd the sales of highly profitable vehicles seen
as gas-guzzlers, particularly SUVs. The latest victim here is Chrysler,
which recently predicted a staggering $1.5 billion third-quarter loss.
Will we unsheathe this sword? Not likely. Most economists were taught
that gold is irrelevant and that it somehow caused and deepened the
Great Depression. Gold had nothing to do with that catastrophe. It came
about because of hideous tariffs and tax-policy errors. For four
thousand years gold has been the Polaris of price stability. But don't
look to Federal Reserve Chairman Ben Bernanke, Treasury Chief Henry
Paulson or any other policymaker to reestablish the long-cut link
between the greenback and gold. Instead, we will for a while longer
subsidize terrorists with billions of dollars, thereby prolonging the
war and unnecessarily giving up innocent lives.
Teutonic Blunder
German Chancellor Angela Merkel and her party, the Christian Democratic
Union, suffered a serious setback in recent regional elections. She
claims the small reforms in pensions, health and welfare that she and
her coalition partner, the Social Democratic Party, are undertaking are
unpopular but necessary.
But it wasn't those tepid changes that did her in; it was the massive
tax increase she recently pushed through that will boost Germany's value-
added tax by almost 20%. The world's most powerful woman (see FORBES,
Sept. 18) felt the increase was necessary to close a budget gap that she
believes would have further undermined an already feeble economy. Merkel
was mistaken. Austerity is not the cure for Germany's economic illness.
She should, in fact, move in the opposite direction-- take a machete to
Germany's onerous taxes and regulations. Such changes would not only
lead to Ireland-like economic growth rates but also give Merkel the
political muscle to effectively fight for needed changes.
Sadly, Merkel has no core pro-growth economic principles. During
national elections last year she hinted she was in favor of junking
Germany's tax code and replacing it with a simple flat tax, a system
that is working wonders in many parts of central and eastern Europe. But
she was unwilling to defend the idea, slinking away when the inevitable
attacks came. It was one of the critical factors that turned what should
have been an electoral landslide for her into a near defeat, forcing her
to cut a deal for a coalition with the major opposition party, thereby
leaving little room for maneuvering.
Merkel is not the only German who seems to have forgotten the inspiring
example of Ludwig Erhard, West Germany's first postwar economics
minister. Erhard was a true free-marketer. Against the wishes of the
Allied occupiers, he overnight threw out the German system of rationing
and wage-and-price controls. He created a new currency and embarked upon
a substantial tax-cutting program. The sluggish German economy came
roaring back to life. Germany soon surpassed its prewar production peaks
and by the mid-1950s had pulled ahead of both Great Britain and France
in economic prowess. Erhard could have told Merkel and her colleagues
that lightening the economic burden leads to the kind of prosperity
that, in turn, leads to burgeoning government receipts.
We have a powerful weapon we could wield against Islamic fanaticism but
won't: gold.
The near-tripling in the price of oil since 2002 has given terrorists
tens of billions of dollars to wreak havoc on civilization. Iran is the
biggest trainer, supplier and paymaster of Islamic terrorism. Its
economy is in shambles. Oil production there is about one-third less
than it would be had the mullahs not so mismanaged the industry. But the
post-2002 windfall has masked these shortcomings. The same is true of
Vene-zuela and its vehemently anti-American, terrorist-abetting
dictator, Hugo Chávez.
Imagine the setback the bad guys--Iran, Venezuela and other countries--
would suffer if oil went back to a price range of $30 to $35 a barrel.
Look at these graphs. When the dollar was fixed to gold between the mid-
1940s and 1971, the price of oil barely fluctuated. And look what has
happened since. In the late 1960s we began printing too many greenbacks,
which resulted in inflation, sending commodities, including oil, upward.
Before this inflationary era was ended by Ronald Reagan, the cost of oil
had risen tenfold.
The volatility in the value of the dollar has led to volatility in the
oil market. The result has been a boom-bust cycle that has been
disruptive--and now politically costly.
The history is instructive: The dollar's formal tie to gold was severed
in 1971, and since then we've fluctuated between periods of strength and
weakness. When inflation was firmly brought under control in the 1980s,
the cost of oil plummeted, reaching a brief low in 1986 of $10 a barrel.
