Today's chirpy economic news from Bloomberg.com:
May 27 (Bloomberg) -- Crude oil rose, trading near $133 a barrel in New York, after a militant attack in Nigeria disrupted supplies from Africa's largest producer. [...].That's right, gentle readers, our falling dollar is the chief culprit in this inflationary oil price mess. Oil futures were already spiking prior to the Nigerian attack. We we can thank Fed Chairman Ben "Inflate or Die" Bernanke for that. In that connection check out this May 2, 2008 story from the Asia Times:
New York oil futures have increased 24 percent in the past two months and reached a record $135.09 on May 22 after the dollar posted its biggest weekly decline against the euro since March. A weaker dollar prompts investors to buy commodities as a hedge against inflation.
"Bernanke takes one more gamble"
And here's an interesting twist on the impact of the Fed's willful decision to sacrifice the fight against inflation in order to more aggressively fight US recession:
"Fuel suppliers demand airlines pay cash in advance".
From today's London Times Online story:
Airlines are being forced to pay cash in advance for jet fuel as the major oil companies tighten the screws on an industry that is being crushed by an extraordinary surge in the price of crude oil.The long and short of it, in our opinion, really isn't that fuel suppliers are concerned about airlines' financial solvency. The real problem, we believe, is that the dollar is now dropping so fast that fuel suppliers want payment in dollars at current value. This is what happens in an economy experiencing hyper-inflation.
Sources within the airline industry indicate that credit is being denied to most of the leading American carriers and the practice is moving to Europe and Asia. So uncertain is the cash solvency of the industry that jet fuel suppliers insist on prepayments into special bank accounts.
A credit controller at a leading European multinational oil company told The Times that the oil industry was moving to jet fuel prepayment. “It’s common in the US and it is moving to Europe. We have been moving to prepayment since Swissair went bust.”
It won't be long, we suspect, before other suppliers of other commodities will follow the oil companies' lead, and will be demanding "cash on the barrel-head." And we foresee a time in the not so distant future when the dollar, still the world's reserve currency, will no longer be accepted by oil producers or refiners.
If you thought we had a bad credit crunch this week, just wait until the next.
Remember: As the purchasing power of your US currency descends to the point at which it's not worth the paper upon which it's printed... The Fed is doing this intentionally... for your own good.
Comments?
1 comment:
I don't know what it would take but perhaps it is time for the United States to move away from the central Bank idea. But perhaps this is just another move by the Fed to bankrupt banks and therefore gain more power. Also it could be a move to introduce the Amero to North America. With the Dollar worth next to nothing and the public already in "fear" of the D word. If presented right the citizens would vote for the Amero. Got to admit the people in charge know how to play the game.
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