Obama responsible for bringing $5 per gallon gasoline

gold is never coming back. it can not keep up with the value created by modern manufacturing. it died a death with the industrial revolution. when people turn rock into steel into cars, they add value to rock. gold cannot keep up with the wealth generated in the modern economy, its a finite resource. there isn't enough of it around. let the dream die.

 

You are viewing gold as a traded industrial commodity - which is not entirely correct. It is primarily traded as a financial commodity - much like government debt. Gold has shown a correlation to oil price increases and shocks.

Price of Gold

http://en.wikipedia.org/wiki/Gold_as_an_investment

Price of Oil

http://www.wtrg.com/prices.htm

From the above graphs you can almost see the 1972 end to the gold standard, 1973 oil shock, late 1970's & early 1980's Iran/Iraq oil production decreases, and mid-2000's oil price increase in the gold price graph.

I am not advocating a return to the gold standard - I would actually say fiat currency is much better - but there does appear a connection between the price of the two. Furthermore, central banks can still have an impact on gold markets, and every central bank in the world has gold reserves.

 

Turmoil in the Middle East. Iran's threats. Oil speculation.

Anyone who actually thinks Obama has any control on gas prices is completely off their rocker. It's just another one of those things that people are trying to use to distract from the fact that the economy is recovering, especially come election season.

Pathetic at best.

 

Hmm, who caused that turmoil in Iraq/Afghanistan which hurt the oil supply? I suppose you could attempt to blame al Queda for Afghanistan, but Iraq?

Obama has little to nothing to do with the Arab Spring and Iran's threats (the current thing spiking gas prices). Unless you're going to get angry at him for spreading democracy or putting sanctions on Iran to hopefully prevent them from getting nukes?

FWIW, I'm not able to watch the video while at work. I'm assuming he's simply blaming Bush for higher gas prices. Does he cite specifics or just generalizing?

 

it's the fact that since oil and gold are weighted in American dollars, a depreciation of the American dollar heightens prices of both. That's one linking factor that can help explain, I'd wager, a pretty significant amount of the correlation.

 

Funny you should mention the wars as Afghanistan produces no oil and Iraq oil production has hit a 3 war...errr, 3 decade high. I suppose there may have been some initial supply interuptions and demand spikes along the warpath.

Afghanistan: http://www.indexmundi.com/afghanistan/oil_production.html

 

Ironically, the use of the gold standard is the cause of one of the first recorded instances of hyperinflation in history---Spain's terrible turmoil during New World discoveries. After discovering so much gold, they actually shot prices up arbitrarily, and people who could not benefit from this (after all, very elite-controlled gold; not everyone could finance trips to the New World) suffered greatly.

just an amusing historical anecdote that illustrates the folly of leaving the discretion of your monetary and fiscal policies to---nature? God? Goldcorp Inc.?

 

No becasue we'd be eating alpo and trading diesel cans a la Mad Max because switching back to the gold standard is the best way to murder the economy for good.

 

And there you go. Who began that war? What administration? Would you disagree that the actions of the Bush administration caused interruption of oil supply from Iraq, causing prices to go up? I find it hard to imagine a legitimate disagreement with that.

Obama's gotten us out of Iraq and the oil is flowing in our general direction. On the flipside, you could say (judging from that article) that the action in Iraq has yielded a boon to oil production in the country, and we could thank Bush for that. But at the time of Obama's statement, it was not a three decade high of production and a statement that Bush's war policy caused gas prices to go up is not factually inaccurate.

Can you name specific Obama policies that have had a direct cause on gas price? (I'm too lazy to go through the thread)

 

No, bigtexxx I wasn't playing dumb. I was actually curious what your response would be. Once again, you're giving me a response based on knowledge from a 50-year-old macroeconomics textbook.

Like it or not, the U.S. is operating a fiat currency in a free floating exchange rate system. Until the day the government decides peg the USD to some precious metal again, you're going to have to accept some of the operational realities of fiat currencies.

