(Click here to read the complete post from GoldenJackass.com.) Nothing will signal a tsunami of inflation (caused by currency creation) faster than rising oil (and gold) prices. I think it is a lock that people around the planet will be paying much higher prices at the pump.Adding to the money creation is the European sovereign debt crisis with Greece at the tip of the debt iceberg. The banks will be kept afloat at all costs instead of liquidated. According to Jim Willie of GoldenJackass.com, massive amounts of new money will need to be created out of thin air to keep the Western banking system solvent. In his most recent report, Mr. Willie said, “The zinger is the recapitalization of the banking system, an urgent need and requirement, the understood impact from the imposed Greek comprehensive solution. Expect more favored treatment to the banks. However, as they are put back on solvent feet, a process only possible with vast hyper monetary inflation directed specifically at the banking pillars, the retribution from within the system will possibly be the first serious price inflation leakover. For over three years, the monetary inflation leakover has been contained, to the detriment of the economy.”
President Obama is saying the recent spikes in gasoline prices are not his fault and said, last week, there “are no quick fixes to this problem.” He is right about one thing, there are no quick fixes. The problem is not one of supply, but of too many dollars created to bail out Wall Street banks that should have gone into bankruptcy. Prices for regular gasoline in America are approaching $4 a gallon and, in some places, they are approaching $5 a gallon. According to a post on Forbes.com titled “Gasoline Prices Are Not Rising, the Dollar Is Falling,” relative to the price of gold, gasoline is cheap. The report said the average for the last 493 months has been “.0732” ounces of gold per barrel of oil. Right now, the ratio is about “.0602” ounces of gold per barrel. Are you getting this? Either gold prices have to go down or oil prices are headed higher to equal the nearly 500 month average. The report goes on to say, “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.” (Click her for the complete Forbes.com report.)
If there is war in the Middle East (as I expect), it will be like lighting a match in a room full of natural gas. Prices will explode for fuel and just about everything else, and talk of the so-called “recovery” will finally cease.