All currencies are 'managed' by central banks. All currencies have depreciated in value by central bank inflation.
The only difference is the degree to which the currency has been devalued. Swiss Franc - not so much until recently (in repsonse to Euro devaluation). Argentinian Peso - lots.
This is not really an argument - all Central banks have inflation as one of their core aims - it's just a matter of degree how much inflation they have created. We are in an era of competitive currency devaluations when even the Swiss are getting in on the act.
The USD is different because it acts as the world reserve currency, and the one in which oil is priced. It used to have a quasi-link to gold until Nixon closed the Gold window, which, unsurprisingly dropped the value.
>Gold is not a sensible measure of value because gold is not a currency. It is a metal with multiple competing uses, only one of which is as a store of value.
It's more sensible than paper money as a store of value over the long term. The mean failure rate for paper currencies is 100% - it's just a matter of measuring the longevity.
But you don't have to use Gold to compare. You can compare oil to any number of commodities (wheat, copper, cotton) and you'll see that historically they trade in a range, which is consistent with oil note becoming more expensive particularly faster than anything else.
I have a feeling that your economic worldview is built out of mises.org articles.
Central banks vary wildly in their policies and work differently. Generalising from the Federal Reserve to other banks is troublesome.
For example, the Fed is very secretive compared to some banks. An enormous amount of effort is spent second-guessing it and it is nigh impossible to guess what it's going to do.
Meanwhile, in Australia, the Reserve Bank publishes its minutes, the Governor of the RBA makes regular speeches about monetary policy and its single policy objective (to keep underlying inflation in a 2-3% band) is widely understood and has never been deviated from. Markets and economists predict its next move correctly about 80% of the time.
Similarly, the Bundesbank and through their influence the ECB has well understood targets for monetary and fiscal policy; they've used monetary policy levers to affect the mix of taxation, spending and borrowing in the direction of financial rectitude. I don't think that's the right way to go about it, but everyone knows what they want and how they intend to do it. Super Mario's announcement of unlimited bond purchases is the first time the Bundesbank has been sidelined.
The USD is not the only reserve currency -- most central banks hold a mix of special drawing rights, USD, EUR, other currencies and yes, some still hold a bit of gold. You don't hedge risk through putting everything in the gold basket and betting on fluctuations in demand and supply that have no relationship to the general economy. You spread your risk onto multiple currencies.
Anyhow, it seems like we agree that the price of oil is rising. It's just that you see it as due entirely to the massive increase in the USD supply in past years; I'm saying that some of it is related to basic supply/demand as well and we can see this by examining its movement in other currencies.
>It's just that you see it as due entirely to the massive increase in the USD supply in past years; I'm saying that some of it is related to basic supply/demand as well and we can see this by examining its movement in other currencies.
Not really. It's not entirely due to the increase of USD, there are demand/supply characteristics that have created a mild inflation in the price (note the cost of extraction affects only profits, not price).
However, the popular view is that the oil price is rising massively due to (a) greedy oil companies or (b) oil running out. Neither is really the case, and historically the oil price isn't significantly different to the band it has been in for the last 30 years. The data used for showing that the oil price is rising is by comparing it to the price ~10 years ago to now. But that is obscured by the fact that currency devaluation in that time period accounts for a large percentage of the sticker price rise. The real price rise is far less.
The only difference is the degree to which the currency has been devalued. Swiss Franc - not so much until recently (in repsonse to Euro devaluation). Argentinian Peso - lots.
This is not really an argument - all Central banks have inflation as one of their core aims - it's just a matter of degree how much inflation they have created. We are in an era of competitive currency devaluations when even the Swiss are getting in on the act.
The USD is different because it acts as the world reserve currency, and the one in which oil is priced. It used to have a quasi-link to gold until Nixon closed the Gold window, which, unsurprisingly dropped the value.
>Gold is not a sensible measure of value because gold is not a currency. It is a metal with multiple competing uses, only one of which is as a store of value.
It's more sensible than paper money as a store of value over the long term. The mean failure rate for paper currencies is 100% - it's just a matter of measuring the longevity.
But you don't have to use Gold to compare. You can compare oil to any number of commodities (wheat, copper, cotton) and you'll see that historically they trade in a range, which is consistent with oil note becoming more expensive particularly faster than anything else.
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