Friday, October 16, 2009

Crude Oil Follows Gold in Technical Breakout

More signs of "success" as defined by the Federal Reserve.... after expansionary monetary policies drove gold out of a months long range in September, crude oil joined the party yesterday breaking out of a roughly 5 month range between $65 and $75. (save for 1 pitstop in July when the markets actually fell for more than 3 sessions)

The party continues today as the central bankers money continues to go into places of speculation because it is not needed in the real economy by a Western consumer, especially of the American kind, who is trying to somehow service all the debt they have already rung up through a multi decade binge.

We'll see how far HAL9000 and his merry band can take oil... looks just like gold did about a month ago. For those of us who were either not born, or too young to remember the late 70s or early 80s, looks like we are going to have a history lesson. Excluding the 12% mortgages of course!

This is actually the point I've been excitedly waiting for... gold and equities inflating just affect a a minority of society; the better off part at that. Once the Fed's policies start melting into things that actually affect the other 70% of Americans on a day to day basis? Good Times. Since Joe6Pack already stopped paying attention to what our leadership is doing, perhaps the only time the masses will ask questions is when they see gas surging back over $3 (do we hear $4? we can only hope) as the country is gripped with real mid teen % unemployment, and 20% unemployed + underemployment.

Gold prices. Check.
Equity prices. Check.
Oil prices. Check.

Now if we can only inflate food prices, I think the "Mission Accomplished" banner can be unfurled. Oops, I forgot about home prices... still working on that; probably going to need to get those mortgage rates on 30 years down below 4% to fix that issue Ben.

Remember, inflation - the most regressive tax in the world - is "a great thing", just ask those smart economists who apparently don't live on median income (or below). [May 20, 2009: Economists - US Needs More Inflation]

They argue that a looser rein on inflation would make it easier for debt-strapped consumers and governments to meet their obligations.

It might also help the economy by
encouraging Americans to spend now rather than later when prices go up.

If you listen closely you can almost hear the politicians scurrying to get the oil executive CEOs up for a hearing on Capital Hill (are you guys free January 2010?), with fingers wagging at "what are you doing to the American people!" They really should look for those answers in the mirror, as well as that building with "Federal Reserve" stamped on its forehead.

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