Stupid Federal Reserve Bank

I don't know about you, but I am tired of $3.50 gas. My truck, a full size GMC Serria, cost me about $73 to $80 to fill. Currently, with having to fill it once a week, I am one pace to spend around $4,000 a year on gas. Using my net pay rate of 63% (what's left of the paycheck after taxes, social security and 401k) that means $6,300 of my salary is going to gas. That is a huge chunk of my pay. If gas were to drop to $2.50 a gallon, the gross pay cost my gas would be $4,500; if it were to drop to $2.00 a gallon, the gross pay cost would be $3,600.

While I realize that driving a gas guzzling truck does not help the situation by keeping my demand high, another problem driving gas, and other commodities, higher is the devaluation of the Dollar. When good old Ben Bernanke lowers interest rates to spike the economy, which it does in the short term, it lowers the carrying cost of commodities. With a low carrying cost of commodities, an investor can move into the commodities markets and hold more of their capital in commodities – this inflates the price of the commodities. It is somewhat counter-intuitive, but this is one of the processes that causes there to be inflation when the Fed lowers the interest rate.

So, while it is good for the banks, and the financial institutions to have a low Fed rates, it is not good for the US currency. Over the past couple of months that Fed has shown that it can come up with increasingly clever, almost ingenious, ways of keeping the banks solvent without having to lower interest rates. I want them to start raising the rates so that prices will start to come down on all commodities, but mostly gas prices.

Later,

B