Tuesday, May 01, 2007

Did Gas Prices Go Up?

Gas right now is $3.50 a gallon. The price of gold has doubled. This can’t be inflation, because our wages should have doubled also (or so the scenario implies).

Lets look a it from a different perspective. Gas and gold have not changed in price. Then what has changed? Could it be the value of the dollar?

What are we really viewing here is perspective. Perspective is an interpretation of events. There is no real right answer, either could be right at any point in time.

Take two different people one retired and one just entering the workforce. The retired guy on a fixed income just had his buying power slashed in half.

The guy entering the work force will not have enough experience to sort out his place in the realm of economics 101 yet. He just got on the ride.

Add to this, an economic downturn, and a Congress that can be depended upon to grease the chute to hell, you have the beginning of a real mess. If its deflation, the governments tax base decreases. If its inflation, the landholders ability to pay taxes decreases. Either way the government is locked into decreasing revenue. In the 1930’s government raised the tax rate because of falling tax receipts. This exploded in their face. More, meant less in the end (pun intended).

The general public's perception of this “inflation” could become more apparent by necessity. It costs 60 bucks for a tank of gas, that pretty much shoots a 100 dollar bill. What if the Treasury started printing $1,000 bills? Wouldn't that set off warning bells? Kind of like seeing a rat trap in your favorite restaurant.

What scares me is the idea of a guy walking around with a $1,000 bill in his wallet thinking that he’s never had this much money before.

Here's hoping that its deflation instead. You never know whats going to happen next with this Congress passing bills that have already been pre-vetoed. Is that a mule or a jackass that they have for an icon?

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