To the editor:
The answer I would give was not an option on the poll [March 13 Patch Poll: Who’s at Fault for the High Price of Gasoline in the County?].
There should have been an option to blame the Fed. (And no, this is not an endorsement for Ron Paul.)
To explain my point: Oil is priced in dollars. Hence the term petrodollars.
When the Fed prints (actually just electronically creates) trillions of dollars ($16T and counting, last time I checked) and uses them to buy up U.S. Treasury debt, the resulting loss of value per dollar is promptly priced into the price per barrel of oil.
You cannot increase the number of dollars in the pot called the U.S. economy without decreasing the value of each one. The Fed has always (since 1913) “controlled” the money supply, but traditionally has only added cash to the pot when the GDP called for it.
With QE1, QE2 and the stealth QE3 (since they are still buying up Treasury debt), money has been added but there has been no corresponding increase in the value added to our economy by actual economic activity (ie. “job-less recovery”). Therefore, each dollar in circulation is worth proportionately less.
Those who price the oil—so-called “speculators” (though they are the same entities who have always brokered this commodity, we just give them a dirty name now and use them as a convenient target)—are aware of this. So they price in the decreased value of the dollar going forward; by about 90-120 days usually.
The dollar in my pocket is worth less than it was yesterday and last year. The price of gas is perhaps a little more sensitive to this than other commodities because of the petrodollar thing, but it takes more dollars to buy gas now and the direct cause is not political or environmental policy so much as the deliberate action of the Fed in trying to keep our economy going in the face of two ridiculously obvious facts (the gorilla in the room).
1. Our government, at virtually all levels is SPENDING TOO MUCH. This is by definition. “Too much” means they are spending money they neither have now nor are likely to have in the future and do so in the expectation that they can continue to raise taxes to cover it and continue to spend more each year as well.
2. The National Debt divided by the population, ie. per capita, of Greece is $38,937 and of USA is $44,215 (source: http://www.theblaze.com/stories/this-chart-of-americas-per-capita-debt-should-worry-you/ ) If Greece is bankrupt and it is a crisis for all of Europe to deal with, what does that make us? We’re at the ER but still sitting in the waiting room clutching our national chest and about to expire.
Our chief executives (federal and state) and the legislatures have their hands on the wheel, their feet on the throttle and no one is even looking for the brake except a few Republicans of the “tea party” ilk who are berated and called obstructionist for even suggesting we figure out where the money is coming from BEFORE we spend it.
This fiscal reality check happens to be a rule of Congress that all the other members have long forgotten or abandoned. The only ones trying to stop this runaway train are being called all sorts of names. To me, they are the heroes.
In my opinion.
I believe my statements and stats to be based on facts.
Good idea, this poll.