A couple of weeks ago Congress had an investigation on big Oil. One of the Senators asked the oil man why they didn’t pass the profits down to the consumer (I guess it’s not right to make a profit in the United States). The CEO said that he didn’t think it was practical. Then yesterday the local channel had a bit on retail legalized marijuana stores here in California. They asked the vendor what the sale price was per ounce and she replied “We keep it at the same price as the illegal stuff, if we didn’t, we would be supplying street users who would still sell at their regular price.” It kind of seems like the dope dealers of this country understand basic economics better than our elected representatives.
Gas prices are going through the roof. At these prices there is going to be a lot of oil entering the market, probably more than the consumer can use. At some point prices have to drop. It’s a little like the housing bubble. As prices rose, more houses were built. Now we have a large supply and no one now really wants one. The odd thing here is that Congress wants to maintain the high housing prices in order to keep the real estate market stable. If gas prices collapse, would we have a gas bailout also?
Congress can run investigations on why things are more expensive. In reality, the items we purchase don’t cost more, the currency is worth less. Counterfeiting is against the law, but spending more government funds than you collect in taxes is not. Let’s face it, the 160 billion dollar tax stimulus was not real money, it was not earned by anyone.
From a simplistic economical view, a worker makes 100 dollars worth of widgets and at the same time, the government prints $100. There is now 200 dollars chasing the produced widgets. This item didn’t double in price. But, by God, Congress is going to grill and roast that widget maker. How dare anyone gouge John Q Public? You can't see the smoke and the mirrors but they are there.
The average person has no idea that Congress is the problem. Isn’t it amazing how politics can solve our economic problems with just a printing press? It’s kind of like trimming your toenails with a guillotine. The solution is a problem.