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Originally Posted by Amadeus  You are right and wrong. The declining dollar has had a little influence in the rising cost of oil but it has more to do with supply and demand. |
There are other factors at play too. Turmoil in the middle east. China's growing economy. But they don't play as big a role as the government wants us to think.
Inflation of the dollar by the Federal Reserve is
the biggest factor.
The reason why OPEC won't increase production isn't because they like yanking our chain. It is because they know the price increase is from a weak dollar, not increased demand.
Weak dollar caused oil's rise, OPEC president says | Gold Anti-Trust Action Committee Quote:
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When George Bush took office oil was around $20 a barrel and now it is around $120. That is a 600% percent increase. If what you were suggestion is true than milk would cost $12 a gallon, cars would cost $120,000, and every home would cost over a million.
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Inflation
is not the increase in prices of things. Just because a loaf of bread doesn't cost 4 times as much doesn't mean the Fed hasn't been inflating the dollar.
It is the increase in money supply. It is happening. There is no doubt about that.
Precious metals like gold are always the first to demonstrate a price movement during an inflationary or deflationary episode. They are so accurate it's almost scary.
I suppose it takes a while longer to effect consumer products and food, but it is happening. Have you not gone grocery shopping lately?
Hyperinflation in 1923 Germany Quote:
By the end of the war, the amount of money in circulation had increased four-fold. In view of this, the extent of inflation was less than one might have expected. The consumer price index had risen 140% by December 1918. This was equal to the inflation during the same time in England, a little more than in the United States, but less than in France. Yet the floating debt of the Reichsbank had increased from 3 billion to 55 billion marks!
Why was inflation kept within bounds? For the same reason that it got off to a slow start in the Unites States during World War II. Necessities were rationed and luxury goods were not easily available. Millions of men were at the front and not in the market for goods. Civilians worked hard and had little leisure for spending. People saved money against peace time, and in some cases to evade taxes. But the fuel for inflation was accumulating in the form of vast hoards of money.
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