Your source does not specify how this billions of tons of algae spontaneously jump together and accumulate and what prevents them to degrade before becoming oil.
Who said that billions of tons of algae jumped together and accumulated before becoming oil?
You said they “accumulate”. Since they generally do not accumulate to these quantities now, why would they have done so long time ago? Do you see any place right now where algae steadily “accumulates”? I don’t.
I think you may have misinterpretted a previous post of mine. When I said that .1 milimeters would grow to a kilometer after 10 million years that was meant to illustrate the effect of a minute change occuring for a large amount of time. I didn’t literally mean that a kilometer would accumulate.
Small amounts get trapped under sediment. This occurs many times and and the sediment very gradually builds up. Pressure and heat cause this algae or plankton or whatever to break down into hydrocarbons. These hydrocarbons migrate and form accumulations.
The problem is that this change needs to be constant and continuous in order to work. If it doesn’t, your comparison simply doesn’t work, and that is the problem. In order to be formed, these huge oil fields need the assumption of huge algae fields to accumulate continuously… Algae which grow and then get consumed, as in a normal biological ecosystem will not do. It needs e.g. a major catastrophy, e.g. the outbreak of a volcano and its ashes to cover the biomatter and thus prevent it to decompose. So, since volcanos normally do not cover these huge quantities of algae, I don’t see any explanation for it to form this way.
I am off to bed (CET) and will respond tomorrow…
It doesn’t need to be constant and continuous, and I don’t understand why anyone would think it does. You seem to have the mistaken impression that there is a giant area of algae (or plants, plankton, dinosaurs or whatever) that all turns in to oil at the same time and forms an underground pool. That is simply not the case. The petroleum is formed in very small amounts. The petroleum then gradually migrates through the small pore spaces in the rocks that it was formed in upwards until it is trapped by something that will cause it to accumulate.
Were there any animals around to eat algae?
For better or for worse, every Federal Reserve chairman for the past three decades seems to have regarded preventing inflation as the Fed’s main function.
And none have every injected so many new dollars into the monetary system as did the current Fed. Almost every economist acknowledges that when robust growth starts up again, this money will have to be unwound. Right now, it’s not causing inflation because velocity is low. Once velocity picks up, expect inflation to pick up with it.
Bernanke acknowledges this, and says he has a plan to unwind all this. The question is whether or not he can manage that without impacting growth, and how resistant he will be to the inevitable political pressure to keep the gravy train running.
There is precedent for the Fed reacting to political pressure. In fact, one of the reasons inflation got out of control in the 70’s was because the fed was afraid to raise interest rates because of pressure from politicians. Paul Volcker even had difficulties with the Carter administration in that regard. Reagan told him to do whatever was necessary to get inflation under control, and the result was a fairly deep recession and double-digit interest rates.
Just how tolerant of such measures will the current political class, or the public for that matter, really be?
Carter, peace be upon him ,appointed Volcker specifically because he knew he’d raise rates to stop inflation. You’re right that it’s unlikely current politicians will show the same kind of strong leadership.
Frankly, based on the noises that the regional Fed presidents are making, it seems more likely that the Fed will tighten prematurely. The central banks of responsible countries have a tendency to err on the side of being “responsible”, which often tends to be an irresponsible choice.
What’s funniest right now is that the Congressional move to undermine Fed independence is coming primarily from Ron Paul. If he actually succeeds in his quest, the result will be a consolidation of more government power in the hands of fewer people. A weird bit of irony about central banking there, which many libertarians seem constitutionally unable to grasp.
There’s a good chance that they’re just trying to sound hawkish to prop up the dollar. OK, a chance. Definitely the only thing worse than letting a revolving door of Wall Street people run the Fed is letting congress do it. The only silver lining would be that they do what WS tells them anyway.
As a general point though I don’t think we’ll ever see strong leadership like Carter showed again. He knew he was kissing reelection goodbye when he appointed Volcker. It’s a shame he didn’t get a second term in 2008.
All credit to Carter for appointing Volcker, but Carter started to get cold feet as the election got nearer, and tried to do an end-run around the fed by setting ‘special credit controls’ on reserves in an attempt to somewhat undermine fed policy. This caused a temporary drop in interest rates, but ultimately failed as price controls tend to do.
The point I’m making is that even though Carter had the right instincts and made an excellent decision to appoint Paul Volcker, the increasing pressure that a tight money policy created caused him to blink in a small way. There was a public uproar against the high interest rates, and he had to respond to it in an election year.
Now imagine how the public will respond today, with their much higher personal debt loads, and with the economy increasingly sensitive to things like mortgage rates, and think how reticent Congress will be given the huge debt carrying costs that will be added if interest rates rise substantially.
Add to that the fact that the current Congress is far more partisan and dysfunctional than was the Congress of the 1970’s and 1980’s, and I have no faith whatsoever in their ability to manage this responsibly. And that applies to both parties.
In hindsight, was the cure really preferable to the disease?
Absolutely.
I absolutely agree with Sam Stone. If I had to make a long-term choice between employment and inflation, I’d choose employment. But making a temporary trade-off to achieve permanent price stability? It’s just no contest.
Paul Volcker made us suffer. He and his Fed committee sent the unemployment rate to a peak of 10.8%, effectively telling US workers to suck on it. It was the longest and deepest post-war recession until the present one, and it was done entirely by their choice, not from external shocks or instability in the markets. It was also the right decision.
The economy went into recession once, and it was grotesquely costly, but the benefits from the subsequent monetary stability have stayed with us for decades, including to the present day. Volcker’s monetary responsibility more than two decades ago has given the Fed more options to fight this recession than we would’ve otherwise had. (In this same sense but reversed, W’s fiscal insanity has stripped away our options (at least politically) for taking a more proactive stance in increasing government spending for stimulus.) From the Volcker recession, we had an enormous one-time cost for fighting inflation, but the benefits of the central bank getting control over our currency have been both enormous and long-lasting.