Thursday, May 3, 2012

State Of Our Currency

So america took the dollar off the gold standard decades ago. In other words, there is not an equal amount of gold in the vault to match all of the paper money floating about. So that got me to thinking, "what does back the dollar?" I think i have the answer. Oil.

Our entire economy is petroleum dependent. Food, manufacturing, even getting to work in the first place is hard to do without consuming this resource. For some even turning on a light switch expends petroleum. More tellingly is the fact that on the world market oil as a commodity is priced by "dollars per barrel".

This freaks me out. Our economy is based on a finite resource. One that some experts believe is past its peak production point and will require exploiting much more costly and difficult locations to maintain. Am I missing something or am I the only one who thinks this is just plain insane? This isn't a long term solution, it isn't even a short term goal. This reeks of the kind of short sighted, quarterly profit motivated, poor judgement you would expect out amoral corporate america, not our political leadership.

If you have read my past posts, I have stated that sustainability needs to be the new metric of success. This is exactly the opposite.


  1. " the gold standard decades ago." That is immaterial as Epictetus pointed out 2400 years ago: "Even Donkeys know that hay is more precious than gold."
    To answer your question more directly, the only thing that backs the value of the dollar, or any other currency from wampum to trading stamps, is FAITH in its exchange value. It is a type of religion, which is why it is so universally worshiped.

  2. I agree with Searat, above. Ah, but what a different world it would be if rather than oil being the driving force behind the economy, transportable hydrogen reigned supreme.