From Better and Better, through View from the Porch comes this story of "Price Gouging."
Apparently, Americans have become so dependent on the government that we no longer need to shop for the best price. The government will order those nasty price gougers to pay us back if we pay too much.
There used to be a TV ad that showed an office full of everyday things, one at a time all of the items made from petroleum disappeared, until almost nothing was left. The purpose of the commercial was to demonstrate how important oil is to us, since petroleum is in almost everything. The message I got from the ad was that rising oil prices will drive inflation, since petroleum is in almost everything.
The government inflation people still exclude food and energy (oil mostly) from inflation numbers, since the food and energy prices are much more volatile than most other prices. It is as if food and energy prices are not important to consumers. They could include a yearly average of the food and oil inflation numbers as a way of eliminating the majority of the fluctuation, but it is better to ignore the problem if you don't want to deal with the actual inflation. Especially if you profit from the deception.
We need to admit that there is an inflation problem and the government is only going to make it worse.
The government tells us there is no inflation and lowers interest rates. This tells us that money is cheap and everyone is happy as long as we keep spending. Recently the banks started to realize that lending out money at low interest rates is not the best thing for their business.
Money is becoming less available as the interest rates decline. Those in the marketplace do not see the benefit in lending money out at a a couple of interest rate points higher than they borrow the money. They may not get their money back and the collateral (if any) may not be worth much. Even if they do get the money back, how much is it worth when they do get it back? The American Peso (you can call it the dollar, but if it falls like a Peso . . . ) makes it so that everything that we import is much more expensive, while everything we make to sell overseas is falling in price. The dollar is demonstrating the confidence people have in the US government to deal with America's problems. The free market has much more confidence in Europe (a lot of socialist economies there) and China (communist?).
Since 2002 the major currencies that are traded have almost all gone up. Swiss Franc from less than $.60 to almost a dollar; Australian Dollar just over $.50 to almost a dollar; Canadian Dollar from about $.65 to over a dollar; Euro from less than $.90 to over a dollar and a half; only the Mexican Peso is down, but even that Peso seems to be rising, now.
What does this matter to us?
We don't use those currencies. So what?
Commodities are rising faster than the currencies. Gold from less than $300 to $970; Heating Oil from less than $.60 to over $2.80; and the big one - Oil from about $20 to over $100.
Oil we all seem to be able to relate to, but this is only a part of the picture. Remember oil is in almost everything, so even stuff made in China and sold at Walmart is more expensive.
As far as the currencies, we all use them - even if we never touch them physically or convert dollars to another currency.
All of those currencies are traded in US Dollars, so when they become more valuable it means that the US Dollar is worth less than it was before. There still is a space between worth and less, but we seem to be getting closer to worthless.
Everything we buy that has parts from overseas becomes more expensive. Even the overseas jobs that have been created in an attempt to avoid high labor costs in the US are becoming less attractive to US companies.
This is what the free markets think of the worth of the US. This is not an optimistic view.
Yet we pretend that we have free markets - this is America, the home of free markets.
The government is trying to keep us spending money by making it easier to get, but the banks are not singing along with the government karaoke of "Hakuna Matata."
The banks are now (not so much over the last five years) acting as if it is a game of musical chairs and they do not want to be the one left standing. And there seems to be a need to quickly get up and remove another chair. Oops, there goes Countrywide Financial. Bye-bye Bear Sterns.
The interesting one is Goldman Sachs. They reported record earnings and bragged that they made money off of the sub-prime problems, but their stock price has been falling at the same rate as all of the financial companies that lost a lot of money on sub-primeloans. What haven't they told us? Somebody knows something, because people just are not buying this very profitable company. They are treating it as if those reported profits are a lie.
While we pretend that we have free markets, we try to limit what things cost us by the "there ought to be a rule" method of whining to the government to protect us from big bad reality. This destroys free markets.
Price controls lead to greater scarcities. Why would a gas station sell gasoline at a loss? The station owner only makes a few cents per gallon before expenses.
Many won't sell at a loss, or will do whatever is necessary to minimize their losses. Maybe then we go back to those wonderful gas lines we had in the 1970s.
Should we have price controls on other things I cannot afford?
I want a nice big house, but the price of houses has gone up a lot.
Wait, the market seems to be correcting that problem and the government did not even step in to say that you cannot sell your house for too much profit.
Why should the government decide what is too much profit?
The government has rarely demonstrated any self control, whether limiting spending or any other excess. Government is not about self control.
Ex-governor Spitzer might encourage someone in government to start price controls on hookers (escorts). Late night comedians have said that they are charging ridiculous amounts for their services. Maybe late night comedians are the experts.
We do not need to have the government come in and tell us what a product or service is worth.
They already overcharge us with taxes. Where are our price controls when the government has a bottomless checkbook backed by their servants - us?
