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
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Permalink Reply by 2s72s0k9mm8gd on
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Corporatism=Capitalism with greed as the sole motivation.
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Permalink Reply by Linda A on
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not exactly glenn - Corporatism is the RESULT of Fed govt support by way of favors in regs and assisting in eliminating the competition thus their lobbyists pay-back by big donations to campaigns etc.
GE would be a great example of Corporatism...
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Permalink Reply by Dan on -
Linda,
That sure sounds like greed to me. It sounds like the tenicals of corp. greed are deep into Govt. If we need to bust up Govt. down to size, wouldn't corps. have to be busted down to size for any meaningfull change to take place?
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absolutely Mark - been preaching this since 2007 when I first became a political activist and aware of what and who is dragging this country into the toilet!
VOTE ALL INCUMBENTS OUT! With two cycles we could have the house CLEAN! The only problem is people have become complacent and 'let others do it' - same as in the work places, same as in the schools, etc etc...
We can't slap someone across the head and say, "wake up" but sure would like to give it a try!
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Permalink Reply by Dan on
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Mark,
We have to try to understand as much about the important issues and vote accordingly, but I wish I thought the answers were that easy. We are in a throw away society. Car breaks, go buy a new one. TV breaks, have to buy a new one. Govt. broken, start over? We have become so polarized with so many issues and concerns we fail to recognize a good plan or deed that originates from within goverment and prop up idiots that are most alligned with our agendas. We are dismanteling our goverment, busineses, education and training programs, the space program and research & devolopment, health care and social programs, culture and the arts and many are trying to scrap and rewrite history itself. We are dismanteling hope for our children. When I watch the news each day I am ambarresed.
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@Dan - starting over with new representation does not mean we must 'throw the baby out with the bathwater' - it means to define what will work and what won't work, keeping in mind free enterprise and free Capitalism.
Also, require our reps to READ the Constitution, and hold them to their oath of office to uphold and defend the Constitution.
Here is a post of mine which simply defines 'how to follow the Constitution - 101'...
"Not Yours To Give"
http://www.gather.com/viewArticle.action?articleId=281474981146430
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Permalink Reply by Dan on
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Glen,
The commodity markets are not tied to supply and demand. Speculators have taken control of oil prices. The news of the XL pipeline and the Straight of Hormuz have only fueled their high price speculation. And we are exporting refined products to just above short. The fastest cure for gasoline prices would be if Obama maned up and said he would dip into the strategic reserve. He wouldn't have to actually use any of it, the news alone would make the price drop and the speculators would learn a lesson in their wallet. The price is only perceived on paper. Virtual Economy. We never learn from history, the great depresion happened from inflated paper trading.
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and, Dan, we were IN the Great Depression for ten years before people even realized it! THEN the crap started flying. The stock market is in the dump BUT they change the way it is measured thus giving a FALSE sense of stability! Anyone who believes otherwise has a fool for a brain!
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Permalink Reply by Dan on
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Linda,
When you look at the tax code, the stock market could be inflated by 25% and still be a good investment being taxed at the Mitt rate. Your wealth is still worth quite a % more after taxes.
I would guess a lot of people knew it back then. I'm sure the few thousand unemployed people in our country that actually want to go out and work are feeling "it" today. My Dad's family had to live with the poverty of the Depression and his Dad had a full time mining job. It took 10 years for the elite to notice because they were busy counting the money they grabbed for 10 years. We are very blessed to live in a region with energy beneath our feet because it will give us a cushion when the next I.O.U comes due this fall. We have kicked the can so far down the road there is hardly enough metal left in it to get a good kick in.
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