High Oil Prices, Inflation and Stagflation

What is it with high oil prices? The economic sages say that what really matters is the average price the refineries had to pay for the whole month. Fair enough. Back in 1980, the oil market bore a price of $38 a barrel. Then the sages work their magic. They quickly seek to justify a price increase based on inflation. “Adjusted for inflation in September 2006 dollars this $38 peak from 1980 is the equivalent of paying $100.52 (in September of 2006). This number is constantly changing as we adjust for inflation at the current moment.” So, even though the U.S. government admits to a 3% yearly inflation rate, the truth is an increase of 265%, which puts the yearly inflation average at about 10%. The producer price index for food (relevant to every American) in 2007 was up 18.1%. In January 2008, the rate was 20.4%, a huge jump for one month in a year. The rate could go up or down for the year. However, that is the current measure of inflation. Can your paycheck meet this level of inflation? This is a much different reality than the 2 – 3% government inflation rate that is promoted to a religious movement. Are you going to let the politicians and the Federal Reserve con you about such basic truth? Even the most nominal resources show a real inflation rate of at least 7% before this latest “slowdown”. For years, the government has made much effort to obfuscate the inflation rate. Instead of playing games on the internet, spend that time researching and dig around for yourself for an evening. You will find an onslaught of archived articles showing huge inflationary increases within the last 6 years. Strangely, the figures on reports never reflect the truth of those articles. Figures are continually adjusted to meet the desired results on public reports and proclaimed truth never shows in the end. The truth is being adjusted. Have you noticed or are you still asleep?

The truth is never out of date and stagflation is no less relevant today than it was in the 70s and 80s. The measurements have been changed to protect the “stealthy”. The U.S. economy is now enduring a classical case of stagflation. We are just trying to talk our way out of stagflation. I didn’t know you could talk your way out of one of the toughest economic situations possible. Don’t hold your breath on that one.

More news later.