Let's All Buy 20% Less Gasoline!!!
What if we could? What if we would? What if we all, ALL purchased 20% less gasoline? Would that save the world? Would that end the energy crisis? Would that bring down the price at the pump?
Instead paying $100 for gasoline in some amount of time... sure, a person could just spend $80 on gas. Maybe they would car pool to work or something... but that wouldn't change the amount that Saudi Arabia sells, or the world market buys.
Let's take one person and see how that would work. We'll call this person "Mr. 20%".
Think about it, what would Mr. 20% do with that $20 he saved at the pump?
If I recall correctly, a typical American spends 101% of what they earn in a year. Mr. 20% would end up buying something with his $20 savings. Perhaps he'd splurge on an extra Pizza Hut meal for his family.
Where does that $20 end up?
Exactly the same spot as it would have if he bought the gasoline in the first place.
It is a world economy, a big huge global economy. Money spent equals energy consumed. It doesn't matter how the money is spent, where it is spent, or why it is spent. If you spend money, energy is consumed at the energy/money ratio (use the world GDP and world energy production to calculate that ratio, if you wish).
So, what is Mr. 20% to do?
Well, he certainly can not spend the $20... because that will just consume the same amout of energy.
He can't put it in the bank... because $20 in savings equals up to $200 in "created money" via loans. Whoa, wrong choice their buddy.
He could hold on to it for a while, maybe in his piggy bank... but he wants to spend 101%, so I'm not sure how long its going to stay in that cute little fellow.
He could tear up, burn, or otherwise destroy it... but I'm not so sure that $20 destroyed would have any impact on the global economy, particularly when the banks and Fed can create money to match "demand".
What Mr. 20% needs to do is to pray... that the global economy slows down. Less global money moving around. Slower "velocity of money". Less credit money... a slowdown, akin to the ones following the previous oil crunches... Yes, that would probably do it.
Unfortunately, I don't think Mr. 20% can do it alone. Then again, the way things are going, he can just sit back and relax, because this recession is already well underway.
Related
Original Post at "The Oil Drum"
Instead paying $100 for gasoline in some amount of time... sure, a person could just spend $80 on gas. Maybe they would car pool to work or something... but that wouldn't change the amount that Saudi Arabia sells, or the world market buys.
Let's take one person and see how that would work. We'll call this person "Mr. 20%".
Think about it, what would Mr. 20% do with that $20 he saved at the pump?
If I recall correctly, a typical American spends 101% of what they earn in a year. Mr. 20% would end up buying something with his $20 savings. Perhaps he'd splurge on an extra Pizza Hut meal for his family.
Where does that $20 end up?
Exactly the same spot as it would have if he bought the gasoline in the first place.
It is a world economy, a big huge global economy. Money spent equals energy consumed. It doesn't matter how the money is spent, where it is spent, or why it is spent. If you spend money, energy is consumed at the energy/money ratio (use the world GDP and world energy production to calculate that ratio, if you wish).
So, what is Mr. 20% to do?
Well, he certainly can not spend the $20... because that will just consume the same amout of energy.
He can't put it in the bank... because $20 in savings equals up to $200 in "created money" via loans. Whoa, wrong choice their buddy.
He could hold on to it for a while, maybe in his piggy bank... but he wants to spend 101%, so I'm not sure how long its going to stay in that cute little fellow.
He could tear up, burn, or otherwise destroy it... but I'm not so sure that $20 destroyed would have any impact on the global economy, particularly when the banks and Fed can create money to match "demand".
What Mr. 20% needs to do is to pray... that the global economy slows down. Less global money moving around. Slower "velocity of money". Less credit money... a slowdown, akin to the ones following the previous oil crunches... Yes, that would probably do it.
Unfortunately, I don't think Mr. 20% can do it alone. Then again, the way things are going, he can just sit back and relax, because this recession is already well underway.
Related
Original Post at "The Oil Drum"