Rising oil prices do not cause inflation. Inflation is the printing of too much money.

With the world economy still in depression territory, there is no logical reason for crude oil to have spiked so much recently. The simple idea of supply and demand doesn't hold water in this case. The lack of refining the product, for whatever reason, also doesn't make sense. Seems to me the US has got to have a strong energy policy to wean the country from this annual scam.

dbhalling said...

Rising oil prices do not cause inflation. Inflation is the printing of too much money.

Exactly, agree 100% with dbhalling . The oil is not the problem and is not to blame here. The reckless financial policy is the problem and especially this intentionality of inflation raise on fiat currency which is supposed to be good for the economy!. Why didn't the oil prices rise out of control before 1970 when US was on gold standard? Because people who owned and sold it knew they were getting the fair value for it.When you manipulate the value of your currency that does not bode well.There are not many stupid people left out there. At least oil is keeping a check on the currency. You may keep low cost ( therefore supposedly low inflation)on cheap labor from China but that is not enough.There should be no inflation and maybe a little deflation, period.

Wrong about oil not causing inflation. Inflation is caused by printing too much money diluting the buying power and by an artificial raise in base costs.

We are creating a scenario for hyperinflation by doing both at the same time.

It is interesting how pundits are saying traders are using commodities as a hedge against inflation thereby rapidly increasing the cost of those commodities and causing the inflation they are trying to hedge against. It is self fulfilling and profitable.

Oil should not be allowed to be used as an inflation hedge because it causes massive inflation. A 3% increase in th eprice of oil in one day is a 3% increase in base cost inflation. If gas cost $1.60 at the beginning of the year and now costs $2.80 a consumer has seen 100% inflation in 6 months in a base cost of living.

You can try to use bogus numbers and government reports to say inflation has been moderated and has only risen by 1%. The truth is that the inflation umbers have only been moderated by the huge decrease in home values. If you are not trying to sell your home or use equity you have seen rampant high percentage inflation over the past few years. As high as 20% base cost of living across the board.

Coupled with reduced personal incomes you have an inflationary disaster right now being reported as a non issue. If I take my salary and deduct my expenses from 6 years ago and then deduct my expenses now I have seen a 25% increase in base cost. If I add health insurance the increase in cost is nearly 40%.

SO by a real number there has been 40% inflation over the past 6 years. Now can you people see why we have record foreclosures and a collapsing economy. We are already living in a period of hyperinflation.

Our economy is in this state because of greed and corruption plain and simple. No one knows how to run the economy and no one really cares, as long as these greedy scumbags get there pockets lined, this will continue people.

Of coure it will!!! But I think it's about time for big oil to shut down another refinery for the summer to assure that they can get the top price for the fuel they produce. Do you hear that Mr. Oboma?!?!?!? Then why don't you stop Big oil for conviently making the price of fuel products go up just like they did last summer... Remember folks, we need to complain as loud as we can over this. My be Mr. President Oboma can help but I doubt it...

must......protect.....oil.....company.....profits.......must.....protect......oil.....company......profits.....must.....protect......oil......company.......profits......must.......use......gas........must.......buy.....gas.......must....protect......oil......company......profits......must......buy......gas.......must......drive.......cars......must......protect......oil......company......profits.........must.....must.....must......must.....must......

Ridiculous! Yes, the last thing we need is oil and gas to go through the roof AGAIN! People don't have enough expendable money as it is. Higher prices equals less travel. Less travel equals less buying. Less buying equals less sales and profits. On and on until companies need to raise their prices to make the bottom line. It is an ongoing cycle. Not too difficult to comprehend.

Well said Iridium.

Stagflation is here to stay for quite a while. Irresponsible expansionary monetary policies, speculator-driven rising oil prices (in the face of decreasing demand), rising unemployment and expanding governmental control/usurpations of the private sector are the seeds for an economic collapse/depression. Additionally, as interest rates rise with ever-increasing foreclosures, the real estate market will remain dead and consequently discourage any chance for an economic recovery.

