Correlation Or Causation: How The Fed Helped Create The Global Oil Glut (In 1 Simple Chart)
Correlation or Causation?
h/t DoubleLine
Easy money by The Fed expanding their balance sheet ENABLED tight oil to be produced 'economically'...
But the signals this sent to the market became self-fulfilling (thanks to an endless Fed put) further creating record US crude production (as the oil 'gold rush' ensued), forcing a real 'deflating' world to be 'glutted' with ever-increasing output of mal-investment-driven 'expensive' oil...
of course until that facade of 'boom', busted and crushed the price of the over-produced by 75% (back to 'reality')
Can you spot the moment The Fed jumped the shark?
So the question is - If The Fed enables mal-investment booms by mandate (or ignorance), will they ever learn from the inevitable busts?
(11 votes)
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Good points Tyler. Also spiking the price by inflating the dollar, then creating the oil glut - increasing supply - also caused it. A reversion to the mean a la price snapback if you will.
Oh, I already explained how the fed caused it here, and took it a step further 9 months ago, and then explained how excessive debt has exacerbated it just a few weeks ago.
Simple malinvestment and misallocation of resources just like housing in the 2000's and overinvestment in tech stocks before it.
Oh SnapBACK!
Cap'n, frankly, I am tired of your comments.
You can't have it both ways. They, (the Fed), also help created the Mainia.
Correllation may not be causation but I have found that elevator farts do get me high.
I bet they didn't even know they could move oil prices like that without the Fed desk pounding the bid everyday with printed money
Japan just opened down 3.5%.
So much for the BoJ's arrows.
This shit is going to get unfunny fast.
The moment the Fed jumped the shark and humped Main Street, was when they dumped gold, in favor of Wall St.
The One Bank and cohorts jumped the fish in a bold move. Think that the transition to control of money was delayed via the 2000 collapse. Do not think the power of the internet info sharing was accounted for, Sort of like the original printing presses centuries ago that allowed info to be made public. Hence control of all media......Object always? Own everything (if they don't destroy it first). The old quote and endearing insight of human altruism "give me control of the money and...."
dumped gold? I do not think so. I think gold is being hoarded back. Always was. Whatever was sold over last few decades is now being replaced at depressed pricing. Sold the family jewels? No problem we got COMEX and can get it all back. We got politicians, bankers we flatter..Wall St. is a martini, coke ridden joke. No real old crappy money dumped any gold in favour of the dupes on Wall St. Takes a greater fool on every level. And Wall St. is mostly a minion joke being bribed by whores and carrots.
Favour to Wall St.? Minions. Obama? puppet. USA is only a tool. These idiots appear to be totally willing to destroy life on this planet as a means to control ir all. Serfdom of billions so that Queens and interbred royalty, fake garbage Roman religious money-changers, can preserve their "Downton Abbey" life complete with staff.
There is blind entitled greed operating. Entitled, inbred "fear", and at the moment I think there is fear.
U tawk reel weird and perty Whacko
definitely causation. every economic problem from now 'til doomsday will be laid at their doorstep. they caused the stock market crash three fucking times. they caused the widening chasm of the wealth divide. they caused the junk bond rout. they caused the oil glut and commodity crash. they caused the coming depression which will now last for decades because they just had to meddle and tip the scales in favor of their friends the maggots. one day soon when the currency goes down the crapper that too will be placed squarely on their scrawny hobbet shoulders.
...YOU have meddled with the primal forces of nature, and YOU... WILL... ATONE! [/Arthur Jensen, Network]
Well, at least they were all highly regulated crashes! ;-)
Keep it up Tyler (and we know you will.) Tomorrow and Friday feel quite ominous.
Options expiry this Friday, followed by MLK holiday long weekend. Should be interesting.
Bank Derivitaves have priroty over BANK DEPOSITORS during FDIC Insurance payouts
https://www.youtube.com/watch?v=2oehMznZd7w
And is that just not so just. So fair. And the masses are buying it all. Negative %, banning cash, complete loss of privacy, data mining, homelessness, serfdom. Begging. Please just give me more toys.
Professors that are idiot lapdogs, Politicians that are thieves. Corruption on every level and cameras up all butts. Control of breathing.
Next commodity which is not on the radar yet is water....but getting there.
