Obama/McCain supporters: what do you think eithe can do...

[Wyldgusechaz]

You made an Herculean leap of logic with that statement, and I'd like to see you fill in the gaps.

Exactly how are the Fed's fiscal policies influential on the prices of refined gasoline?

The common thought is that the is a run on commodities from newly strengthened economies like China and countries in South America. However we don't have traffic lines at gas stations because fuel is in limited supply like in the '70s.

What is happening is we are inflating the dollar. It started around 2000-2001. We dropped interest rates so low that the effective rate was below the rate of inflation. rates should always be about 2.75% above inflation. Thats sound policy. It means an prudent investor would get a real positive rate of return. I myself borrowed money, a lot of it at 4% back then to purchase buildings.

Now interest rates are well below the rate of inflation so for all intents and purposes, our dollar is losing value at a hi speed. We are losing to the euro, the Brazilian real, the pound, because the Fed Reserve can't get it right. The price of a barrel of oil has almost doubled in months. Demand hasn't increased in months by a factor of 2 and neither has supply gone down by half. Its the ever weakening dollar. I just got back from 2 weeks in europe and the Euro is solid and sound and the dollar is getting trashed. So oil which is valued in dollars goes up as the dollar gets weaker.

Part of good commodity trading is knowing exchange rates. Traders have caught on that our dollar is dropping, so they bid up oil and other commodities accordingly.

 

[HazelGod]

I think it's erroneous to equate the crude oil commodities market with the retail pricing of refined fuels...and it's also erroneous to apply the simple model of supply and demand, as the reality of our society does not allow us as consumers to influence demand at all.

Even so, what are you positing? That the Fed should decide US fiscal policy based on how it might influence the world market price of crude oil? That hardly seems like either a societally-encompassing or forward-thinking guideline to determine the economic direction of this country.

 

[B_OtterJoq]

McCain disappointed (and lost) me when he started making nice-nice with the radical right-wing fundamentalist "Christians" who in reality are bigoted, hatemongering homophobic hypocrites.

I've switched my allegiance to the next president of these United States, Barack Obama.

 

[B_Nick4444]

there was in fact, concern among many analysts and fund managers that the Fed would be playing politics, and keep interest rates high, as a political move, to keep the price of oil low (i.e., keep the US Dollar highly valued)

 

[Wyldgusechaz]

I think it's erroneous to equate the crude oil commodities market with the retail pricing of refined fuels...and it's also erroneous to apply the simple model of supply and demand, as the reality of our society does not allow us as consumers to influence demand at all.

Even so, what are you positing? That the Fed should decide US fiscal policy based on how it might influence the world market price of crude oil? That hardly seems like either a societally-encompassing or forward-thinking guideline to determine the economic direction of this country.

Thats a really good question. With most European countries on the Euro, and the Euro is not subject to political folly as in *priming the pump* by easing interest rates, the Euro has remained strong. Brazil's economy has gotten stronger by strengthening the Real. I was in Italy and they aren't happy with the Euro but Italy has always been screwy with economics.

When you say socially encompassing I don't know what that means. We need a sound currency. If we raised basic Fed interest rates, the dollar would rebound and gas prices should fall. Right now we are inflating away our debt. Is that a good idea? I sure wonder. With gasoline at $4/gallon, how is the average guy handling it? Thats real money to the regular guy.

 

[HazelGod]

When you say socially encompassing I don't know what that means. We need a sound currency. If we raised basic Fed interest rates, the dollar would rebound and gas prices should fall. Right now we are inflating away our debt. Is that a good idea? I sure wonder. With gasoline at $4/gallon, how is the average guy handling it? Thats real money to the regular guy.

By socially-encompassing, I mean considering the ramifications of policy as they reach beyond any single aspect...like crude oil prices. Rates are rock bottom already, and we still have a crisis in the mortgage industry, for example...can you imagine what our nation's situation would look like had the Fed been raising the rates with the main aim of suppressing the price of crude oil?

I say it isn't forward-looking because fossil fuels are an inherently unsustainable basis for energy, and the hoi polloi are just beginning to awaken to this fact. Any policy that aims to preserve the technological status quo is doing us a disservice.

It's a big animal with lots of interconnected moving parts...any policy focused on a single aspect is doomed to fail.

 

[D_Cyprius Slapwilly]

chizz: and my criticizing McCain for stating he would make tax cuts permanent (if elected) is at odds w/ your statement how?

I'm aware of the outside forces of the economy. Moreso what are we producing that gives us value - to invest in our markets. To wit those jobs are not here any more - but are outsourced elsewhere. Value of the dollar is dropping - check. Spending out of control - check. Got off the gold standard and inflation results - check. Can we get back to the gold standard? To control inflation? Not likely. Gold is worth more now and our dollar is losing value.

What on earth is making the tax cut on the richest permanent - going to do to change the above? That tax bracket is outsourcing cheaper labor by contracting outside the US? What can the fed do to encourage buying - lower interest rates - but our gross national product is what??? Who is going to invest in the US w/t a 2 percent rate of return. So the president doesn't control interest rates. Yet they have helped to outsource our value (produce what?) for cheap labor (mexico, India and Europe don't pay american income taxes) - so who picks up the tab for the lack of income tax revenue.

Suggesting this president cut the gas tax - when there is no support for it and if we responded by driving more - it would create more of a demand on oil and companies would respond by raising prices. As a consumer - we'd get no relief in the price as a result. Then we have a deficit in the highway transportation fund to refurbish bridges and highway - from the cut in the gas tax.

my vote isn't about who takes a shot w/ GW or who is more sympathetic to whether I like to hunt or pray.

I wasn't referring to your post, Zoe. I agree with you. I'm against making the Bush tax cuts permanent 1) because with the current rate of inflation it simply isn't a good time to keep taxes on the upper class at the levels they enjoy under Bush, and 2) I would be against ANY measure to keep ANY tax cuts permanent. The economy is fragile, and it changes all the time. The answer to everything isn't "cut taxes," regardless of what the right wing wants us to believe. If that were so then neither Bush I nor Reagan would have raised taxes because they were against it in principle, but they realized that handling the economy takes a bit of pragmatism.

I also agree with you on the supposed "gas tax holiday," but then again so does every economist in the country. It's a stunt that neither McCain nor Hillary would actually enact in reality, but it sure sounds fun!