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The Fed pushes gasoline prices even higher
Economic Policy | Energy Policy
by Jackie Corr | April 23, 2008 - 8:36am

Butte, Montana | As we well know the price of a gallon of gasoline keeps going up. And nobody sees an end to this surge let alone a drop in price. For just this past weekend the price of oil per barrel jumped again to an all time record high of $117.01. The New York Times commented that “what was striking about this latest milestone was what didn‚t happen: there was no shortage of oil, no sudden embargo, no exporter turning off its spigot.”

But there is something going on and it means more bad news for the American public. And that is the Fed’s Ben Bernanke has been pulling out all the stops to save Wall Street from paying for the mess they made while keeping all the prolfits. On Sunday in the Washngton Post, the conservative writer George Will said Americans should tell the congress the free ride is over and it is time to start dismantling Wall Street Socialism.

In Will’s words, “the Fed has no mandate to be the dealmaker for Wall Street socialism. The Fed’s mission is to preserve the currency as a store of value by preventing inflation.” But that is not the way that George Bush, Treasury head Hank Paulson, Bernanke and most of the congress see it.

You see very time the Fed lowers interest rates, it weakens the dollar and the Fed has been very active slashing these rates in order to keep the big banks afloat. That dollar devaluation then raises gasoline prices at the pump, about 8 cents per gallon per each 25 percentage point cut by the Federal Reserve.

Since September there have been 12 of these cuts made - eventually costing America 96 cents extra for each gallon of gas. Between September 18, 2007 and March 18, 2008, the Federal fund rate was lowered from 5.25% to 2.25% and the discount rate was lowered from 5.75% to 2.50%.

Check the dates: In Butte on October 3, 2007 the price of a a regular gallon of gas was $2.80. On New Years Day $3.06. St Patrick’s Day $3.25. As of this writing the price is $3.50 ($3.49.9) a gallon and it will go even higher in the coming weeks, roughly $3.75 a gallon, as a result of the Fed’s giving in to Wall Street.

Of course, the Fed has yet to mention this gasoline price surge in statements concerning those rate cuts for Wall Street and for good reason. As George Will pointed out, continued dollar deflation means higher and higher prices for the American public and even more $ billions for Wall Street investment banks like Goldman Sachs.

And there’s more. Before the current Fed cuts in the interest and discount window mentioned above run their course, regular gasoline prices will have reached $3.76 per gallon according to the Fed formula, nearly a dollar increase since last October. And like the moon follows the sun, a higher price for gas further pushes up already rising food prices.

So it’s no wonder people want change and the hell with experience. “Bailout Ben” Bernanke, Hank Paulson (a former Goldman Sach’s CEO) and of course, Alan Greenspan, the former Fed guy, are long on experience and look where they got us. And we might also remember the present disaster originated in the unregulated Wall Street investment banks who were set free to plunder and loot after Bill Clinton and Robert Rubin in 1999 deep-sixed the old New Deal banking law, Glass-Steagall.

And what have they learned? Needless to say, the Wall Street guys and gals are still calling for more tax cuts even with a war going on that is further bankrupting us.

http://www.smirkingchimp.com/thread/14204