Oil prices plummeted -305 percent on Monday, going into the negative for the first time ever. From a year’s high of about $60, a barrel of crude oil was going for a record low of -$36.73 on Wall Street. In theory, this means that buyers would be paid for transportation and storage costs to take delivery of oil. Some believe this downward trend will continue even further.
The major futures markets are pointing to a decline of 1.4 percent and the Dow Jones Industrial Average fell over 592 points or 2.3 percent. The S&P 500 and Nasdaq Composite were down 1.79 percent and 1.03 percent, respectively.
Rafi Farber, a monetary analyst whose article can be read online, explained the economic situation.
“Anyone who says they know for sure about anything that will happen is lying,” Farber stated as a disclaimer. “There is so much oil being produced and no one is using it because everyone is in lockdown. The production of oil is outpacing the usage so oil needs to be stored. No one drives, very little manufacturing is being done.”
“The other part of the puzzle is that Russia and Saudi Arabia couldn’t agree on production cuts and now they are trying to flood the market with oil to price each other out of the market. This happened at the same time the coronavirus destroyed the demand for oil.”
“It is not accurate to simply state that the price of oil dropped below zero. Oil is traded in contract, futures of delivery of oil based on speculation. No one wants to take delivery today because storage is in high demand and therefore expensive. The supply of oil storage is expensive so the people who had contracts to receive oil had to pay someone else to take these contracts. So the worth, or price, of delivery today went into the negatives.
“The longer we remain in lockdown, the greater the chance that the next delivery in July will also go into the negatives. But that hasn’t actually happened yet because oil still has uses and practical value.”
“What might actually happen in the longer term is that Russia might be intentionally trying to destroy the U.S. economy by first destroying the oil market price. But this might be a tag team. It might appear to be a fight between Russia and Saudi Arabia that pushes down the oil prices but it might also be a clandestine attack. The U.S. is the biggest oil producer in the world but the reason we have been producing so much oil is because the Federal Reserve has been printing so many dollars. It is so easy for the oil companies to get loan after loan that it is easy for them to keep producing oil at a loss.”
“Once oil is very cheap, all these American companies will go bankrupt. And when that happens, the Federal Reserve will need to print even more money to bail them out. Once that happens, the gold market can get pushed to infinity. Just like the futures market got pushed to push the oil prices below zero, they can buy old contracts at the current market value of $1,700 an ounce and demand delivery all at the same time, which would clear out the commodities exchange of all physical gold. If these people who have sold their contracts and then can’t deliver the oil, they are going to have to go into the market and buy physical gold anywhere they can get it at any price that is being demanded.”
“Just like the price of oil dropped an unprecedented amount in just a few hours, at any time in the future, you can see the price of gold go to $20,000 in two hours. That would destroy the U.S. economy. That would cause hyperinflation and the U.S. would no longer be the most powerful economy. The U.S. economy would be D.O.A. (dead on arrival).”
Rabbi Pinchas Winston, an end of days expert, had a powerful perspective on what the economy will look like after the Messiah.
“What will the world look like if you took away the yetzer hara (evil inclination?” Rabbi Winston asked rhetorically. “That is the template for the post-Messiah era. Without the evil inclination, without pride, without anger or gluttony, what will people want to buy? We are already getting a taste of that now. How many sins are impossible or irrelevant in lockdown?”
Rabbi Winston pointed out that casual sex, a sin that was thought unstoppable just a few months ago, is now a life-threatening proposition.
“Restaurants are closed. Gluttony and excessive focus on eating is out. Pride is one of the most effective tools of the yetser hara and the entire world has been humbled,” Rabbi Winston said. “Except for the media which seems to have doubled down on arrogance.”
Rabbi Winston cited a section of the Talmud Sanhedrin which stated that in the era of the Messiah, grapes will be cheap but wine will be expensive.
“This doesn’t make sense if you think about it based on the pre-coronavirus values. But those values don’t exist anymore. Only things that can be used in a spiritual manner will have worth in the future. In times of need when humility is the rule and sin is on the decline, Torah is the best commodity. The best investment today is in things like kippot (head-covering), tzitzit (ritual fringes), and mezuzot (scrolls placed on the doorpost). People are clamoring to go to synagogue like never before.”
“What has been driving the economy until now was a sin tax. People were paying big money to sin. Greed was considered a good and necessary part of the economy. But it isn’t good. It destroys people.”
“Until the Moshiach comes, there will be a very difficult time in which the evil inclination will get a dressing down and people are going to need to reevaluate how they invest their time and money. But not everyone is going to get that and we are already seeing that now. There are people who insist on living in illusions of what used to be. We saw in the Bible that most of the Jews did not understand that the plagues signaled a change in reality. People are waiting for everything to go back to normal. That was what people did after 9-11 but so many things were irrevocably changed or lost. This is an even greater change and the world is not going back.”