The US Federal Reserve is leading the world down a dangerous path to flood the globe with money in order to stifle the global financial crisis that started in August, followed by the bursting of the US mortgage industry.
Increasing the supply of a currency will decrease its value against real assets like, oil and gold. Unless every nation increases their currency at the same rate, the result is massive currency fluctuations and interest rates swings.
One way to stay clear of the coming currency fluctuations is to trade your currencies for real stuff like oil that is sure to be in short supply in the near future and therefore hold value better then any paper currency.
China is now filling its oil reserve tanks, taking advantage of tumbling world crude prices, which are now down 78 percent from their highs a few months ago. China began the construction of four strategic oil reserve facilities earlier this decade, and two of these are now in operation.
According the article from which I read about this, this is just the first phase, which will eventually have an overall capacity of more than 50 million barrels of crude. The investment in the first phase of the project is close to $1 trillion dollars.
China in planning to continue increasing its oil consumption for years to come. In 2007, China imported around 1.2 billion barrels of crude, up 12.4 percent from the previous year. China is looking past the global financial meltdown and realizing that a large stable oil supply will be a very strategic position in the near future as nations tussle for a larger piece of the global political and economic pie.
China's strategic oil reserves are expected to reach 101.9 million barrels by the end of this year and rise to 145.9 million barrels in 2010, with 511.9 million barrels a long-term goal.
I can only hope the US is also filling its oil reserves at this time.
This week I participated in two blog carnivals
They did an excellent job and as usual, there are tons of great articles. If you have the time, I highly suggest you skim through this week’s carnivals.
The Carnival of Personal Finance #184: From the Land Down Under
The 90th Edition of the Carnival of Money Stories