|
It is unfortunate that the Supreme Court, in its
ruling this week that U.S.
currency is unfair to the blind, did not make the next logical step and
declare it unfair to everyone who buys gasoline.
In their search for explanations as to why oil has
surged past $130 per barrel, Washington, Wall Street, and the financial media
are as clueless as cavemen after a freak summer snow storm. Despite the head
scratching, the blame game is nevertheless in full force. Speculators and big
oil companies are being trotted out as scapegoats, and increased margin
requirements and taxes on windfall profits and futures trading have been
mentioned as appropriate sanctions. It should be clear that this is pure
farce, and that no one understands what is actually happening.
The reality is that after years of reckless
consumption and dollar debasement, Americans are now being priced out of
markets over which they formerly held unchallenged title. As more affluent
foreigners consume more of the resources and products they previously
supplied to us, Americans are being forced to cut back. The rising
dollar-based price of gasoline is simply an illustration of this global
trend.
Poorly concealed behind contrived government
statistics, the signs of America's
falling standard of living are everywhere; all one has to do is look. We are
unloading SUVs for less desirable compacts, and are paying more to fly on
crowded planes (where we pay to check luggage and dine only on what we bring
onboard). We drink our lattes at McDonalds or not at all, and we increasingly
forego dining out, trips to the mall, and vacations, just so we can scrape
together enough to fill our gas tanks and kitchen pantries, pay taxes and
insurance, or make credit card, mortgage or car payments.
The collective belt tightening is simply the down
payment on the Government's massive bailout of Wall Street investment banks
and mortgage lenders. As the Fed creates money to buy bad mortgages and other
shaky securities held by banks and brokerage firms, the value of the savings
and wages of everyone on Main
Street will continue to fall. As a result, the
costs of products previously taken for granted have begun to bite.
The various housing bills and stimulus packages now
passing through Congress will add significantly to the staggering final price
tag. In the end, the "free lunch" currently being dished out by Washington will be the
most expensive meal ever served. The cost will be borne by ordinary Americans
citizens every time they open their wallets. Four dollar gasoline is just the
beginning.
For all the talk of increased global demand, few
seem to understand from where it actually comes. The surge in global demand
is both a function of the increased purchasing power of foreign currencies
and the fact that foreigners are choosing to spend more of their incomes
themselves. In other words Greenspan's famous "global savings glut"
is turning into a global consumption binge, with Americans unable to crash
the party. This trend will only get worse as the dollar-denominated price of
just about everything that is either imported, or capable of being exported,
goes through the roof.
Peter D.
Schiff
President/Chief Global Strategist
Euro Pacific Capital, Inc.
20271 Acacia Street, #200 Newport Beach, CA
92660
Toll-free:
888-377-3722 / Direct:
203-972-9300 Fax: 949-863-7100
www.europac.net
pschiff@europac.net
For a more in depth analysis of the U.S. economy and
why it is in so much trouble, read my new book “Crash Proof: How to
Profit from the Coming Economic Collapse.” Click here to order
a copy today.
More importantly make
sure to protect your wealth and preserve your purchasing power before it's
too late. Discover the best way to buy gold at www.goldyoucanfold.com,
download my free research report on the powerful case for investing in
foreign equities available at www.researchreportone.com, and subscribe to my free, on-line investment newsletter at http://www.europac.net/newsletter/newsletter.asp.
| 
