Rising Gas Prices Explained

Not long ago I stumbled on an outstanding reporter on, of all places,  a local Fox affiliate in Cincinnati, Ohio named Ben Swann.  I don’t even live in Ohio but I came across him while on Facebook (yes, I’m on FB).  Below, and in only a matter of minutes,  Swann does an outstanding job explaining a complex issue that impacts all of us and not just at the gas pump.  The issue is the immorality of our entire monetary system.   The Machiavellian beauty of a fiat currency (i.e., printing money out of thin air)  is that it allows the federal government to benefit directly from the value of the new dollars simply because, at least initially,  the new dollars have the same buying power as the old dollars.  Even more appealing to those in power is that it takes time for those “new” dollars to trickle down through the economy which inevitably results in higher prices (inflation).   Because of this lag between the time new dollars are printed and when higher prices finally started to be noticed at the pump, the grocery store, or in your pocket, the government can blame the higher prices on … hurricanes . . . embargoes … wars … oil spills … cold weather … the price of tea in China … or on anything that may be happening in the world at the time and the American people are none the wiser.  How clever is that!

In addition, you shouldn’t overlook the value to the federal government in promoting inflationary monetary polices to help stimulate job growth. In a slightly different context and as mentioned in a previous blog post, Brian Doherty recently wrote in Reason Magazine:

“In a 1930s context of very powerful unions, [John Maynard] Keynes thought it was politically impossible to achieve the nominal wage reductions necessary to clear the market for labor—that is, to let wages fall so that hiring would be cheaper and unemployment thereby reduced. He instead promoted inflation as a means to trick labor into taking lower real wages.”

Today the federal government through the levers of the wizards at the Federal Reserve trick everyone, and not just a bunch of no-neck and gullible union bosses.   So, while  the focus of the Fed today may not be powerful unions, they can still provide employers with a means to pay their workers less while appearing to pay them more.  You want to solve the unemployment problem then devalue the currency to make labor cheaper for employers.   I bet you never thought that the simple manipulation of the currency could be such a boon for big business and big government, even while the rest of us are being defrauded without ever knowing.   No wonder big business and big government are in bed together (can you say “crony-capitalism”).  Thankfully, Ben Swann helps pull back the veil.

Explore posts in the same categories: Politics

31 Comments on “Rising Gas Prices Explained”

  1. Steve M Says:

    I am a business owner and I know that this in itself makes me an evil person, but I do not want to see the buying power of my employees eroded through the printing of money out of thin air. Think of this, while it allows my labor costs to go down in real terms, it also causes all my other expenses to go up (i.e. cost of goods, cost of equipment, cost of fuel, etc.). As a business owner, I wish the government would just get out of the way and let the market determine the cost of these things. It would make my planning for the future much more predictable. I would not have to guess what some moron at the federal reserve was going to do. I agree that honest money is the most important change that needs to happen in this country. This said, I still find four more years of Obama to be more than I can stomach. I will vote for whomever it is that can defeat him.

  2. Sean Gerety Says:

    There is nothing evil about being a business owner. I frankly don’t even like the phrase “crony capitalism” since it gives capitalism (a good thing) a bad name. I’d say fascism but that word is so loaded down with brown shirt imagery and death camps that it is a word better reserved for things like the TSA.

    Also, you’d better get some Pepto as I can virtually guarantee 4 more years of Obama. We just need to make sure that we get some more constitutional conservatives (you can’t even say conservative any more without qualifying it) elected to the Senate.

  3. Steve M Says:

    One thing I have found to be humorous in certain stories about gas prices going up that we hear from time to time are these people, usually liberal politicians, who blame it on greedy oil companies. When prices eventually drop, they never come back and thank the oil companies for becoming less greedy. Apparently they have short memories.

  4. justbybelief Says:

    “…they can still provide employers with a means to pay their workers less while appearing to pay them more.”

    Nicely worded. It drives the point home better than the ‘Hidden Tax.’
    “…but I do not want to see the buying power of my employees eroded through the printing of money out of thin air.”

    Yes indeed, much less the robbing of our kid’s future.

    “This said, I still find four more years of Obama to be more than I can stomach.”

    Did you hear about this: http://www.youtube.com/watch?feature=player_embedded&v=6Qm7Idz3OY8
    “I’d say fascism but…”

    How ’bout ‘Oligarchical Collectivism?’ ‘Feudalism?’

  5. justbybelief Says:

    “I will vote for whomever it is that can defeat him.”

    I know I sound like a broken record…, but if the federal reserve issue is THE issue and no one else will address it but R.P. how will voting for anyone else help?

    Rumor has it that the federal budget cannot be balanced even if we were taxed at 100% of our income. With anyone but R.P. in office it will only get worse, it that is possible.