Let's hear it for the leftist media putting another spin on Obama's Porkulus bill..!! Let's see...we're looking at one of the worst inflationary periods to come in our history, so we better blame someone now...how bout big oil...! Okay...sounds good..!! When you print trillion's of dollars without any real backing, guess what you create...Let's say it together "INFLATION"..!! Keep eating it up America...! Let's all just be dumb cows and just keep eating the grass we're being fed and ignore what's really going on around us..!!! Let's be realistic..Coal IS at present time the cheapest source of fuel. Should we find another source of fuel for the future...ABSOLUTELY...!! But tell me why we don't just become self dependent in the meantime and drill our own oil...? Why, Why, Why..?

The speculators got away with it last summer and are doing it again. Oil does not cause inflation, the value of the dollar does and how much debt the government generates, imagine that, the government generating debt. It would take 20 years for windmill, solar and lawnmowers as transportation to make a dent in our dependency on foreign oil. Lawnmowers might be fun, American engin-uity, high horsepower beefed up mowers that run 110 mph @ 2 miles to a gallon. I've seen lawnmower dumpbeds & snowplow attachments. Our icy roads will take a long time to plow, it may take years to get enough dirt or gravel but it might be fun. In any event it is the working class that always gets burned. My Dad always said since I was a young boy, the only way to beat the money changers and government, is do your best to live without them. You play, you pay.

I voted for president Obama and I can not make this any more clear to him , " STOP THE SPECULATORS " They will destroy this country again , Sad thing is a lot of people blamed president bush for gas prices and the truth is the speculators were the true enemy of every Liberia and Conservative voter who are sick and tired of this BS with oil prices , President Obama you and the Democrats must put a stop to these speculators, my future vote go to which ever party stop these thief's ! I am so sick and tired of being riped off at the pump by these terrorist of wall street with oil prices as their weapons of mess destruction

The world will never see a change from capitalism. As long as a effective means of unlimited success lies in predatory tatics..ie our utilities. Oil for the heating of our homes as well as transpotation, electricity for our power, water, taxes and the list goes on. Greed is the stagnator. If the energy companies, the goverment just wanted to be extremely rich with a mixture of compasion and fair play to the common man, Our economy would flourish. But they want to filthy rich. They want to charge whatever they get away with. Gas prices...take the price on the pump( that changes daily when they are playing their games with us) No merit for it, just ..you need it so you will pay it. Not as long as the masses lay down to it, we will continue to be controlled. the ones who control will continue to milk the herd as long as a drop of profit can be gotten. They already have theirs. Screw us

You guys kill me with all of your nonsence about big oil. The oil companys do not set the pricec of oil, the market does. When it gets to low in price to produce the amount being produced ( drilled for ) goes down. It is called supply and demand, and the demand is by far greater than this country alone. You have got to love the people that want goverment to fix all of their woes. The goverment creates inflation by printing more money.....

The price of gas last year was probably the straw that broke the camel's back when it came to people being able to make their house payments. When you're purchasing a house that you really can't afford, or using the equity in your home to take a vacation or buy a couple of cars and suddenly the cost of getting to work has gone from say...25.00 to 75.00 to over 100.00 to fill the tank, that extra 200.00-300.00 just for gas could make a difference in being able to keep up with your payments. There was nothing more annoying than watching the financial pundits stating that it was supply and demand, and that even at almost 5.00 a gallon gas was cheap because the price of shampoo was the equivalent of 35.00 per gallon....yeah, good...when was the last time the economy was based on SHAMPOO?

Between Obama's power grabs and taking over businesses, Obama plans to spend BILLIONS on a healthcare plan that won't work...then there's the Cap and Trade tax that will jack up the average power bill 150.00 per month, and he's also considering a VAT (value added tax) at 25%...that would mean the current price of everything would go up 25%. Those working poor that voted Obama into office thinking they would be getting freebies are going to be hit, and hard.

So...how's that "hopey changy" thing working for you?

"Yet nothing could be further from the truth: on a cyclical basis, oil has repeatedly increased inflation in the U.S. and caused recessions."

Correct. Nothing could be further from the truth. Increasing the price of one commodity does not directly cause a general price increase, i.e. "inflation".

Inflation is always and everywhere a monetary phenomenon, according to Milton Friedman. That is, only the government can cause inflation by increasing the money supply faster than goods and services are produced.