$4.019 for gas

I did all I could for as long as I could to avoid paying $4 for gas, but on Saturday it was unavoidable. I paid $4.019 at Sam’s Club in Fountain Valley.

It’s a lot more expensive in other local petrol stations.

A local Shell station ran out of yellow signs with black “4’s” printed on them, and instead used a “4” printed on a white sheet of paper.

This bodes ill for the incumbent party. The last time we had hyperinflating gas prices, the 1970s, Nixon was forced to resign, Ford lost to Carter, and Carter lost to Reagan. Reagan, finally, decontrolled gas prices and stabilized the value of the dollar. He was re-elected.

Sure, it wasn’t just gas prices that defeated those presidents in the 1970s. There also was Watergate, losing in Nam, and Carter’s “malaise” and the Iranian hostage crisis. Just as, today, it isn’t just high gas prices today that are upsetting Americans, but losing in Iraq and Afghanistan and nothing but lies from the White House for 8 years.

But Americans love driving their cars and demand low gas prices. Leftist Obama supporters say Europeans pay much higher gas prices, as much as $6 a gallon back when we were paying $1.13.

That’s because their countries are socialist. And it only takes a couple of hours, or less, to drive across any of those countries. You can bicyclee across Holland or Luxembourg in a couple of hours.

But over here, if I drive a couple of hours, I’m still in California.

A couple of years ago some friends visited a relative who was a priest in Dodge City, Kansas. “Let’s go on a picnic to a local park,” he said. They were enthusiastic. Two hours later they got to the park. Out there in the Great Plains States, there’s a whole lot of nothing for miles and miles, so you need cheap gas to keep from being isolated.

So I don’t think Americans long will put up with high gas prices — which really are caused by the Bush-Greenspan-Bernanke inflation. Something about that guarantee in the Declaration of Independence about “the pursuit of happiness.”

How can Republicans win with oil at $139 and gas at $4 rising to $5?

Gas out here in Orange County now approaches $4 a gallon. At the cheapest station around, run by Arco, I just saw the lowest price, for 87 octane, at $3.956.

Oil’s price now is $139.40 a barrel.

There’s one person to blame for this: Bush. When he took office, oil’s price was about $20 a barrel. Weren’t he and other oil industry big shots like Cheney supposed to know how to keep oil prices low? Wasn’t the Iraq war supposed to turn on the spigot of Iraq’s oil supply, second biggest in the world?

But Bush and his Federal Reserve chairmen, first Greenspan and now Bernanke — whom he chose for their jobs — have been inflating the dollar. That’s the real reason for the increase in prices. Inflation means higher prices, first for commodities like oil, then for everything else.

Abandoning the gold standard

It all stems from America not being on the gold standard since 1971. If we were still on the gold standard, gas would cost 31 cents a gallon. I remember the price because that was the year I turned 16 and got my license to drive on my birthday.

The Democratic Congress, backed by most Republicans and even more clueless than Bush, is blaming OPEC. Reuters reports:

The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.

The measure passed in a 324-84 vote, a big enough margin to override a presidential veto.

The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation.

All that would do, if it becomes law, would be to spur those countries to stop selling to us.

It’s embarrassing that such economic illiterates run America’s government. They have the wrong target. For one thing, the top oil importer to America is Canada, with 1,727 thousand barrels/day, as of March; followed by Saudi Arabia with 1,535, Canada with 1,232, Nigeria with 1,138, Venezuela with 858, and Iraq with 773.

What are they going to do, invade Canada and Mexico?

Or maybe, invade Iraq? (Wait, they already did that. Hmmm.)

If Congress really wanted to do something, they would abolish the unconstitutional Federal Reserve Inflation Board. Kick Bernanke and his cohorts back to academe.

The Constitution stipulates that Congress, and only Congress, has the power: “

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures.”

That is, money is supposed to be given a specific value, much as the “Standards of Weights and Measures” fix a yard at 36 inches, and so on. For most of America’s history, until the Fed was imposed, gold was fixed at $20.67 and ounce. Check out this historical chart. The Fed was imposed in 1913 and, for until 1933, behaved itself somewhat. Then in 1934 FDR mandated that gold be devalued to $35 an ounce — a vast stealing of the nation’s wealth. FDR made Bonnie and Clyde look like pickpockets.

4,367% inflation

As of today, after almost a century of Fed inflationism, gold was at $923.28. That’s inflation of 4,367%.

I’ve been writing about this for 35 years — especially the last 7 years of Bush inflationism.

Do you get it now, America? Apparently not, because you keep electing these planariae to Congress.

