I guess I could write this morning about the NYSE being fined by the SEC for facilitating front running. I could also offer more commentary on global banking institutions that now seem to realize a little thing called “reputation” actually matters. Perhaps I could offer insight on how the Fed’s recently announced “QE-infinity” is directed as a further bailout of the banks and the red-headed stepchildren commonly called Fannie and Freddie.
But let’s put those topics off for another time. Today, let’s address why your wallet is significantly lighter every time you go fill your vehicle’s tank.
I paid the outrageous price of $4.39/gallon for regular gas at my local station the other day. I believe the last time I had filled the tank, ten days or so prior, the price was approximately $4.15/gallon.
What the hell is going on? Why is the price of gasoline skyrocketing?
Must be the booming economy, right? What booming economy?
Have families forgotten that schools are back in session and they are taking extended summer vacations?
I think not.
Is there a massive fuel leak somewhere that is not being reported? Doubtful, or otherwise it would be utilized to further castigate George W. Bush.
More saber rattling in Iran? Certainly no more than the usual.
So, how do we make sense of the skyrocketing coast of gasoline? What is pushing the price of petrol so high so that more and more people will decide to stay at home?
Perhaps I should not write “what” is pushing the price so high but rather “who” is pushing it so high.
Do you recognize this man to the right?
I have no doubt that the quantitative easing programs pursued by the Federal Reserve under the leadership of Ben Bernanke are the forces at work driving the cost of gasoline ever higher. In fact, by committing to flush the economy with $40 billion/month on an open ended basis (the QE-infinity announced just last week), I would be surprised if we do not see $5.00/gallon in the foreseeable future. Is $6.00/gallon out of the question? Certainly not.
The Fed’s QE1 and QE2 programs more than doubled the size of the Fed’s balance sheet. With QE-infinity now announced along with an accompanying commitment to keep the Fed Funds rate at the current 0% until at least mid-2015, the Fed is now on the record in its commitment to print money like it is going out of style. The value of the dollar was immediately hit after the Fed’s announcement and long term interest rates actually moved higher in anticipation of a pickup in inflation. The price at the pump is an immediate indicator of this reality.
While Bernanke and his fellow Fed governors are easy targets on this front, make no mistake, his predecessor Alan Greenspan also deserves very real blame for this current fiasco. The charlatans in Washington masquerading as our political leaders while they collect their booty from a wide array of special interests instead of protecting the public interest also share in the blame.
Very simply, we need no other reminder than the cost of gasoline to appreciate that the Federal Reserve and Washington have FAILED America.