Many analysts are pondering whether there is a cause and effect between peak oil and inflation. The answer is clearly no. Oil could go up to $500/barrel and it still could not be solely responsible for inflation. Inflation is an increase in money supply and credit. Oil is much like a currency but an international one and it cannot cause domestic inflation without more dollars being in circulation or more debt being established. So while skyrocketing oil costs can certainly be a result of inflation it cannot be its cause. Considering, though, that the American economy is in a deflation right now, the current soaring price of oil is not the result of inflation either, at least not in America.
The more likely scenario is that the steeply and rapidly rising cost of oil is due to factors such as inflation in China, increased demand for oil in China, India and other countries and worries about peak oil. That is a nasty brew and there is no way for the Fed or the ECB to control it.
Suppose oil production in a large Saudi Arabia oil field halted tomorrow, Oil just ran out unexpectedly and oil surged to $300. Would the Fed try to fight this by raising interest rates to fend off inflation?
That would be nuts. Like kicking the cat because the car broke down.
I don't know, you don't know, and the Fed does not know what to and this is as good a reason as any why the Fed should be abolished.
Only by getting rid of the Fed and checking the resultant answer would one know for sure what is really going on. In fact, the Fed operates in such secrecy that we are not even allowed to know how much money is being printed at any time. That is a new development as they get more and more cloistered. That puts us all at total effect, unable to handle any thing or make any useful changes.
So now we have to ask what we can do as individuals in our own personal lives to better our own conditions as regards economic turmoil and the price of gas.
WATER4GAS is offering information for a nominal fee which folks can use at home to create a small assembly which infuses hydrogen into the fuel/air mixture that their car runs on.
Using Water4Gas you can reasonably expect to lower your gas consumption by thirty to fifty percent or significantly more. With W4G gasoline is made usable so you can lower your gas consumption.
It also helps reduce emissions significantly.The percentage of happy customers is about 99%! So how about you?