Skip to main content

What's Keeping the Lid on Gas Prices?

The price of gas, similar to the price of any hybrid industrial-consumer good, will fluctuate commensurate with the amount of market activity and confidence in the prevailing money.


In the case of the United States, global demand for the USD is artificially high while aggregate demand from its consumers lags along with their shrinking pocketbooks, plateauing personal incomes and virtually nonexistent savings.

The Federal Reserve has commissioned studies concluding a nearly direct (0.99) correlation between monetary expansion and general price increases.

"Under fiat standards, we find the same extremely high correlation between money growth and inflation that has been found by other researchers who have studied this relationship. In addition, we find that the strength of the relationship does not vary with the measure of money used: The correlation between money growth—measured by primary money, secondary money, or M2—and inflation is always 0.99."

Moreover, the effects of inflation are captured not only through linear price movements but through the inhibition of price declines or the dilution of quality, quantity or even some combination thereof.

Moreover, a lot of this money creation has yet to be deployed, as trillions of dollars of US debt remain locked up in a cycle of vendor financing while much of that inflation has financed specific asset bubbles, such as US equities, student loans, and the Treasury and mortgage markets.

Finally, the volatility of a single asset class cannot alone define the causal relationship between monetary supply and general price levels.

As it turns out, Americans are driving less than ever, ostensibly due to tighter budgets and their preoccupations with domestic activities surrounding their technological devices.

The fact of the matter is that gas prices in the United States remained roughly flat until Nixon closed the gold window in 1971, when the average price of a gallon of gas was 36 cents, 28% lower than today's average even when adjusting for inflation with the official measures. And measured against gold and silver today, these prices have still remained largely flat.

In summary, the long-term fundamentals point to a far higher US dollar price of oil and gas, despite those short-term gyrations.

The recent declines of the fiat-friendly U.S. Dollar Index (DXY) showcase this trend, posting a near-8% year-to-date decline, scripting the prologue to a story that has yet to play out.

Comments

Popular posts from this blog

The Kaepernick Craze: Exposing the Nation's Fools One Conversation at a Time

The Kaeparnick craze and other viral movements haven't merely pressured people into becoming simpler caricatures of their prior selves, but they have manifestly exposed people for how foolish and uninformed they've been all along. 



In his final year in the NFL, Kaepernick ranked 17th in passer rating and 34th the year before that. 

He played through an entire season in only two of his six years in the league, and his best full-season performance ranks far outside of the NFL's top-250 single-season passing performances in the league's history. 

For reference, the oft-criticized Tony Romo posted a career passer rating of 97.1, as compared to Kaepernick's 88.9. 

Romo's passer rating dipped below 90 for only one season of the eleven seasons he played, whereas Kaepernick failed to eclipse the 90 mark on three of his six seasons, a full 50 percent of his time in the NFL. 

In fact, Kaepernick accomplished this feat only once if we are to discard those other two seasons in …

America's Civil War: Not "Civil" and Not About Slavery

Virtually the entirety of South and Central America, as well as European powers Britain, Spain and France, peacefully abolished slavery — without war — in the first sixty years of the nineteenth century. 

Why, then, did the United States enter into a bloody war that cost over half of the nation’s wealth, at least 800,000 lives and many hundreds of thousands more in casualties? 

The answer: the War Between the States was not about slavery. 

It was a war of invasion to further empower the central government and to reject state sovereignty, nullification of unconstitutional laws, and the states’ rights to secession. 

It was a war that would cripple the South and witness the federal debt skyrocket from $65 million in 1860 to $2.7 billion in 1865, whose annual interest alone would prove twice as expensive as the entire federal budget from 1860.

It was a war that would blur the lines and jurisdictions between sovereign states, that would indiscriminately sacrifice the founding principles etched …

Institutional Racism: The Sasquatch of Political Folklore

A great confusion has arisen out of the clamor of political debate, one which presupposes that any dismissal of the merits of “institutional racism” somehow equates to one’s rejection of personal struggle. 

Whereas the struggle of any individual remains always and everywhere unique and wholly personal, his common bond of complexion with others who have struggled serves inadequately as the basis for any argument which regards this commonality as the cause, or as the reason, for that veritable struggle. 

To condemn the unidentifiable and nebulous abstraction, then, by castigating an unnamed institution which persists beyond our specific capacity to recognize its power, serves only to absolve individuals of their personal responsibility, to shift blame and culpability to a specter which exists only by the creative designs of our imaginations, which exists as the scapegoat for all outcomes popularly maligned as undesirable. 

This unactionable practice, then, swiftly and categorically excuses…