High Gas Prices

How did it get to be Obama's policy? AFAICT it is the exact same stupidity of the half dozen or so presidents that preceeded Obama.

-jim

But to look behind the presidents and the two party system and see why it all comes out the same is considered kooky conspiracy theory.

Gasoline prices will go up because the oil companies CAN raise the prices pretty much as they wish.. Obama, as lame as he is, has littgle or nothing to do with this.

If Americans want gasoline prices to go down, there is only one strategy, IMO: Decrease the use of gasoline and let the market hump the producers/refiners until they drop the prices to a more or less reasonable level. Hump them at every level, lubricating oil, gasoline, plastics, etc etc.

"hls" wrote in news:sLidncETyKKqo snipped-for-privacy@giganews.com:

Then how come oil went down to $10 a barrel in the early '90s? The oil companies were really hurting for quite a while there. Did they engineer that too?

Because speculators buy crude oil and refined gasoline futures on margin. And the Fed uses a CPI to set interest rates that excludes 'volatile' commodities such as fuel and food (also the subject of much speculation).

Want stable commodity prices? Put energy and food back into the CPI. In fact, weight commodities that are subject to such speculation higher in the CPI formula than other items.

"Paul Hovnanian P.E." wrote in news:St2dnUaO_o4k__XQnZ2dnUVZ snipped-for-privacy@posted.isomediainc:

Then go back on gold.

Or, at the very least, peg the funny money to the price of gold, as Steve Forbes has touted for many years.

Do you realize that the funny money has lost 90% of its value since Nixon took it off gold in 1971?

Governments and currency are like Indians and firewater: A bad mix.

Because Obama was supposed to be so 'different'?

But, if you remember right, he said he WANTED to see $5 a gallon gas. So don't expect him to do much.

The side effect of this, though, is worse than the disease it cures.

The problem with the gold standard is that there is zero inflation, combined with a relatively small amount of cash in circulation. This sure sounds like a good thing, until you actually try it.

When you try it you find that zero inflation is just as bad as runaway inflation. When there is no inflation at all, people have a tendency to hoard money rather than investing it, because they know it will keep value.

This is much of why the Great Depression came out so badly. Money got concentrated in the hands of a relatively few number of people, and when the stock market burst they all decided (fairly wisely) that they didn't want to invest their money for a while. The end consequences were bad for everybody else.

It was taken off the real gold standard years before 1971. But yes, money slowly loses value, this helps keep it in circulation.

Who are you going to trust to manage a currency, then? The IMF? Credit-Suisse?

--scott

snipped-for-privacy@panix.com (Scott Dorsey) wrote in news:ikaqpf$4v5$ snipped-for-privacy@panix2.panix.com:

It was used for many decades, up to 1913, with stunningly successful results.

Which is precisely what did NOT happen when we were on a true gold standard. Where do you think credit comes from? Hint: it's not the Fed!

You don't know much about the Depression, do you?

Government employees (and activists) caused the Depression by screwing with a system that was working very well indeed. They though they had a better idea, but they had a worse one instead.

The people who ran it best prior to 1913.

You don't have to go back to the depression. You are describing exactly what is happening currently and for the last 2.5 years. The private sector has suddenly decided to pay down debt and rebuild savings. The total private debt of US was 3 times the GDP and has dropped like a rock in the last couple of years. If it weren't for the massive influx of new money by the govt. and Federal Reserve this would make the panic of the great depression look like a picnic.

So far the mindset of the great depression that led people to stuffing their money into Mason jars has not taken hold, but it has come very close and may still get there.

-jim

It had good results and bad results both. That thing in 1873 for instance. And if you look at income distribution in the 19th century you'll notice interesting patterns, definitely a lot more concentration of wealth than we'd consider reasonable today. Some of the folks with money did in fact decide to do something about that; philanthropy was a big deal.

But it did. The amount of private credit today far exceeds the amount in the 19th century. (You can argue this is a bad thing, actually, that there is in fact too much credit in circulation. You'd probably be right about that, but limiting it by limiting the total currency is cutting off your head to cure a headache.)

Where did you get this notion?

For a really good introduction to what caused the depression, get a copy of "Confessions of a Stock Market Operator." It's from 1906, but it demonstrates a lot of the practices that eventually caused disaster. It's also a really interesting introduction to market manipulation; pretty much all of the techniques it describes are unusable today because we have protections against them, but it's a nice introduction to why totally free markets aren't necessarily such a great idea.

That would be Mellon and Morgan. You have a lot more confidence than I do in such folks.

--scott

Yup. And if we were on the gold standard, that influx wouldn't be possible.

The current concentration of wealth is a really bad thing. Limiting circulation of currency makes it worse, not better.

I agree completely. Now, what do you propose to prevent that?

--scott

Concentration of wealth is really bad only for those who are not among the wealthy

Concentration of wealth is necessary for free markets to work It is what keeps markets from behaving irrationally and it is the natural consequence of free markets However it leads to decadence because eventually the people who created the wealth die and then the wealth is left in the hands of those who did nothing to deserve it

The wealth becomes concentrated in the winners of random lotteries birth is the lottery that produces most of the big winners

Hey man... its not my job.

There is nothing really wrong with the system unless you are Amish and it doesn't appeal to you

The problem is there is weak spot - and that is petroleum Every time the price of oil goes up the whole thing unravels If that isn't addressed it will fall apart

Well it is being addressed - that is what Iraq is about but it's being addressed in a way that it will doom us later rather than sooner

-jim

Which would be almost everyone.

Yes, this is true. An even distribution of wealth would be as bad as a huge concentration of wealth among a small number of people.

Inheritance tax helps prevent this sort of dynastic succession, and it also helps keep currency in circulation.

There's nothing wrong with being rich... the prospect of becoming rich is a great motivator. But when there is a tiny number of extremely rich people and a huge number of very poor people who see no possibility of moving up the ladder, that motivation isn't effective.

There will always be rich people and poor people and that is a good thing, but currency needs to circulate from one to the other and back or there will be stagnation.

I agree that the system is generally a good one but I think it needs a little tweaking. On top of this, people have become used to cheap and easy credit and that's an unrealistic expectation. It will take some time for people to realize that it's unrealistic.

I think the petroleum problem is only one of many problems, but I do think that if you're forced to use a commodity standard for currency you're better off using oil as a standard than gold right now.

--scott