The only one in Congress who understands this, Ron Paul, couldn’t gain contraction even in the GOP primaries (although he just got 15% in Oregon; maybe people are waking up a little from their Ambien overdose).

Americans don’t much understand what’s going on. But they’re going to blame the party what now runs the White House: the Republicans. The GOP once got this stuff, at least sort of. Reagan’s two election platforms promised a return to the gold standard. Although he broke those promises, at least he made them.

Bush is going to be gone in 8 months (thank God!), but the Fed will still be with us — unconstitutional, unelected, undemocratic.

So, don’t blame OPEC, or the Arabs, or even the Iraq War. Blame Bush and the Fed, the Fed, the Fed.

Then abolish the Fed.

Hillary: Warrior Princess vs. OPEC

I was stationed as a Russian linguist in the U.S. Army in West Germany from 1979-1982. This was the height of the American hostage crisis in Iran and the global “energy crisis.” In my unit was a staff sergeant (E-6) who had this elaborate fantasy about how he would end the problems with Iran and energy.

He would gather a group of guys riding extended choppers like the one Peter Fonda rode in “Easy Rider.” They would invade the Middle East, free the hostages, take over the oil fields, cut prices, and flood the world with cheap oil.

I thought about the staff sarge when I read that Hillary, in her Warrior Princess mode, said she would confront OPEC for jacking up oil prices. It’s part of her attempt to appear “macho” for Rust Belt blue-collar workers. Ben Smith reports:

“We’re going to go right at OPEC,” she said. “They can no longer be a cartel, a monopoly that get together once every couple of months in some conference room in some plush place in the world, they decide how much oil they’re going to produce and what price they’re going to put it at,” she told a crowd at a firehouse in Merrillville, IN.

“That’s not a market. That’s a monopoly,” she said, saying she’d use anti-trust law and the World Trade Organization to take on OPEC.

As I tried to explain to the staff sergeant 28 years ago, the problem isn’t OPEC, which then as now only is responding to the U.S. government inflating the dollar. If the dollar drops in value by 2/3, why shouldn’t oil producers triple their prices?

It’s worth mentioning again the Wall Street Journal article from January, still relevant, which shows that oil’s price has held steady against gold the past 7 years. It proved what I’ve been saying for 7 years — or, really, for 37 years since I was in high school and in 1971 Nixon began the 1970s inflation by taking us off the gold standard. So OPEC isn’t “cheating” us, the U.S. government is cheating us by devaluing our money.

Here’s Wall Street’s nice chart:

As you can see, oil’s price has held steady against gold, a 1:1 ratio (more or less). But it’s the dollar’s value that has eroded so quickly.

You, my constant blog readers, understand what’s going on.

But Hillary wants to be out there in the Arabian desert riding a chopper next to my staff sergeant as they charge the Saudi oil fields.

Real inflation rate: 20%

The U.S. government is saying inflation is only 4% a year. Actually, it’s 20%. Here’s how I calculate it.

When I came to California 21 years ago, my new Golden State friends raved about the ice cream at a local drugstore, Thrifty’s. In 1996, Thrifty’s was bought by Rite Aid, but the new owners were sensible enough to keep the local ice cream tradition alive, under the same name and the same price. Thrifty’s ice cream for a long time cost just 99 cents, as shown in the picture (check out the upper left hand corner of the sign).

I bought a scoop today and found out the cost recently jumped to $1.19. That’s a 20% increase over last year.

I call it the Thrifty Ice Cream Standard. Ice cream involves several elements: milk or cream, sugar, wheat (for cones), store rent, gas for trucks, and labor. All have risen in price lately.

The Thrifty Ice Cream Standard reflects the Bush-Greenspan-Bernanke inflation of recent years, which I have been writing about for a long time.

And it’s just going to get worse. Pretty soon, I’ll be paying $9.99 for a formerly 99-cent scoop.

Sgt. Schultz Republicans

I have a new name for Republicans who refuse to see how Bush has ruined America — and the Republican Party.

They’re Sgt. Schultz Republicans. The name comes from Sgt. Schultz, the bumbling NCO on “Hogan’s Heroes” who, when he saw something fishy going on right under his nose, would blurt out, “I know nooooothing! I see nooooothing!”

