The top headline in today’s local paper recently read “Who’s To Blame For Gas Prices?–The More We Pay At The Pump, The More We Want To Know Who Is Responsible.” There were pictures of President Obama, the street sign for Wall Street, an oil refinery and Capitol Hill accompanying the twsiting storyline. We’ve all felt pump pain, we’ve heard all the Presidential candidates weigh in on the deal, and we’ve grown weary of the finger-pointing because none of it makes sense.
Do not despair! There is a simple, though convoluted, answer to the question but the answer doesn’t solve the problem America is facing.
Examine some of the facts. The world has more oil available today than it has had in decades. Oil demand is dwindling as the world’s economies brace for contraction. Oil production is still rolling along quite nicely. The “proven” reserves are higher than they’ve been in 20 years. Logically then, the price of the valuable commodity should be on a downward spiral.
President Obama, the master at diverting attention from the real source of any problem, points to oil speculators. Sorry Barack, in a market, speculators may influence the direction of a daily move but long-term they are subject to the basic supply-and-demand pricing structure as the rest of us. The GOP Presidential hopefuls blame Obama. In this they are partially correct but Obama has about as much control over the oil prices as he does over the lack of logic he spewed when pointing at the speculators.
Where the answer lies is in the root of the liberal, socialist policies we have endured for the past four years since President Bush allowed the bailout of the financial sector and more specifically the maniacal fiat manipulations of one Ben (BS) Bernanke and the Federal Reserve. For his approved actions and reappointment, Barack Hussein Obama has to take full responsibility.
BS and his boss were facing an economic crisis, a crisis they failed to understand. Any politician’s instinct is “Do Something” rather than apply logic and “Stand Aside, Wait And Things Will Sort Themselves Out.” This is especially true for someone who feels unlimited regulation rather than unlimited commerce is the correct way to operate. BS and Obama cooked up the “stimulus” plan.
The Federal Reserve began printing money, lots and lots of money. When this didn’t alter the course of the economic slowdown, the Fed churned out more fiat for QE2. And it has churned out more yet while supporting The European Central Bank’s efforts to give Greece the monetary support it needs to continue its government mismanagement. All this printing has devalued, through inflation, the U.S. dollar.
I can already hear the howls of protest from the Left. “The dollar,” they’ll claim, “is stronger than its ever been!” And, per the FOREX (the foreign exchange) as measured against other fiat, they are correct. But all this proves is the fiat American dollar is more valuable than any other fiat from any other government in the world. In other words, measuring our worthless paper against other countries’ worthless paper in a waste of time.
This is where the commodities market, most notably oil, steps into the picture. Commodities measure the pace of the world’s economy. Every developed economy and every developing economy needs oil to operate in an economically-competitive way with every other economy operating. This is another lesson Obama failed to learn from watching the collapse of Spain and its “green” economy. The Spaniards simply weren’t competitive economically and have not recovered yet even though they ditched the green movement more than five years ago.
But friend Oil has been pegged to the dollar’s value for more than 60 years everywhere in the world. When BS ran the printing press at the Federal Reserve without qualms for the past four years–UNDER PRESIDENTIAL DIRECTION, when he boosted and boosted the fiat supply of a valueless item, he failed to recognize the consequences. For an allegedly smart man and former Princeton professor this is inexcusable and potentially a criminal dereliction of duty for counterfeiting legal fiat.
His only excuse? He is a product of his ivory-tower background, the fact he has never been a manager in the private sector and was promoted to a position by other ivory tower-educated miscreants who know only what their misguided education spoon-fed them. In short, the mindset of the academia fools involved missed a vital economic lesson somewhere along the line in their social education. The lesson is one every businessman in the country knows, “You have to have a concrete value in your product or you go bust.”
BS, and Obama, and Bush, and all the back-slapping pols who roamed the halls of Congress cheered the printing press but the fiat it produced had no value to support it, there was only more fiat available. And the banking system cannot remove it without resulting inflation and a longer, deeper recession than it was supposed to alleviate–probably with a spiralling inflation rate built-in.
The pump price is a mere harbinger of the hyper-inflation coming to America soon for the ultimate fool’s folly–an over-utilized printing press. If oil makes the world economy run, it will be doing so without the dollar as the benchmark currency.
Hmm…gold, the metal, is the only history-tested commodity with a core value unchallenged. Oil is “black gold.” You don’t suppose our politicians will get the connection to their relentless overuse of the printing press, do you? I don’t think so either. That means we’ll just have to pay through the nose or alter our lifestyle. Buckle up America, there’s a wreck coming at you!
“I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man”–Thomas Jefferson
Michael McCune spent 16 years as a government tax auditor and then operated a consulting/accounting business for 14 years. For 11 years he wrote a biweekly opinion column for the local paper (1981-1992).