State gasoline price passes $3 mark again

On Tue, 16 Jun 2009 10:38:18 -0400, Jim Higgins fired up the etcha-a-sketch and scratched out:

so?

So? In Canada, I just paid $1.03, for a damned litre, and it's even higher (1.11 in Vancouver) in other Provinces.

Headed up-again. If gas goes to last year's level, or beyond, GM/Chrysler will be DOA and remain on the dole.

To some degree, it isn't that gasoline went up, it is the value of the currencies that is tanking.

Can't print all the bailout and corruption money without getting some negative affect. It is called dilution. Dilution of the currency. Which means you need more money to buy the same goods. It can be a major cause of inflation. In this case, the rising cost of motion potion.

Dilution of currency works just like stocks. Say we own a company called XYZ Corp, and it was representated a value of $1,000,000 dollars cash and there were 1,000 shares out to represent the company. Well than makes each share worth $1000.

Now the ass at the top says lets cut another 1000 shares and blow it on bailouts and corruption. Now there are 2000 shares out, but the company hasn't changed value at all. So each share is now worth $500. And you can buy less with $500 than $1000.

Well currency is the same way. If Ottawa and Washington DC print/'create money like insane mad hatters to blow on corruption, bailouts and waste, because no one will loan the government money, it dilutes the currency.

When governments create money, it is creating inflation as there is now more currency out there representing a smaller economy. This only works for awhile, like paying off one credit card with another. But it is garanteed to eventually fail real bad.

So not only do we have to bailout crooks like GM, we get to pay it off and eat inflation.

Think next time you vote for leftist-debtors to run a corrupt feel good government be it president, prime minister, congress, senate or member of parliament.

BTW, governments are creating the money as they are in fact bankrupt. Doesn't really mater any more as it is likely far too big now to stop hyper-stagflation.

Generally:

One product X may trade for = 1 currency = may trade for product 1Y

Double the quantity of X ; exchange value changes to 2X = 1Y or still one currency

Changing the quantity of currency doesn't affect the ratio of X for Y, only the amount of currency.

But it makes a HUGE difference if one holds currency at a previous exchange value of 1 currency for 1X or 1Y. If some entity (gov't since they are the issuers of new currency) artificially changes the quantity of currency (lets say to 2 currency). Now the prices will adjust to twice the quantity of currency in exchange for either one X or one Y. However the process of price change isn't immediate or even to all holders of currency. Those initial recipients of the new currency get to buy at the old value of one currency until prices gradually adjust to two currency. The first comers in the receipt of the new currency are gov't and it's favored friends, banks, and in our case auto manufacturers.

This is inflation and the process kills those farthest from the entrance of new money, poor people, those on fixed incomes.

So the next time a politician speaks how much he cares for the poor and elderly, call him a liar to his face. He if really believed what he spoke he'd stop this grand theft immediately.

Yep, never said the process was instant. But none the less materially correct. With twic as much currency representing the same economy, it will adjust in time.

You are also correct about elderly. The people who get hurt the most are the elderly who have saved for thir own retirement as old dollars no longer carry the same purchasing value. Just makes them poor. Yep, politicians be liars if they don't realize this. Every time the money supply has been increased, inflation follows like clockwork.

Ironically government benefits the most paying off old devalued dollars with new dollars as wages rise. But this time the size of it is like we have never seen before.

The important point to keep in mind is when new money is added it must enter the economy at some point first. It then spreads in stages throughout the whole economy.

I neglected to add another point that the quantity of currency is not real factor in an economy. Most essential is that the quantity does not change appreciably over time. No matter what mankind selects as his money, a gradual increase in quantity can be expected but history has shown that even when gold is selected increases match population growth. This causes the least amount of disruption and harm in an economy.

It is very rare that the average person has any knowledge of economics and money. What is taught is mostly useless. If this could be changed the world would be a much better place. Recessions/depressions such as this one raise awareness. There are always some good and psoitive benefits from difficult times.

Bullshit. If that were true, everything would be going up, and it's not. It's summer time - the traditional season for oil companies to rape the public even more. Nothing new happening here.

Double ditto. They have been driving up the prices for weeks in anticipation of the summer travel season.

It is both. Demand drives prices that's true. But inflation is the main driver of prices. Now that can be deceiving. Not ALL prices go up in uniform. Even in a non inflationary environment prices do not move in tandem. Demand and supply will drive prices. When we say (more accurately gov't tells us) there is no inflation that is because they use a rather narrow list of items as their criteria. They are quite selective actually. It's misleading since the economy is so diverse it's impossible to include everything that people buy and sell. There is an over supply of many items which cancel out rising prices elsewhere. The over supply resulted mostly from bad management by the Fed Reserve's low interest rate policies.

And this is the season of high oil use so demand pushes oil prices higher. If the oil companies truly had control of pricing their porduct they wouldn't wait till summer peak use.

And what if they were wrong in their anticipation? There is a pretty fair supply of oil on the world market at the moment.

Huh? Quantity is a real factor in fiat currencies. I might agree with you if the currency was backed with a constant such as gold, but it isn't.

If quantity is irrelivant, then why tax people at all and the government can just print/create it all. Heck, why not have everyone leave industry and the farms and work for the government?

A most recent example where this was tried was Iceland. Look it up. As much as an irrational loser debtor might want it to be so, the fact is you cannot print or spend your way out of debt. Nice fantasy though.

Agreed. Many can't even make change for $5 without the machines help. People are often coached into credit management after they are in trouble, perhaps one should have to take a course on credit before they get a credit card or loan. Might save a lot of grief for the so many fools that oversubscribe to debt.

If "ifs and buts were fruits and nuts"......

You know as well as I do what is happening. Anticipation's rear end. They go up before oil goes up, and hold the price for weeks when oil falls.

Agreed, gasoline is still a bargain but let's not play games.

Supply and demand. Lots of commodities are on the rise, just you don't have to buy them every day. Coal, flour, uranium, copper, gold... Natural gas should hit somtime in about February. It lags because business that shut down don't burn the electricity or natural gas but supplies are dropping fast too. Once supply gets corrected, that holidy will be over.

You don't think the stock market is up because of an economic turn around do you? Hell, better be in oil wells than in T-bills when inflation hits.

Yes and no. And if any kind of economic turn up happens, watch oil...it will go right past $140 in a blink.

That isn't to say there is a shortage. There isn't. Just a shortage at $60/barrel. At $140 there is lots.

That is an understatement. Per gallon, people should look at what they spend at Tim Hortons or a bottle of water.

What I meant by quantity is it is immaterial wht the size is in circulation. A small amount will do just as well as a large amount. That applys to both fiat currency or gold. The quantity must remain relatively constant in both cases. Our problem with fiat currencies is the quantity is NOT constant. It is almost continuously increased.

See above. How much is required? What is the correct amount of currency? There is no answer. It just must remain constant.

No you can't that's true. What is being done is printing money too freely. The supply is not constant. Gov't are loath to keep a tight hand on the supply. That is why they hate gold. It ties the politician's hand.

No same as GM. Let them go broke. Happens to a few and problem solved. Others will be less inclined. But if interest rates were set by market forces they would be discouraged from excessive borrowing. The borrowers lining up would drive the rate of interest higher. And higher interest rates would encourage more savers to enter the loan market driving it downward until a balance would be found.

We have NONE of that happening in our countries today. The gov't sets the rate. And we wonder why we're in such a mess?

the price will rise until consumers balk. Obviously not high enough yet.

No argument/