GAS Prices Are NOT Rising; DOLLAR is FALLING!

Discussions on this site are very interesting and it may be helpful to understand the nature of the "Dollar"; cause of the falling dollar and rising prices is printing money out of thin air (nothing to back it).  So, not only are gas prices rising, so is everything else, at the same rate, and for the same reason.  Please read this explanation from Forbes Magazine.  Another issue to consider is that the Eastern oil rich countries are no longer using the U.S. Dollar, Iran being the latest.  Hillary Clinton said 'we can't go to war with all of them".  Iraq proposed the Oil Bourse first, we went to war, now Iran and Syria have followed.  They NO LONGER WANT our 'valueless paper dollars'!

In light of ALL this, please review the monetary policies of ALL our Presidential candidates and the ONLY one talking about monetary policies, the printing of money, the bureaucracy and unending expansion of the government, endless invasions (wars), eliminating the Federal Reserve (who is NOT a part of the Federal Govt, but a private international bank) and Federal Reserve PRINTS THE MONEY!

That person in Congressman Ron Paul, whom the media ignores and maligns, gets the largest crowds, more donations from our Military than ALL the other candidates combined (including Obama), gives specifics on cutting the deficit by $1 Trillion dollars the first year, will downsize the govt., eliminate the Federal Reserve, promote private enterprise, and supports freedom and prosperity for all, NOT the elites and corporatists and international banksters! 

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Gasoline Prices Are Not Rising, the Dollar Is Falling

http://www.forbes.com/sites/louiswoodhill/2012/02/22/gasoline-price...

Panic is in the air as gasoline prices move above $4.00 per gallon. Politicians and pundits are rounding up the usual suspects, looking for someone or something to blame for this latest outrage to middle class family budgets. In a rare display of bipartisanship, President Obama and Speaker of the House John Boehner are both wringing their hands over the prospect of seeing their newly extended Social Security tax cut gobbled up by rising gasoline costs.

Unfortunately, the talking heads that are trying to explain the reasons for high oil prices are missing one tiny detail. Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more.

What the politicians, analysts, and pundits are missing is that prices are ratios. Gasoline prices reflect crude oil prices, so let’s use West Texas Intermediate (WTI) crude oil to illustrate this crucial point.

As this is written, West Texas Intermediate crude oil (WTI) is trading at $105.88/bbl. All this means is that the market value of a barrel of WTI is 105.88 times the market value of “the dollar”. It is also true that WTI is trading at €79.95/bbl, ¥8,439.69/barrel, and £67.13/bbl. In all of these cases, the market value of WTI is the same. What is different in each case is the value of the monetary unit (euros, yen, and British pounds, respectively) being used to calculate the ratio that expresses the price.

In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.

During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl. It has been higher than that during 225 of those months and lower than that during 268 of those months. Plotted as a graph, the line representing the price of a barrel of oil in terms of gold has crossed the horizontal line representing the long-term average price (Au0.0732/bbl) 29 times.

At Au0.0602/bbl, today’s WTI price is only 82% of its average over the past 41+ years. Assuming that gold prices remained at today’s $1,759.30/oz, WTI prices would have to rise by about 22%, to $128.86/bbl, in order to reach their long-term average in terms of gold. As mentioned earlier, such an increase would drive up retail gasoline prices by somewhere between $0.65 and $0.75 per gallon.

At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot. And, because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices.

Federal Reserve Chairman Ben Bernanke uses a “core CPI index” that excludes food and energy to guide monetary policy. From Big Ben’s point of view, rising gasoline prices are not a problem. For the rest of us, they are becoming a big problem.

Over the centuries, gold has been “the golden constant”. Eventually, all prices equilibrate with gold. This is why gold represents the best available standard in terms of which to define the value of a monetary unit. Forty-one years ago, when the value of the dollar was defined in terms of gold at $35/oz, WTI was selling for $3.56/bbl.

Right now, the threat posed by rising gasoline prices is not just to family budgets. An even greater danger is that the government will use escalating oil prices as an excuse to do something stupid.

After President Nixon abrogated the Bretton Woods monetary arrangement in stages starting in September 1971, both gold prices and oil prices started to rise. The government responded by imposing wage-price controls. This made a bad situation much worse.

This time around, the stupid policies being considered to “deal with” rising gasoline prices include additional cuts in payroll taxes and higher taxes on energy producers.

