Oil mania worse than dot-com craze: report

June 14, 2008 (LBO) – The current oil bubble which has seen crude rising 700-pct since November 2001 is worse than the dot-com bubble which saw the Nasdaq composite index rising 640 percent before it crashed, a media report said. Food riots in poor countries have increasingly put pressure on the Federal Reserve to alter its monetary policy stance.

The Federal Reserve has now promised to end further rate cuts, and is increasingly making noises about inflation, in a dramatic about turn from its earlier warnings on ‘growth’ which panicked people into accepting its rate cuts.

Rate cuts were needed to save the banking system from collapse, which speculated in unsound assets, when interest rates were kept artificially low by the Fed.

The ability of central banks to inflate and create commodity bubbles was somewhat limited under the gold standard when currencies had to keep their values to a certain volume of gold.

The US dollar was valued at 35 dollars an ounce for more than a century, until it went off the gold standard in 1973 and became a pure fiat or paper currency, which could be printed in unlimited quantities as long as people tolerated inflation.

Gains in oil are the result of a bubble caused by specula