Apparently, Americans have become so dependent on the government that we no longer need to shop for the best price. The government will order those nasty price gougers to pay us back if we pay too much.
There used to be a TV ad that showed an office full of everyday things, one at a time all of the items made from petroleum disappeared, until almost nothing was left. The purpose of the commercial was to demonstrate how important oil is to us, since petroleum is in almost everything. The message I got from the ad was that rising oil prices will drive inflation, since petroleum is in almost everything.
The government inflation people still exclude food and energy (oil mostly) from inflation numbers, since the food and energy prices are much more volatile than most other prices. It is as if food and energy prices are not important to consumers. They could include a yearly average of the food and oil inflation numbers as a way of eliminating the majority of the fluctuation, but it is better to ignore the problem if you don't want to deal with the actual inflation. Especially if you profit from the deception.
We need to admit that there is an inflation problem and the government is only going to make it worse.
The government tells us there is no inflation and lowers interest rates. This tells us that money is cheap and everyone is happy as long as we keep spending. Recently the banks started to realize that lending out money at low interest rates is not the best thing for their business.
Money is becoming less available as the interest rates decline. Those in the marketplace do not see the benefit in lending money out at a a couple of interest rate points higher than they borrow the money. They may not get their money back and the collateral (if any) may not be worth much. Even if they do get the money back, how much is it worth when they do get it back? The American Peso (you can call it the dollar, but if it falls like a Peso . . . ) makes it so that everything that we import is much more expensive, while everything we make to sell overseas is falling in price. The dollar is demonstrating the confidence people have in the US government to deal with America's problems. The free market has much more confidence in Europe (a lot of socialist economies there) and China (communist?).
Since 2002 the major currencies that are traded have almost all gone up. Swiss Franc from less than $.60 to almost a dollar; Australian Dollar just over $.50 to almost a dollar; Canadian Dollar from about $.65 to over a dollar; Euro from less than $.90 to over a dollar and a half; only the Mexican Peso is down, but even that Peso seems to be rising, now.
What does this matter to us?
We don't use those currencies. So what?
Commodities are rising faster than the currencies. Gold from less than $300 to $970; Heating Oil from less than $.60 to over $2.80; and the big one - Oil from about $20 to over $100.
Oil we all seem to be able to relate to, but this is only a part of the picture. Remember oil is in almost everything, so even stuff made in China and sold at Walmart is more expensive.
As far as the currencies, we all use them - even if we never touch them physically or convert dollars to another currency.
All of those currencies are traded in US Dollars, so when they become more valuable it means that the US Dollar is worth less than it was before. There still is a space between worth and less, but we seem to be getting closer to worthless.
Everything we buy that has parts from overseas becomes more expensive. Even the overseas jobs that have been created in an attempt to avoid high labor costs in the US are becoming less attractive to US companies.
This is what the free markets think of the worth of the US. This is not an optimistic view.
Yet we pretend that we have free markets - this is America, the home of free markets.
The government is trying to keep us spending money by making it easier to get, but the banks are not singing along with the government karaoke of "Hakuna Matata."
The banks are now (not so much over the last five years) acting as if it is a game of musical chairs and they do not want to be the one left standing. And there seems to be a need to quickly get up and remove another chair. Oops, there goes Countrywide Financial. Bye-bye Bear Sterns.
The interesting one is Goldman Sachs. They reported record earnings and bragged that they made money off of the sub-prime problems, but their stock price has been falling at the same rate as all of the financial companies that lost a lot of money on sub-primeloans. What haven't they told us? Somebody knows something, because people just are not buying this very profitable company. They are treating it as if those reported profits are a lie.
While we pretend that we have free markets, we try to limit what things cost us by the "there ought to be a rule" method of whining to the government to protect us from big bad reality. This destroys free markets.
Price controls lead to greater scarcities. Why would a gas station sell gasoline at a loss? The station owner only makes a few cents per gallon before expenses.
Many won't sell at a loss, or will do whatever is necessary to minimize their losses. Maybe then we go back to those wonderful gas lines we had in the 1970s.
Should we have price controls on other things I cannot afford?
I want a nice big house, but the price of houses has gone up a lot.
Wait, the market seems to be correcting that problem and the government did not even step in to say that you cannot sell your house for too much profit.
Why should the government decide what is too much profit?
The government has rarely demonstrated any self control, whether limiting spending or any other excess. Government is not about self control.
Ex-governor Spitzer might encourage someone in government to start price controls on hookers (escorts). Late night comedians have said that they are charging ridiculous amounts for their services. Maybe late night comedians are the experts.
We do not need to have the government come in and tell us what a product or service is worth.
They already overcharge us with taxes. Where are our price controls when the government has a bottomless checkbook backed by their servants - us?
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