Naturally, the unexpected price collapse saw the industry slash expenses
and exploration budgets, which set the stage for the subsequent rise to
almost $40 a barrel by the early 1990s. Then in the late 1990s the
Federal Reserve inadvertently tightened money again, sending the price
of oil crashing to $10 a barrel. The cycle repeated: Exploration was
sharply reduced, and the price of oil started moving up again. Then Fed
actions inspired a mini version of the 1970s-early- 1980s inflation, and
the price of black gold gushed up once more.
We are not running out of oil. The recent major discovery in the Gulf of
Mexico is the latest verification of this. Experts estimate that in the
U.S. Outer Continental Shelf, where oil exploration is mostly banned,
there are more than 85 billion barrels in reserves. As monetary expert
John Tamny recently wrote in National Review Online: "Amidst oil's
impressive price rise in recent years, we've predictably been assaulted
with provocative books such as The Party's Over: Oil, War and the Fate
of Industrial Societies and Twilight in the Desert: The Coming Saudi Oil
Shock and the World Economy, which herald the coming decline of
worldwide oil reserves. In the 1970s, [publications] such as The Limits
to Growth and The Oil Crisis: This Time the Wolf Is Here were released
amid much fanfare, similarly suggesting that 'scarcity and shortages'
were part of our future."
Cutting the dollar-gold connection has played hob with the economy in
other ways. The resulting turmoil in commodity markets led a number of
hedge funds to speculate widely. There will be more debacles like the
now notorious Amaranth Advisors before this inflation unwinds.
A lot of money is being invested in alternative energy sources, and many
of these endeavors will come a cropper if the assumption of ever-higher
oil prices proves false. Then there will be ever-louder cries for
expensive government subsidies to help out.
This bout of inflation has been devastating for Detroit. The surge in
the cost of gasoline KO'd the sales of highly profitable vehicles seen
as gas-guzzlers, particularly SUVs. The latest victim here is Chrysler,
which recently predicted a staggering $1.5 billion third-quarter loss.
Will we unsheathe this sword? Not likely. Most economists were taught
that gold is irrelevant and that it somehow caused and deepened the
Great Depression. Gold had nothing to do with that catastrophe. It came
about because of hideous tariffs and tax-policy errors. For four
thousand years gold has been the Polaris of price stability. But don't
look to Federal Reserve Chairman Ben Bernanke, Treasury Chief Henry
Paulson or any other policymaker to reestablish the long-cut link
between the greenback and gold. Instead, we will for a while longer
subsidize terrorists with billions of dollars, thereby prolonging the
war and unnecessarily giving up innocent lives.
Teutonic Blunder
German Chancellor Angela Merkel and her party, the Christian Democratic
Union, suffered a serious setback in recent regional elections. She
claims the small reforms in pensions, health and welfare that she and
her coalition partner, the Social Democratic Party, are undertaking are
unpopular but necessary.
But it wasn't those tepid changes that did her in; it was the massive
tax increase she recently pushed through that will boost Germany's value-
added tax by almost 20%. The world's most powerful woman (see FORBES,
Sept. 18) felt the increase was necessary to close a budget gap that she
believes would have further undermined an already feeble economy. Merkel
was mistaken. Austerity is not the cure for Germany's economic illness.
She should, in fact, move in the opposite direction-- take a machete to
Germany's onerous taxes and regulations. Such changes would not only
lead to Ireland-like economic growth rates but also give Merkel the
political muscle to effectively fight for needed changes.
Sadly, Merkel has no core pro-growth economic principles. During
national elections last year she hinted she was in favor of junking
Germany's tax code and replacing it with a simple flat tax, a system
that is working wonders in many parts of central and eastern Europe. But
she was unwilling to defend the idea, slinking away when the inevitable
attacks came. It was one of the critical factors that turned what should
have been an electoral landslide for her into a near defeat, forcing her
to cut a deal for a coalition with the major opposition party, thereby
leaving little room for maneuvering.
Merkel is not the only German who seems to have forgotten the inspiring
example of Ludwig Erhard, West Germany's first postwar economics
minister. Erhard was a true free-marketer. Against the wishes of the
Allied occupiers, he overnight threw out the German system of rationing
and wage-and-price controls. He created a new currency and embarked upon
a substantial tax-cutting program. The sluggish German economy came
roaring back to life. Germany soon surpassed its prewar production peaks
and by the mid-1950s had pulled ahead of both Great Britain and France
in economic prowess. Erhard could have told Merkel and her colleagues
that lightening the economic burden leads to the kind of prosperity
that, in turn, leads to burgeoning government receipts.
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