"PAPER MONEY"
Summer is a good time to catch up on one's reading. If you're anything like me, my list of books "to be read" stretches from here to Jupiter. So many great books, so little time...
I am currently on vacation, so I have a bit more time to devote to such a pleasurable pursuit. Recently, I've devoured a few classics from the world of Finance and Investing. "Paper Money," by Adam Smith (a nom de plume - his real name is George Goodman) is a classic. Everyone desiring a better understanding of the global financial system post-Bretton Woods would greatly enhance their understanding of our precarious "global economy."
By the way, Adam Smith used to have a great show in the 1980s on PBS - a stock market show that came on weekly, somewhat like Louis Rukeyser's classic show "Wall Street Week," except I cannot remember the name of Smith's show. I miss both of those superb shows and the incisive commentary of their guests. (I especially miss Louis Rukeyser - his monologue at the beginning of each show was one of the best things ever on television, and many of his guests were superb and quite helpful.)
Anyway, "Paper Money" was published in 1981, right near the apex of the 1980s high interest rate mania; the tail end of the inflationary 1970s, and just before the great bull market of 1982-2000 kicked off (Aug. '82). In it, Smith chronicles the unlikely rise of the global oil cartel OPEC. Chapter 7 - "How OPEC Started, and Grew, and Engineered the Greatest Transfer of Wealth in World History" should be required reading for anyone wishing to understand a little better our current predicament, the dependence of the US on foreign oil (mostly from hostile sources), and the general state of the world today. OPEC, modeled on the Texas Railroad Commission (which had much to do with the rules and regulations of Texas oil production, transport, conservation, etc.), was the brainchild of Juan Pablo Perez Alfonso, a Venezuelan lawyer and government official, and an American-educated Saudi named Abdullah Tariki, who in 1959 was the director of the Office of Petroleum Affairs for Saudi Arabia. They were initially brought together by American Wanda Jablonski, who was then publisher and editor of Petroleum Intelligence Weekly.
The desire was for the petroleum-rich countries to form a cartel in order to better control the price and rate of consumption of oil. They needed collective bargaining power to counter the enormous influences (then hegemonic) of the so-called "seven sisters" American and European oil giants (Exxon, Mobil, Royal Dutch-Shell, BP, et.al.) And the rest is history... Unfortunately, the prediction by Milton Friedman, one of my favorite economists, that the cartel "would not last long," has failed. OPEC is as strong and wealthy as ever, funneling much of their profits into the funding of terror enterprises worldwide, all at our expense (think Iran).
Enough about OPEC. Bottom line is, Adam Smith is an excellent, engaging writer, and this book reads just like today. All the concerns - a "housing bubble," "inflation," the "dollar crisis" (hint - it's been in a "crisis" for several decades now), "high oil prices," concern about the stock market and the onset of stagflation - all read like they were taken out of today's headlines or from the jabbering nabobs on CNBC. Everything old is new again, and the current America/global economy looks like a repeat of the 1970s/80s era. Only the prices have changed...
What's ironic is that the so many of our most vociferous enemies have been educated right here in the US; most at Ivy League schools. Smith refers to those involved in the oil trade as "technocrats." Nuts about American college sports (and "their" alma mater teams), yet downright hateful of the American government (no matter what their incarnation) and disrespectful of the American people, whose taxes and consumption habits fuel the entire global economy and maintain its freedom. Everyone has a tale of woe and/or "oppression," and, of course, somehow, Uncle Sam is to blame. You'd think the events of the past 3 decades would spur American ingenuity to the point of some real energy breakthroughs, new technologies on the fast track, new investment opportunities with some staying power, etc. Would that that were the case. Will we ever learn our lesson when it comes to energy?
If you want a much more informed understanding of the current political and economic malaise, pick up a copy of Smith's excellent book "Paper Money" and educate yourself, and see that nothing at all has changed in 25 years - only some of the names and faces.
TTC
I am currently on vacation, so I have a bit more time to devote to such a pleasurable pursuit. Recently, I've devoured a few classics from the world of Finance and Investing. "Paper Money," by Adam Smith (a nom de plume - his real name is George Goodman) is a classic. Everyone desiring a better understanding of the global financial system post-Bretton Woods would greatly enhance their understanding of our precarious "global economy."
By the way, Adam Smith used to have a great show in the 1980s on PBS - a stock market show that came on weekly, somewhat like Louis Rukeyser's classic show "Wall Street Week," except I cannot remember the name of Smith's show. I miss both of those superb shows and the incisive commentary of their guests. (I especially miss Louis Rukeyser - his monologue at the beginning of each show was one of the best things ever on television, and many of his guests were superb and quite helpful.)
Anyway, "Paper Money" was published in 1981, right near the apex of the 1980s high interest rate mania; the tail end of the inflationary 1970s, and just before the great bull market of 1982-2000 kicked off (Aug. '82). In it, Smith chronicles the unlikely rise of the global oil cartel OPEC. Chapter 7 - "How OPEC Started, and Grew, and Engineered the Greatest Transfer of Wealth in World History" should be required reading for anyone wishing to understand a little better our current predicament, the dependence of the US on foreign oil (mostly from hostile sources), and the general state of the world today. OPEC, modeled on the Texas Railroad Commission (which had much to do with the rules and regulations of Texas oil production, transport, conservation, etc.), was the brainchild of Juan Pablo Perez Alfonso, a Venezuelan lawyer and government official, and an American-educated Saudi named Abdullah Tariki, who in 1959 was the director of the Office of Petroleum Affairs for Saudi Arabia. They were initially brought together by American Wanda Jablonski, who was then publisher and editor of Petroleum Intelligence Weekly.
The desire was for the petroleum-rich countries to form a cartel in order to better control the price and rate of consumption of oil. They needed collective bargaining power to counter the enormous influences (then hegemonic) of the so-called "seven sisters" American and European oil giants (Exxon, Mobil, Royal Dutch-Shell, BP, et.al.) And the rest is history... Unfortunately, the prediction by Milton Friedman, one of my favorite economists, that the cartel "would not last long," has failed. OPEC is as strong and wealthy as ever, funneling much of their profits into the funding of terror enterprises worldwide, all at our expense (think Iran).
Enough about OPEC. Bottom line is, Adam Smith is an excellent, engaging writer, and this book reads just like today. All the concerns - a "housing bubble," "inflation," the "dollar crisis" (hint - it's been in a "crisis" for several decades now), "high oil prices," concern about the stock market and the onset of stagflation - all read like they were taken out of today's headlines or from the jabbering nabobs on CNBC. Everything old is new again, and the current America/global economy looks like a repeat of the 1970s/80s era. Only the prices have changed...
What's ironic is that the so many of our most vociferous enemies have been educated right here in the US; most at Ivy League schools. Smith refers to those involved in the oil trade as "technocrats." Nuts about American college sports (and "their" alma mater teams), yet downright hateful of the American government (no matter what their incarnation) and disrespectful of the American people, whose taxes and consumption habits fuel the entire global economy and maintain its freedom. Everyone has a tale of woe and/or "oppression," and, of course, somehow, Uncle Sam is to blame. You'd think the events of the past 3 decades would spur American ingenuity to the point of some real energy breakthroughs, new technologies on the fast track, new investment opportunities with some staying power, etc. Would that that were the case. Will we ever learn our lesson when it comes to energy?
If you want a much more informed understanding of the current political and economic malaise, pick up a copy of Smith's excellent book "Paper Money" and educate yourself, and see that nothing at all has changed in 25 years - only some of the names and faces.
TTC
posted by thoughtful conservative at 6:40 PM
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