Gold, Gas, and the Collapse of the Dollar

[micah4]

Over the past 6 months gold has gone increased 43%, for an annual rate of change of +100%.

So many whining about the high price of gas, but nobody mentions the obvious fact that a huge factor is the vastly depreciated value of the dollar. An ounce of gold six months ago would have bought just about the same amount of gas as it would buy today; the real price of gas hasn't gone up a bit in the last six months.

Politicians blame oil companies, and oil companies blame the politicians, but the biggest culprit here is the interference of the Federal Reserve banking system that 3 years ago cranked interests rates down to 1.5% and executed massive open market bond purchases in order to flood the market with cheapened greenbacks. Of course your gas is more expensive, there's a sea of cheap $$ credits just floating around desperately trying to buy some real tangible commodity.

Now the fed's desperately trying to control this to keep "confidence" in the dollar up. Who remembers the removal of 30yr bond offerings a few years ago? They fed just recently reintroduced them of course, now that they're doing all they can to sop up some extra $, including encouraging increased reliance on cheap foreign imports from china so that it can use a manipulated "basket of goods" to hide the true extent of inflation. Does anybody think that "dollar confidence" wasn't a major factor in our incursion to Iraq? Saddam had only shortly prior announced that he was no longer accepting payment for his barrels of oil in dollars, he wanted Euros, which would have forced a huge reduction in global dollar bank reserves. Can't have that, can we?

But even so, we got the world paying for Iraqi oil with dollars again, and yet global commodity prices and gold won't lie; gold has been on a rampage with no sign of slowing yet at it's highest prices in twenty years; our trade deficits and budget deficits are the most massive in history. How much longer can the "dollar confidence" game go on? Does anybody else notice this?? I feel like I'm taking crazy pills!!!!!!

[Timothy Leary]

Ahh, more logic. I love it!

[Skyrider]

Over the past 6 months gold has gone increased 43%, for an annual rate of change of +100%.

So many whining about the high price of gas, but nobody mentions the obvious fact that a huge factor is the vastly depreciated value of the dollar. An ounce of gold six months ago would have bought just about the same amount of gas as it would buy today; the real price of gas hasn't gone up a bit in the last six months.

Politicians blame oil companies, and oil companies blame the politicians, but the biggest culprit here is the interference of the Federal Reserve banking system that 3 years ago cranked interests rates down to 1.5% and executed massive open market bond purchases in order to flood the market with cheapened greenbacks. Of course your gas is more expensive, there's a sea of cheap $$ credits just floating around desperately trying to buy some real tangible commodity.

Now the fed's desperately trying to control this to keep "confidence" in the dollar up. Who remembers the removal of 30yr bond offerings a few years ago? They fed just recently reintroduced them of course, now that they're doing all they can to sop up some extra $, including encouraging increased reliance on cheap foreign imports from china so that it can use a manipulated "basket of goods" to hide the true extent of inflation. Does anybody think that "dollar confidence" wasn't a major factor in our incursion to Iraq? Saddam had only shortly prior announced that he was no longer accepting payment for his barrels of oil in dollars, he wanted Euros, which would have forced a huge reduction in global dollar bank reserves. Can't have that, can we?

But even so, we got the world paying for Iraqi oil with dollars again, and yet global commodity prices and gold won't lie; gold has been on a rampage with no sign of slowing yet at it's highest prices in twenty years; our trade deficits and budget deficits are the most massive in history. How much longer can the "dollar confidence" game go on? Does anybody else notice this?? I feel like I'm taking crazy pills!!!!!!

Hi Micah!

In fact, petrol for you folks in America is now cheaper than ever before!!! If I sound loony then go to my web site and find out what I mean. www.f-n-n.com The Truth is that gas/petrol is now cheaper than it has been in a very long time. AND the good news is that with gold presently at $18.62 per gram, you should get in before it goes up a bunch more. You can actually get some of those inflation taxes back!

Sky

[Skyrider]

Americans, endowed by their solicitous government with an ever-expanding array of entitlements, now have the whiny mentality that an entitlement culture breeds. They feel entitled to purchase gasoline at the price they paid for it 25 years ago. Guess what? Last week they could do even better than that. The average price of a gallon of regular was $2.91. In April 1981, the real, inflation-adjusted price was $3.10.
© 2006 Newsweek, Inc. http://msnbc.msn.com/id/12554975/site/newsweek/page/2/

[Skyrider]

Americans, endowed by their solicitous government with an ever-expanding array of entitlements, now have the whiny mentality that an entitlement culture breeds. They feel entitled to purchase gasoline at the price they paid for it 25 years ago. Guess what? Last week they could do even better than that. The average price of a gallon of regular was $2.91. In April 1981, the real, inflation-adjusted price was $3.10.
© 2006 Newsweek, Inc. http://msnbc.msn.com/id/12554975/site/newsweek/page/2/

Here is a very clever page to see what the inflations adjusted price of gas is where you live. Be sure to put your state in the box at the right of the chart, then step over to www.f-n-n.com (http://www.f-n-n.com) to see how to STOP the inflation monster from eating out your substanc.

Sky


Back-to-back posting in reply to the same post is not permitted. Please edit your posts if you wish to add something within the given time frame.

[Hoosier]

"Inflation adjusted" is a tricky concept. It depends on how "inflation" is defined, for one thing. The correct way to adjust for inflation is against the M3 money supply --- OOPS! The Treasury isn't publishing THAT anymore! Adjusting against some basket of goods only measures where the increase in the money supply has flowed to this point, so largely becomes an exercise in sophistry.

The fact that some items have been bid up at a faster or slower rate than others is to be expected, and is a smokescreen clouding the fact that EVERYTHING is rising in price against unbacked paper money over time. Contrary to the response of one poster, there is no valid reason to expect everything to increase in price over that of 25 years ago except that we are so accustomed to the perpetual inflation of the money supply that it seems natural to us. In fact, if the money was stable the prices of things in relation to it would fall over time as inovation brought production to more and more efficient levels, through technology and economy of scale.

[Skyrider]

"Inflation adjusted" is a tricky concept. It depends on how "inflation" is defined, for one thing. The correct way to adjust for inflation is against the M3 money supply --- OOPS! The Treasury isn't publishing THAT anymore! Adjusting against some basket of goods only measures where the increase in the money supply has flowed to this point, so largely becomes an exercise in sophistry.

The fact that some items have been bid up at a faster or slower rate than others is to be expected, and is a smokescreen clouding the fact that EVERYTHING is rising in price against unbacked paper money over time. Contrary to the response of one poster, there is no valid reason to expect everything to increase in price over that of 25 years ago except that we are so accustomed to the perpetual inflation of the money supply that it seems natural to us. In fact, if the money was stable the prices of things in relation to it would fall over time as inovation brought production to more and more efficient levels, through technology and economy of scale.

Hi Hoosier!

I couldn't agree more! Do you use your country's fiat currency or have you moved up to the International currency?

All the best,

Sky