  6. justbybelief Says:

    “This said, I still find four more years of Obama to be more than I can stomach.”

    Admittedly, I get sick to my stomach listening to him too. I thought Clinton was bad. I think one of the worst things about the end-times, for believers, at least, will be the living in a world where we’re constantly inundated with lies.

  7. Denson Dube Says:

    God hates commercial fraud.
    Leviticus 19: 35 Ye shall do no unrighteousness in judgment, in meteyard, in weight, or in measure.
    36 Just balances, just weights, a just ephah, and a just hin, shall ye have: I am the LORD your God, which brought you out of the land of Egypt.
    Proverbs 11: 1 A false balance is abomination to the LORD: but a just weight is his delight.
    Proverbs 16: 11 A just weight and balance are the Lord’s: all the weights of the bag are his work.

  8. Neil Says:

    One clarification may help: There is the Bureau of Labor Statistics CPI, which *does* include groceries & fuel oil (N/A if you have natural gas, right?), & then there’s Core Inflation, which the speaker was referring to. This indeed excludes food & energy, which if you think about it, is crazy since these are more important to daily life than durable goods etc. But in a classic example of Question Begging, they rejected the CPI for Fed policy, which is dubious enough, because they don’t like its volatility. Once again, Clark’s critique on Science & Truth come to mind.

  9. […] Rising Gas Prices Explained (godshammer.wordpress.com) […]

  10. Neil Says:

    Correction to my last post: I think the fallacy in the Core Inflation metric is better described as Special Pleading, not petitio principii. And I should’ve mentioned that oil is an important price multiplier, since so many goods & services depend on it.

    Peter Schiff has a very similar analysis of oil price increases, along with a scathing rebuke of Bill O’Reilly for advocating oil export restrictions. It is shocking how often those who call themselves conservatives betray their alleged free-market principles. Eliminating foreign oil dependence is a Red Herring; it is not the problem. Even dictators have to respect market forces. Besides, Canada & Mexico are our two largest foreign suppliers; what’s wrong with them?


  11. justbybelief Says:

    “It is shocking how often those who call themselves conservatives betray their alleged free-market principles.”

    They are veritably wolves in sheep’s clothing. It is also amazing to me how the same ones betray their alleged Constitutional principles concerning foreign policy–war mongers one and all, empty suits and skirts.

  12. Steve Matthews Says:

    “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” – John Maynard Keynes, The Economic Consequences of the Peace.

  13. LJ Says:

    Ron Paul poked fun at his three establishment opponents and their claims that they could lower gas prices to $2 bucks a gallon, or thereabouts, on a network news show interview recently.

    Dr. Paul said he could drop the price of a gallon of gasoline to one thin dime overnight.

    The talking head interviewer kinda rolled her eyes like “here he goes crazy Ron Paul.” Paul held up a silver U.S. dime worth $3.60 based on that day’s spot silver price – the price of a gallon of regular gasoline.

    Crazy Ron Paul

  14. LJ Says:

    Just for fun, here’s what your silver dime is worth today. The spot price has dropped over the past few days.

    Using the latest metal prices and the specifications above, these are the numbers required to calculate melt value:
     $33.37   = silver price / ounce on Mar 07, 2012.
    .90   = silver %
     $3.7291   = copper price / pound on Mar 07, 2012.
    .10   = copper %
    2.5   = total weight in grams
    .0321507466   = ounce/gram conversion factor
    .00220462262   = pound/gram conversion factor (see note directly below)

    The NYMEX uses pounds to price copper and that means we need to multiply the metal price by .00220462262 to make the conversion to grams. The silver price is based in troy ounces and that means we need to multiply the metal price by .0321507466 to make the conversion to grams.

    1. Calculate 90% silver value :

        (33.37 × .0321507466 × 2.5 × .90)  =  $2.4139584315

    $2.4139 is the rounded silver value for the 1946-1964 silver dime on March 07, 2012. This is usually the value used by coin dealers when selling these coins at melt value. However, the total melt value is continued below.

    2. Calculate 10% copper value :

        (3.7291 × .00220462262 × 2.5 × .10)  =  $0.0020551

    3. Add the two together :

        $2.4139584315 + $0.0020551 = $2.4160135315

    $2.4160135315 is the total melt value for the 1946-1964 silver dime on March 07, 2012.

  15. Sean Gerety Says:

    @Steve Matthews. It’s so easy to read into that quote from Keynes that he had some sort of moral indignation at the “debauching” of the currency, but if it’s true that he also advocated inflationary policies in order to reduce real wages in order to increase employment, then the quote could be read in an entirely different way. I’ve never read any Keynes, so do you have any evidence that he supported inflationary policies in order to ease unemployment and undermine the power of the unions per the Reason quote?

