Wednesday, February 22, 2012

FORBES: Gas prices not rising, dollar is falling.

http://www.forbes.com/sites/louiswoo...ar-is-falling/



"At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot. And, because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices.



Federal Reserve Chairman Ben Bernanke uses a “core CPI index” that excludes food and energy to guide monetary policy. From Big Ben’s point of view, rising gasoline prices are not a problem. For the rest of us, they are becoming a big problem.



Over the centuries, gold has been “the golden constant”. Eventually, all prices equilibrate with gold. This is why gold represents the best available standard in terms of which to define the value of a monetary unit. Forty-one years ago, when the value of the dollar was defined in terms of gold at $35/oz, WTI was selling for $3.56/bbl."


I say this a lot. Good to see it in a mainline publication. You can use silver, as well. A silver dime from 1964 will still buy the same amount of gas, roughly, as it did back then.

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