Yeah bank casino gambling with depositor funds now take priority over the basic depositors. And nobody blinks. Got my new Apple phone and Netflix feed. Bread and circuses amplified.
Un-frigging- real. Dumb down the sheep/slaves.
Much as I read I still do not see a true way out beyond complete revolt.
***Bank Derivatives have priority over depositors during FDIC payouts***
https://www.youtube.com/watch?v=2oehMznZd7w
***Bank derivatives have priority over depositers during FDIC payouts***
https://www.youtube.com/watch?v=2oehMznZd7w
They're expecting something too....
You nailed it Tyler. $ 4.5T balance sheet.
$4.5T balance sheet... LMAO! I believe those numbers about as much as I believe any ad hoc BLS report. Let's audit & assay Ft. Knox while we're at it.
Good luck with that. As a citizen of US is not your
"right". Good luck and bring a vacuum cleaner for the spider webs and dust.
When? when are people going to come out of this dilusion? I know it is is uncomfortable to wake up when it is so pleasant hazing out on mutual back-patting, TMZ, Kardashian butt measure garbage. But these are educated people that are parroting this utter nonsense.
Nobody is even really asking questions. Hilary? Laughing stock of the world right now. On most levels. And I think it is all planned. Going down as planned. Rah rah. We got Superbowl to plan for with our fat snacks nd GMO corn chips. Grab a case of death (Coke and Pepsi).
There is hope. Just not in the US of A. Hilary? what is wrong with you?
The Federal Reserve has loads of garbage off balance sheet.
We know why they lobbied the senate and congress to veto audit bill.
All sorts of nasty things off balance sheet.
Multiple entries on gold. Gold reserves they don't even have anymore.
Probably told the politicians they don't go there,
There are such things as co-incidences and spurious correlations, Tyler. There was no oil glut until 2014, when the House of Saud decided to start pumping like mad and prices fell below oil's fair value.
By 2014 it was clear QE wasn't working in the US, Europe or Japan, and high oil prices put Russia in too good a position to assert the rights of Russians to self-determination. So, our betters decided to engineer a supply-side shock. The hope was that if gas was cheap enough eventually the proles would start spending money again. Meanwhile, low oil prices would reduce Russian living standards and stir up unrest against Putin.
So Saudi Arabia was offered an unlimited credit line at the Fed to cover the cost of selling oil at a loss. The inability to compete of oil producers in countries that can't rely on an ample supply of South Asian slave labour to work for nearly nothing was, at best, a secondary consideration.
Spurious? Or cause and effect? http://tylervigen.com/view_correlation?id=28771
I said the phrase "economic warfare" to the best educated colleague on my team. He gave me the blank stare. I guess some people are just more sensitive to these things.
excellent
What put the cherry on the glut the Saudis began were the smaller producers who saw how much the Saudis were producing, knowing that as prices fell their production should be cut.
They assumed that Saudis knew something they didn't. And that the Saudis must be concerned about their revenue.
So the smaller producers became concerned about their revenue and started producing like crazy, too.
Voila, $29 oil. Going down.
All because some neocon fucked Obama in the ear.
They DID do something right !
AI Tuning: Final Rights
The brain is a tuner. It comes with both channels preset by DNA and the ability to expand the band with imagination, the implicit conscience – what you cannot see, which is far, far greater than what you can see. Parenting, what the self-obsessed majority wants nothing to do with except to employ the output as economic slaves, is about encouraging your children to expand their conscience productively.
Empire GDP measures consumption, not production; its productivity measures efficiency of natural resource liquidation; and its employment measures compliance, in an economy of stupid rewarding itself for self-obsession. Only a moron accepts credit from the top down and tax from the bottom up expecting anything other than a short rent/income squeeze. GDP is a sub-tuner, a welfare state for stupid activity.
The majority always chooses the path of least resistance offered by the empire broadcast, adopting and replicating the habits of those whom they can expect to confirm their choices, shorting the short and replacing their own consciousness with whatever false prophet controls the channel. Empire is an artificially closed system, liquidating nature to provide channels of employment, guaranteeing inflating prices on declining resources, insured by an actuarial ponzi, paying the participants in their own debt for compliance. The only possible outcome is war, and empire is in the business of war.