  16. Sean Gerety Says:

    @LJ That crazy Paul speaks to the Keynes quote, written who knows how many decades ago. People roll their eyes because not “one in a million” understand what the gov’t has and continues to do to our money. Even the belief that paper is money is an impressive deceit. But thank you for doing all the math to show that Paul is really one in a million. 🙂

  17. Steve Matthews Says:

    I’m like you and have not read a lot of Keynes. That quote was from a book he wrote in 1919. In his General Theory published in 1936, Keynes argued that governments should deficit spend in times of economic downturn in order to make up for lack of demand from the private sector.

    Regarding the quote, you’re correct in saying that it can be read in one of two ways. In either case, it’s a very good statement on inflation, one of the best I’ve read.

    Regarding your question about Keynes’ support for inflation to ease unemployment, let me get back to you and that.

  18. Neil Says:

    @LJ, I like your analysis of the numismatic angle, but here’s another one for comparison: The 1963 Corvette Sting Ray base price was $4241 (Source: Wikipedia). Note, this was before the Great Society & Vietnam. Now, MSRP for a 2012 Corvette Coupe is $49,600 (Source: http://www.chevrolet.com).

    It is ironic that the US Mint has for some time now despaired of the public rejecting their metal dollars, which have lower life-cycle costs than paper ones. This was no problem when the SIlver Dollar reigned. BTW, keep your pre-1985 copper pennies, though it is illegal to melt them down.

  19. LJ Says:

    @ Neil: MSRP for a 2012 Corvette Coupe is $49,600 (Source: http://www.chevrolet.com).

    Buy that new Corvette in gold? Cost you 29 little 1-oz. plates of gold to drive it off the lot (if it was legal tender). Then, press on the accelerator and your next tank of gas will cost you TWO ounces of silver!

  20. LJ Says:

    take a look at this chart, it’s amazing! Something really, really significant happened about 1971. Anybody know what it was?

    I hope the link works here: http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

  21. LJ Says:

    See if that one works. Sorry if it doesn’t. But the chart shows, over approximately 150 year period, the historical price of gold. Huge spike in 1971.

  22. Sean Gerety Says:

    What happened was Nixon when he threw the last vestiges of the gold standard onto the trash heap.

  23. LJ Says:

    @ Sean: What happened was Nixon when he threw the last vestiges of the gold standard onto the trash heap.

    Yep, and if you look at a chart from 1999 to 2012 the rise is even more spectacular, especially from 2008 till now. Next question, what happened in 2008 to make gold go through the roof?

    I already know you know the answer, so does everyone else, so to me the interesting point is that BOTH establishment Republicans, like Nixon and Bush, and plain old Democrats, like the Obamination, are pretty much the same beast wearing different titles.

    Ron Paul is the only genuine change in the status quo we’ve been offered in over 40 years. Everything else is just one more step in the final destruction of our Republic.

  24. Neil Says:

    Good remarks. Nixon made matters worse by sending military aid (Operation Nickel Grass) to Israel during the Yom Kippur War. The resultant Arab response was the oil embargo which brought on the 1973 Energy Crisis. I recall everyone blaming the Arabs or the oil companies, always a convenient foil.

    Democrats have long nursed a pathological hatred of Nixon, but not because he was a conservative. Sort of like Bolshevik hatred of Mensheviks or Fascists.

  25. LJ Says:

    Blowback. Dr. Paul is pointing it out when he gets to get a word in edgewise. It’s a subject that turns the Neocons virtually apoplectic.

    I spent all the mid ’70’s in the Navy so I missed much of the recession, gas lines, and malaise. No car, no gas line; no money, all the food you want in the galley; cheap beer at the gee dunk; perfect example of life within totalitarianism.

    Gas lines … a thing of the FUTURE?

  26. Neil Says:

    LJ, I have noticed that while Progressives often laud schoolteachers as noble, selfless servants of the public, “conservatives” do the same with emergency services & the military. The common factor is, one has to earn a gov’t paycheck to have a truly honorable vocation, while private businessmen get no respect unless they pay homage to Progressive sensibilities, which seems true of all the prominent ones I can think of these days. And among Christians, pastors & missionaries are the only ones *truly* submitted to God’s will.

  27. Steve Matthews Says:

    @ LJ,

    Government price controls were the cause of the ’70s gas lines. Since the price of gas was artificially suppressed, so was the supply. This is what led to gas shortages. If the government’s dumb enough to try price controls again – and I wouldn’t put it past them – we’ll see the same thing all over.

    You can read Thomas Sowell’s remarks about this here about gas shortages here http://www.washingtontimes.com/news/2006/may/15/20060515-122820-6110r/?page=all

  28. LJ Says:

    Yeah, to counteract that I’m looking for a 3/4 ton pickup that will run on baby spotted owls.

  29. Steve Matthews Says:

    Better not let the tree huggers hear that.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: