Fed Making Gas Prices Worse

For months now we've been paying more and more at the gas pump. Slowly but surely gasoline prices have gone from near decade lows at under $2.00 per gallon, to now $3.50 and there is talk that $5.00 will be the price by Summer's end.

Now the Obama administration with its insane restrictive policies toward domestic oil exploration deserves much of the blame. But, the fact is that oil is an import. And if our dollar is worth less it's going to take more dollars to buy a barrel of oil.

For  over a decade, the Federal Reserve (the Fed) has had a schizophrenic policy when it comes to interest rates. That took its toll on them markets and the economy. But when the Fed's efforts to stimulate the economy with lower interest rates failed they initiated a policy of monetizing the debt. They started buying back the bonds the Government had issued. In order to do this the Fed had to print money. It has increased the money supply by about 20%.
This is nothing but a hidden tax. Because soon enough the market realizes that the dollar is worth 20% less and prices go up 20%.
 
Before the Fed started pumping  dollar bills into the economy, the price of a barrel of oil was about 75 to 78 dollars. Now it's  105; that's an increase of 27 to 30 percent. Granted, there is concern that the supply will be interrupted because of the  trouble in the Middle East. But the biggest chunk of that increase was caused by the failed policies of the Federal Reserve.

Now the Fed is threatening to us with more easing. Check out the following from Forbes:

Recent comments from Atlanta Federal Reserve President Dennis Lockhart, combined with spiking oil prices, have led to speculation regarding future rounds of quantitative easing. Lockhart spoke recently at the National Association of Business Economics conference, commenting on rising oil prices and the potential for spikes to affect the economic recovery.

“I would take a position we would respond with more accommodation” Lockhart said, regarding the potential onset of recession as a result of oil price increases.

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I think the Federal Reserve has done enough accommodating. We need a sound monetary policy along with a sound fiscal policy. Gasoline would be 20% cheaper if the Fed hadn't been printing money to pay for out of control Obama spending.