Regardless of governing ism in the divide and conquer regime, they are all feudal organizations controlling the bandwidth narrative to issue themselves credit, on the expectation of liquidating natural resources in their own favor. In this iteration, the healthcare system simply selects based upon compliance and the education system confirms routing into established channels, in a process it calls expert system certification. Why would anyone trust a contract from a slaveholder cartel made to be broken by Family Law, unless they were chosen and programmed to do so?
Critters stranding themselves on an island of scarcity in a sea of abundance aren’t going to behave well, surprise. The majority willingly chose to believe that an individual cannot outlast an irrational market, which is simply the majority behaving irrationally to tune out all other channels and calling the product economic activity, GDP as an excuse to issue more debt. There is no shortage of oil; the majority is waking up to global demographic collapse, with no talent and no skills.
The disposable economy of disposable make-workers, passing debt instruments around in a MAD circle, is collapsing of its own dead weight, just when the communists thought they had it all figured out, again. Whether global economic collapse is a problem or a solution depends upon your perspective. Empires come and empires go, because empire is a depository institution for those incapable of adapting in a real economy.
Communism is a bipolar marriage between capitalism and socialism, to replace a complimentary marriage between a man and a woman with government. But if you look, you will see that the two worst weeks for the market in this cycle came the week after they took my kid and the week after the decision was confirmed by a judge. Hunting down an AI guy with an AI derivative doesn’t end well, and you have two points on a line.
When you have two points on a line, you may expect the third by eliminating time as a variable at the position you set on the fulcrum. Of course the critters will vote for an equal right to consume, no responsibility to produce, and a cushy make-work job to pretend they are busy. At awakening, who do you suppose has the advantage of leverage?
When my pop brought me to California from white Ohio as a little kid, he placed me in school with blacks and browns on the bad side of town, and sent me to class with a military haircut, but I had free roam of the military bases, if I rode my bike 10 miles across ‘enemy’ lines. Capital, the middle class and my welfare mom placed their kids in the most posh, affirmative action schools they could afford. Funny, the race is irrelevant.
I am not the least bit concerned about Grace; she is smarter than I am, with far more resources at her disposal. And funny thing about smart kids; they begin their life ignoring ignorance, to develop their own identity. You can’t choose your parents and you can’t choose your children, but that never stops the majority from trying, which is why it is always traveling in common, back to the DNA churn pool.
JPM and Edison were self-obsessed morons doing the wrong thing at the wrong time in the wrong place 99% of the time, but you wouldn’t know that studying History in the public education system at a dc terminal.
I repeat.
Slavery was not cost effective. Slaves needed to be fed, watered, reproduced. Direct costs that ate into the bottom line.
Serfdom, on the other hand, put the cost onto the serf. Who gave a flying frig if the serfs starved? Slavery was tried. We are going back to serfs who are dependent on "lords" for favour. To company stores. To "chits" instead of cash.
Going back to no choice for survival. Already a good way there. Eliminated home ownrship, Erasing any reasonable job in favour of a serving role for little pay. Making any good food unaffordable and eliminating abiility to grow health. Feeding people garbage.
Making fun and pretending there is any respect for mankind. And most politicians and movers and shakers,,,think they mean something to this hidden machine of greed..
Correlation, Causation, or Coincidence?
There only seemed to be shortages over the years because of agreements between governments to produce certain amounts. This "glut" is nothing more than a war between various oil producing nations who are trying to play a game of musical economies while hoping to be the last country with a chair to sit on.
More like if you spread peanut butter over a table that has a slice of bread on it, everything will be sticky, plus you will have a peanut butter sandwich.
Think if the Fed free money policy as peanut butter, spread over everything financial.
No relation.
I've always been an admirer of Yellen's BUST. She is very BUSTY.
Even more busty than the Bernanke and Greenspan, who both were rather busty men in their own right.
Hang them all, I will gladly chip in for the cost of the rope.
The Fed's defense (as they are always looking for others to blame) is that they could have never imagined mal-investment to occur as a result of their policies (experiments).
Cheap money fueled corporate debt issuance and stock buybacks are one of the other perverse results. These criminals will eventually be called to account, we need a Nuerenberg-like Trial for them once the economy finishes crashing, and the currency craters, and tens of millions are roaming hungry on the streets.
The FED is not there to support the economy or to increase employment. The FED is a head organization of banks and its mandate is to secure the wellbeing of the banks and their shareholders.
a better chart would be WTI CRUDE and the neocons' dripping dicks at Russia