During the 1970s, the toxic combination of a weak dollar, high tax rates, and onerous regulations introduced a new word into America’s economic vocabulary: stagflation. Reaganomics banished this word to the history books. Now, President Obama and Fed Chairman Bernanke are teaming up to give stagflation another try. It is not likely that Americans will like it any more this time around than they did 40 years ago


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Replies to This Discussion

Permalink Reply by Linda A on February 27, 2012 at 12:23pm

we can't keep up with the presses but it would be a LOT better for a LOT of folks - especially those who worked hard all their lives only to have their SS reserves stolen, taxed twice (and again when spent), dollars received are worth pennies on the dollars *cough - 'invested', and reimbursement of benefits constantly re-calculated so people will never get back what they 'invested' in that retirement fund.

Now, trust me when I tell you, they are stealing your 401k's and IRA's as we speak!  They own them, control them (as far as how people can get their money, and when, and how much) and then the final nail in that coffin is when it is all turned into Annuities for more 'wealth redistribution'.   Because, those who didn't work couldn't contribute and that's just not FAIR!

Permalink Reply by Dan on February 27, 2012 at 2:23pm

Mark, 

Glenn and Linda A are right.  It is the market.  It was the good news that affected the price.  Easing regulation in a real free market would have taken much longer to effect the price.  Glenn is right.  Food should not be priced by a virtual paper trade.  Millions in the world have already staved from market minipulation causing  un-natural price spikes.  We could be next.  Linda A is  3/4 right, printing money has caused considerable increases in everything.  If we only have had 3% inflation why is a can of beans twice as much in 2 years?

Permalink Reply by Linda A on February 27, 2012 at 5:49pm

AND the size of the can's has decreased as well (and the amount inside continues to go down too)...

Permalink Reply by Dan on February 28, 2012 at 4:11am

It just doesn't taste the same any more either.

Permalink Reply by Linda A on February 28, 2012 at 4:46am

@Dan - using GMO ingredients, along with MSG - but that's another post for another time...

Permalink Reply by Linda A on February 27, 2012 at 12:01pm

@glenn - coffee and sugar are among the other commodities which take the same big hit!!!

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on February 27, 2012 at 12:44pm

To me it sounds like all this international , "world economy" stuff hurts us more than helps us. The "us" I refer to is you and me , the average working class.

This nation is blessed with an abundance of fertile land and natural resources. Why should we care how many Euros or Yen or whatever equal our dollar? Unless one of these currencies is the coin of the realm of a country we NEED to import something from? IMO we need to step back and wake up to the fact that the rest of the world needs us more than we need them and adjust accordingly.

We are capable of being self sufficient in almost every need , so why are we so bent to stumble down this path of destruction? We are like a big , dumb , lummox being sheistered out of his lunch by the skinny , weak , prick of a kid down the street.

We , as a nation , need to wake up and take control of our destiny before it's too late!

Coffee , cocoa , meat , sugar , oil , gas, corn , wheat , oats , soybeans , cotton..........any and all of these are Staples of Life and have no place being traded like stocks. They should remain here and if there is an excess , THEN sell the excess to the rest of the world. No one  , not one man , woman , or child in this nation should ever go without so that some trader in Chicago can eat Veal while we starve. Capitalism with a moral and nationalistic basis is to be admired and encouraged. Capitalism with greed as the sole motivation should , and must be , be condemned!

Whatever happened to an honest profit margin being the reward? I guess the "me generation" is totally in control these days. Makes me sick. Things have to turn around or we are doomed.

Permalink Reply by Linda A on February 27, 2012 at 12:54pm

@glen - agree with all but would like to clarify 'Capitalism'...

Free Capitalism is not to blame, Corporatism is the problem.  Corporatism are corporations supported by our fed govt - loose regulations in return for political money and support.  Strict regulations for competition, the Free Capitalists.  So, the greed is with the Corporatists, not Capitalism!

Thanks...

Permalink Reply by Chartist on February 27, 2012 at 1:48pm

This all a moot point.....the only thing folks care about on this site is what's in it for me?

Permalink Reply by Linda A on February 27, 2012 at 1:59pm

that may be Jim, however I like to give the benefit of the doubt and always take an opportunity to enlighten those who really don't understand - are probably too busy working day and night to even think about what is happening, let alone doing something about it.

have a nice evening...

2s72s0k9mm8gdPermalink Reply by 2s72s0k9mm8gd on February 27, 2012 at 2:08pm

Jim, I have to disagree. We are not all so shallow as you suggest.

Permalink Reply by Dan on February 27, 2012 at 2:46pm

Jim,

If that is true, what is "in it" for you?

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