When Bush-Bernanke-Greenspan inflate the dollar, sending gold and foreign currencies soaring and the dollar plunging, Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When Bush’s inflation sends oil to record highs and even bread is rising fast in cost, Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When Bush’s Iraq War costs soar to $3 trillion and more, busting the budget, Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When Bush’s wild spending pushes the national debt above $9 trillion, Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When Bush’s grotesquely extravagant spending pushes the federal federal budget above $3 trillion, Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When Bush’s “surge in Iraq fails” — despite Bush claims to the contrary — Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When Bush shreds the U.S. Constitution and destroys the most basic civil rights that date back even to the Magna Carta in 1215, Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When Bush’s disastrous presidency will bring election defeat in November, Sgt. Schultz Republicans say, “I know nooooothing! I see nooooothing!”

When are Sgt. Schultz Republicans going to wise up and see Bush what has done to destroy America, combining the worst aspects of LBJ, Nixon, Carter, and Clinton? When are Sgt. Schultz Republicans going to insist that this dictator stop the inflation, stop the snooping, stop the wars?

Cheney’s trip: It’s the gold, stupid, not the oil

The Bush regime keeps tumbling into farce.

Now Dick Cheney, the worst vice president in American history, is going to Saudi Arabia to beg OPEC to produce more oil, so oil prices drop from their recent highs well over $100 a barrel. Remember when oil was around $10 a barrel about 10 years ago?

But none of this means squat.

Oil prices depend not on the Saudis or OPEC, but on the price of gold. And gold has risen in price because of the Bushflation imposed by Bush and his cronies at the top of the Federal Reserve Board, first Greeenspan, now Bernanke.

Inflation is back, big time, like in the Disco 1970s. The reason: The Fed is printing too much money. That’s always the cause of inflation. And it happens because we’re not on the gold standard, which keeps a constant price for the dollar.

Instead, we’ve seen the dollar’s price rise from around $255 an ounce 6-7 years ago to almost $1000 today. Which means the dollar’s value has dropped by about 75%.

I’ll put up again the chart from the January Wall Street Journal article that confirmed what I’ve been saying for years: That the problem is inflation, not oil production. Note how the price of oil and gold have remained on par, with a mostly 1/1 ratio, in this decade:

Also notice that there’s a slight spike beginning with the 2003 Iraq war. But even that settled down because oil is a gigantic global commodity that adjusts to such problems after a relatively short time.

Weren’t Cheney and Bush in the oil business before they took over the White House? Aren’t they supposed to know this sort of thing?

If America had been on the gold standard the past 6 years, there would be no inflation, oil would be about $23 a barrel and gas $1.13 a gallon.

I hope the next president has more sense than these two.

Bush is an economic dunce about oil prices

Today Prez Bush insisted that the USA must “get off” oil because it supposedly costs too much. He said “it should be obvious” that rising demand is pushing up oil prices.

Not obvious.

And not true.

When measured against the price of gold, oil prices actually have held steady, as I’ve been saying all along. A Wall Street Journal article in January confirmed what I’ve been telling my blog readers:

Since 2001 the dollar price of oil and gold have run in almost perfect tandem (see nearby chart). The gold price has risen 239% since 2001, while the oil price has risen 267%. This means that if the dollar had remained “as good as gold” since 2001, oil today would be selling at about $30 a barrel, not $99. Gold has traditionally been a rough proxy for the price level, so the decline of the dollar against gold and oil suggests a U.S. monetary that is supplying too many dollars.

In the chart, note that the prices of oil and gold are in a 1.0 ratio, meaning they’ve moved in tandem.

Put another way, if the dollar were still on the pre-1971 gold standard, oil would not have risen at all since 2001. Oil would still be around $23 a barrel, instead of nearing $120. We’d still be paying $1.13 for gasoline, instead of $5.36.

What’s out of whack is the dollar, which Bush and his two Fed flunkeys, Greenspan and Bernanke, have inflated.

There’s no new “oil crisis.” As in the first “oil crisis” in the 1970s, there’s an inflation crisis. And Bush is the cause of it.

There’s only one solution: Return to the gold standard.

Mexican peso rising in value against the dollar

In the last year, the U.S. dollar has been crashing in value against the Mexican peso. Which now is the Third World country? Check out this graph:

So a year ago the dollar bought 11.2 pesos, but now it buys only 10.7 (and dropping). That’s a decline of 4.5%.

That means Mexico’s economy is getting stronger against the crashing U.S. economy.

Maybe it’s all a sneaky plot by Bush and other Republicans to wreck the US of A so immigrants leave here and go home.

Chavez won’t go to war with Colombia

A blogger at Orange Juice wonders:

It looks like Mr. Chavez is trying to prepare himself and South America for a possible war with the U.S. and other countries. I sure hope the U.S. is paying attention to this.

Your thoughts?

