Why Oil Prices Are So High

[Mr_Jefferson_24]

By Paul Craig Roberts

http://counterpunch.com/roberts06112008.html

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Of course, Americans don’t get real inflation numbers from their government and have not since the Consumer Price Index was rigged during the Clinton administration to hold down Social Security payments by denying retirees their full cost of living adjustments. According to statistician John Williams, using the pre-Clinton era measure of the CPI produces a current CPI of about 7.5%.

Understating inflation makes real GDP growth appear higher. If inflation were properly measured, the US has probably experienced no real GDP growth in the 21st century. Williams reports that for decades political administrations have fiddled with the inflation and employment numbers to make themselves look slightly better. The cumulative effect has been to deprive these measurements of veracity. If I understand Williams, today both inflation and unemployment rates, as originally measured, are around 12 per cent.

By pumping out money in an effort to forestall recession and paper over balance sheet problems, the Federal Reserve is driving up commodity and food prices in general. Yet American real incomes are not growing. Even without jobs offshoring, US economic policy has put the bulk of the population on a path to lower living standards.

The crisis that looms for the US is the loss of world currency role. Once the dollar loses that role, the US government will not be able to finance its operations by borrowing abroad, and foreigners will cease to finance the massive US trade deficit. This crisis will eliminate the US as a world power.

[NC_Nurse]

1. "This crisis will eliminate the US as a world power." Maybe that's a GOOD

thing. The Neocons and those who think like them may have to let go of some hubris...
hard to imagine, I know. :o

[Mr_Jefferson_24]

3. If we can't act responsibly as a nation, then sadly, it is.

[Ilsa]

2. HDNet Dan Rather has an excellent report on the rise of Russia

as a world power again. The down side of what they are doing is creating a class of mega-rich, the poor, and the terribly poor. It's a recipe for another revolution with another communistic outcome.

[Mr_Jefferson_24]

4. What's going on in Russia sounds like a pretty good description...

...of what's happening here.

[nadinbrzezinski]

5. Bingo! And the oligarchs are setting the basis for

revolutions

They will happen... one way or another, if these trends continue

[Ilsa]

7. Yeah, but there are business opportunities there for anyone with

any capital to work with. (stressed: "If you have the capital...") In the US, many opportunities are dried up. There are still pockets of opportunity, especially to market to the "golden youth" -- the children of the oil barons.

The dark side is that they can't say anything negative about Putin or Medyedev.

[Democrats_win]

6. Borrowing money is what's hurting America. Why so much borrowing? Rich people won't pay taxes.

The result of borrowing is a lower dollar which causes inflation.

Thus the result of rich Americans not paying taxes is that poor and middle class Americans are picking up the rich man's tab through inflation.

[Ilsa]

8. Yep. Having a war, not paying for it except by borrowing. "No one

wants dollars anymore," said a Saudi prince at OPEC.

[roamer65]

9. PCR hits the nail on head again, except for one point.

According to John Williams M3 money supply growth figures, we are presently at the same rate as when we left the gold exchange standard in August, 1971. Right around 16% growth. The horrendous price increases we are seeing are simply a result of monetary inflation.

PCR does make one mistake, though. Rigging the CPI began in the RAYGUN admin. The pre-1980 inflation measurement is the most accurate and shows a current inflation rate between 11 and 12%.