Fiat currency operational reality #1:
The government hasn't truly "funded" any of their spending since 1971. Congress just passes a budget, and the government just starts spending regardless of how many tax receipts they've collected or how many bonds they've sold. Do you think Tim Geitner sits there staring at the Treasury Department's bank account and worries about where the money coming from? Does he ever call Hu Jintao to asks how many bonds the Chinese government plans on buying before Congress passes a budget?

The only person Geitner talks to is Bernanke. They talk about how many T-bills/bonds they should sell. Bernanke and the Fed hold an "auction," and by law...the primary dealers (big banks) have to buy them with their reserves and facilitate their sale in the secondary market. If nobody in the secondary market (you and me) buys them, then the banks just sit on them. If any foreign governments decide to participate in the auction, then the primary dealers don't need to buy as many. It's all one big optical illusion that only accomplishes one thing: drains excess reserves so the Fed can hit its target overnight interest rate.

Fiat currency operational reality #2:
When the government spends via fiscal policy, the money that they magically created from thin air ends up in the private sector somewhere. Since the government is not operationally bound by the need to "fund" its spending (fiat currency), the end goal of fiscal policy is to inject money into the economy to help citizens produce more, improve quality of life, provide public services, etc.

I agree with you in one sense. The potential for inflation is the biggest risk of fiat currencies. You don't want a government that just continually spends money into the economy without a corresponding increase in goods/services/other productive output. In that respect, I believe the current administration has failed. We're still sitting at 8.4% unemployment, and the vast majority of fiscal spending ended up just lining a few bank executives' pockets.

However, I disagree with you when you say fiscal austerity would solve anything. 8.4% of our greatest resource (our workforce) is sitting at home idle right now. In light of the private sector's inability to employ these people, I believe the government should step in and spend money to get these people to produce. Of course, where the government should be spending money is up for debate: improving our infrastructure, researching energy independence, XL pipeline, sending them to school, etc.

 

I made some graphs to help illustrate some points. I identified what I believe to be the key

Iraq Oil Production Timeline


World Production Timeline. Vertical red lines correspond to notes in the above graph.


Oil Prices Timeline with corresponding above notes (vertical lines) plus a couple extra notes.


Take a look at the Dow Jones Industrial Average (DJIA), and after the 2000 tech crash you will see the DJIA mimick changes in oil and gold.

What I don't see is a correlation between Iraq production on world production and any subsequent change in price. There does appear to be a correlation with the Iraq war.

More so, the rise in price seems to begin around September 2003 which is where world production begins to increase by 3 million barrels per day from the summer 2003 to the beginning of 2004, followed by slow increase by 2 million bpd over the next year and a half. Then production seems to plateau for the next 6 years.

This one is for you bigtexxx...

http://en.wikipedia.org/wiki/Iraq_War#Iraq_disarmament_crisis_and_pre-war_intelligence
http://www.energybulletin.net/node/7707
https://www.uschina.org/info/chops/2006/economy.html
http://en.wikipedia.org/wiki/Iranian_oil_bourse
http://www.telegraph.co.uk/finance/commodities/9077600/Iran-presses-ahead-with-dollar-attack.html
http://en.wikipedia.org/wiki/Five-Y...c_of_China#Tenth_Plan_.282001.E2.80.932005.29
http://globaleconomicanalysis.blogspot.com/2012/03/president-obamas-lies-regarding-us.html

 

I'm not sure how to respond. On the one hand, I love Mad Max, on the other hand, I'm not sure if this was a discussion on Mad Max or on the manipulation of fiat currency versus the stability of gold. =)

 

incoming windfall profits tax, accusations of gouging, and calls for Nixon style price controls

gas lines here we come

 

Obviously you haven't studied why we had the gas lines. The reason we had those were because of an actual oil shortage. We don't have that now, and we aren't even close to that now.

 

a price ceiling would cause a shortage

 

Could cause a shortage. However, 1970's price ceilings alone did not cause shortages, but they did cause revenue/profit loses for exploration and production companies.

 

No. Would cause a shortage.

basic microeconomics

 

That depends on the price ceiling and how it was implemented. There is always an indirect price ceiling in effect.