However much of a tyrant Hugo Chavez may be in Venezuela, he’s not stupid enough to attack Colombia, even less so the U.S. If he just sticks to his own country, he’s safe. The U.S. military has shown itself particularly inept at invading Third World countries, as we see in Iraq and Afghanistan. The Bush regime, and the military with it, just don’t get Fourth Generation Warfare.

But an attack by Chavez on Colombia would be different. It would be old-fashioned Second Generation (attrition) warfare. It would bring to the fore the immense advantages enjoyed by the U.S. military and its allies: intelligence and logistics. U.S. spy satellites would tell Colombia’s military where Chavez’s forces were. Chavez would be unlikely to get such info from anyone else. Russia and China wouldn’t want to offend the U.S. Commercial satellite and photos now can be bought, but you have to know how to interpret them.

So the moment they got into a foreign country — Colombia — Chavez’ forces would be decimated. That’s how dictators lose their perches.

Ecuador won’t mess with the U.S.

Chavez will remain a pest, but nothing bigger. His flirtation with Castro is meaningless. Castro will be dead soon. After that, Cuba will become a suburb of Miami and we’ll finally get legal Cohibas.

Chavez’s whole Che Guevara schtick is meaningless without the Soviets to back it up. And the Soviet Union has been extinct for 16 years.

We Yanks shouldn’t get get so excited about this stuff. Just bring our troops home from everywhere, including from Colombia, cut our taxes, and let the foreigners take care of themselves. Let’s mind our own business for once as the Founding Fathers advised.

By the way, Chavez only has so much power because oil prices are over $100 a barrel. And whose fault is that? Why, it’s Bush-Greenspan-Bernake’s inflation that has debased the value of the dollar, giving great benefit to commodities-rich countries, such as Venezuela (at least for a while).

Stop the inflation and go back to the gold standard and not only will Chavez be cut down to size — his economy would suffer and he’d get the blame — but the U.S. recession would end.

Economist Hoffmeister on ending the inflationary spiral

One of our best economists is Paul Hoffmeister, chief economist for Bretton Woods Research. He previously worked for the late Jude Wanniski.

Make sure you read his new article on the inflationary spiral caused by Bush, Greenspan, and Bernanke. He writes about how, in 1981, then-Federal Reserve Board Chairman Paul Volcker halted the 1970s inflation by pegging the dollar to the price of gold (a quasi-gold standard). An excerpt:

The institutional theory of demand-siders at the Fed posits that slowing growth translates into lower prices (disinflation), while accelerating growth leads to inflation. Supply-side thinking rejects this theory and believes accelerating growth is actually disinflationary and vice-versa.

But the more important point is that fed funds rate policy is designed to control economic growth, NOT a method for controlling the rate of money supply growth or stabilizing the gold price. It is therefore a popular and unfortunate misconception that higher interest rates translate into tighter money.

In other words, advocates of higher interest rates today are in essence supporting a policy that aims to weaken economic growth even further; growth that is already sagging as evidenced by last Friday’s unemployment report. Sadly, actions taken to reduce economic growth will ultimately do little to reduce true inflation, nor will they restrain forward-looking inflation indicators.

The Fed experienced a comparable dilemma to today’s during the late 1970’s; albeit to a more extreme degree. At the time, the Fed similarly manipulated short-term interest rates with little success in preventing a painful stagflation. Failed rate-targeting efforts eventually forced Fed Chairman Volcker to abandon interest rate targets in favor of monetary aggregate targets in October of 1979.

The policy change was an explicit acknowledgment by the Fed of the failures inherent in targeting the cost of credit to control growth and inflation; especially when growth is slowing and inflation is rising. Volcker was surely courageous in reversing what was a failed policy, but his policy alternative was not perfect because it singularly attempted to directly control the expansion of the money supply to fight inflation. We must remember that monetary inflation is always the condition of too much money relative to money demand. Monetarist targets then and now concentrate solely on money supply without factoring in demand for same….

Fast forward to today, Ben Bernanke has the chance to seize this monetary moment before being confronted with the harsher extremes Volcker once faced. Rather than continuing to guess about the proper level of interest rates, Bernanke should do as Volcker once did and reject the Fed’s targeting mechanism.

He should do so while setting a gold price target; the latter’s stability a signal that dollar demand is matched by supply. These actions would stabilize the value of the dollar, immediately ameliorate the inflation environment, restore reliability to the dollar as an internationally recognized unit of account, and establish a sound monetary standard free of the distortions that promote inflationary cycles, including the one that threatens the economy as this is written.

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