Tell me lies
Tell me sweet little lies
Tell me lies, tell me, tell me lies
Rising gasoline prices are not President Obama's fault. He only wishes he had that kind of power. And contrary to what the President and Pelosi want you to believe, it's not the fault of Wall Street speculators, oil companies, or even Arabs. The fault lies much closer to home...the Federal Reserve, the US Treasury, and our monetary policy.
A sad little truth that most politicians don't like to mention is that oil is traded in dollars, therefore if the value of a dollar falls the price of oil rises. When you print more dollars you will need more of them to buy a global commodity such as oil. Now of course oil is also a commodity driven by supply and demand. When demand increases globally, especially in fast growing emerging markets, the price tends to rise. Also when there are threats to supply, like a war between Iran and Israel, prices tend to rise. But the real culprit is the easiest monetary policies in history. As the 1st graph below shows it's a little more than a coincidence that oil prices sore in conjunction with the Fed's massive liquidity injections known as QE1, QE2, and Twist.
The second graph below shows oil priced in gold. As you can see, oil is volatile, but it has averaged around 2 grams of gold per barrel since 1950. Oil priced in gold has actually been declining over the last couple of years. This is simply because the value of gold, priced in ever depreciating dollars, has climbed.
A better more current graphic can be found at the following link... Wikipedia
The next time a politician tries to tell you sweet little lies about greedy oil companies, Wall Street speculators, etc.; remember it's not the price of oil that's the problem, it's the declining value of the paper money in your wallet.
Ron Paul is the only Presidential candidate (including the President) who understands the great theft going on in America today. Here he takes the time out from his campaign to question Ben Bernanke on the continuing debasement of the dollar. Enjoy:
Recently our commodity indicators moved to bullish territory (following the flow of money), therefore we increased our weight in commodities, gold, and emerging market bonds.
Be careful out there, and keep the lights on,
Chris Wiles, CFA
412-260-7917
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This article contains the current opinions of the author but not necessarily those of the Rockhaven Capital Management. The author’s opinions are subject to change without notice. This article is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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