Suppose USA goes to Mexico and asks for crude oil. Mexico says ’100 dollars’. USA goes inside its house, prints 100 dollar bills and gives it to Mexico and buys the oil barrel. Later Mexico says, 120 dollars and USA goes inside, prints 120 dollar bills, gives them to Mexico and takes the oil barrel. What does USA lose ? A little effort of printing, ink, paper, etc. Practically oil comes free. Then why can’t USA sell gas a t say 1 dollar a gallon ?
Mark, USA prints 1 trillion USD every year which equals the cost of oil.
dfgoodwin: gold standard was withdrawn by the great economist richard nixon in 1971.
We can print this money and send it overseas, and then other countries end up with giant storehouses full of USD.
The problem is, spending the USD causes inflation in the United States (which is the obvious conclusion to this commodity bubble).
China has billions of dollars sitting around, and if they were to spend them or convert them into Euros, they would plunge the American economy (which isn’t good for them because nobody would buy there goods).
I hoped that helped.
