Ohio miners forced to attend Romney rally without pay...

[kandrathe]

You can't switch horses in midstream. If oil is carrying the business cycle, then it's oil. If the business cycle is a monetary phenomenon, then it's money. If it's both, they need to be modeled together somehow. It can't be whichever is more convenient for the explanation.

Why can't oil price be both the cause of economic stress, and then affected by the resulting crash in demand for goods and services? The issue is that oil (energy) is intrinsic to the operation of the system -- the economic engine stops when the price of oil begins to make profit equal or less than zero (the ceiling). A crash occurs, until confidence (price stability) in the economy is restored. Then we begin recovery again, until demand drives prices back up above the tipping point. Monetary policy (zero interest rate) is just the foot on the accelerator pressing it all the way to the floor. (as opposed to QE, which is like dumping a gallon of Jack Daniels** in the tank). And, like I've said before... Energy is multiplicative, and so it's price is far more important to the economy than any other commodity. The buyer, seller, and producer all require energy to enact the transaction.

** A gallon of JD we don't really own, and end up paying way too much for as well.

Ok... A model linking oil, and an easy money monetary policy... lemme see... The Petrodollar? Another side effect of a bust cycle due to the linkage of oil and US dollars is a loss of liquidity.

Also of interest in my quest... (Peak Oil)

"The peaking of world oil production presents the U.S. and the world with an
unprecedented risk management problem. As peaking is approached, liquid fuel
prices and price volatility will increase dramatically, and, without timely mitigation,
the economic, social, and political costs will be unprecedented. Viable mitigation
options exist on both the supply and demand sides, but to have substantial
impact, they must be initiated more than a decade in advance of peaking."

DOE, 2005, PEAKING OF WORLD OIL PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT