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Falling Oil Prices Not the Reason for U.S.’s Economic Woes

Sent to us by the author.

Antonius Aquinus

The dramatic fall in the global price of oil is being cited by the financial press, government officials, and academia as the catalyst for the recent abysmal U.S. economic data which shows that the economy is, in all likelihood, sliding into a recession or worse.  

While falling oil prices sound like a plausible explanation for the abysmal financial numbers, anyone with a modicum of economic sense (which excludes much of the financial Establishment) can see that it is merely a smokescreen to obfuscate the real culprit.

The fall in oil prices, while detrimental to many oil producers, should actually be a boon for the rest of the economy, especially those industries that are heavily reliant on energy. Lower fuel prices mean lower production costs leading to, ceteris paribus, greater output.

For consumers, lower oil prices mean lower utility bills and cheaper gasoline, both of which mean more disposable income for either savings or more consumption. Why would greater disposable income lead to a recession?

Naturally, lower prices are not good for oil producers. But a decline in one sector of the economy (albeit an important one), does not lead to a general collapse. While the energy sector may be contracting, industries that use fuel should be able to expand as their production costs fall.

The Federal Reserve’s Quantitive Easing (QE), Zero Interest Rate Policy (ZIRP), Operation Twist (OT), and their variations have created a massive bubble in asset prices which is now beginning to burst. All of these polices have been undertaken to save the banking system from collapse after the crisis of 2008. Since the start of the Great Recession, none of the problems that have led to it have been addressed.

Not only has the stock market been artificially inflated by the Federal Reserve, but it has come at a devastating cost in the decimation of savers, as the return on their money has dropped to next to nothing. This, of course, has had debilitating consequences on retirees and seniors.

The Obama Administration, with little opposition from Republicans, has increased the federal deficit to nearly $20 trillion from the $4 trillion it had inherited with little or no hope of any reduction. Its wasteful stimulus program of a few years ago has done nothing to improve conditions while its collectivist health care initiative has placed crushing burdens across the economic spectrum.

What is even scarier is that Obummer is apparently clueless about current economic conditions, as he mindlessly demonstrated in his (thankfully) last State of the Union Address: “Anyone claiming that America’s economy is in decline is peddling fiction. What is true – and the reason that a lot of Americans feel anxious – is that the economy has been changing in profound ways, changes that started long before the Great Recession hit and hasn’t let up.”

Obama is correct in one sense: there is a “profound change” that is happening in the economy, however, it is a change for the worse which he and his harmful policies have created.

Not surprisingly, in their rebuttal to the speech, the Republicans offered little in substance. Instead, they chose a spokesperson whose only claim to fame was her infamous decision as governess of South Carolina to remove the Confederate flag from state buildings. Needless to say, the choice of Nikki Haley met with disgust among the party’s base. The GOP is not called the “stupid party” for nothing!

Unfortunately, for the vast majority of Americans, there is little likelihood that the present Administration or the next, be it of a different party, will turn things around. Instead, there will probably be more of the same.

Until there is a change in ideology where the corrupt notions of money and credit creation via the printing press and the running of gargantuan deficits are debunked, American living standards will never improve.

Antonius Aquinas@AntoniusAquinas

Falling Oil Prices Not the Reason for U.S.’s Economic Woes

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2 Responses to Falling Oil Prices Not the Reason for U.S.’s Economic Woes

  1. Jolly Roger says:

    “The fall in oil prices, while detrimental to many oil producers, should actually be a boon for the rest of the economy, especially those industries that are heavily reliant on energy. Lower fuel prices mean lower production costs leading to, ceteris paribus, greater output.”

    Sounds easy enough, but this formula ignores the demand side of the equation. (a complete lack of consumers)

    I think the author (Antonius Aquinas) is doing his best to help the good side of the fight, but still doesn’t realize how thoroughly he’s been deceived, and how much of “the economy” is comprised of orchestrated events and controlled markets.

    • DL. says:

      As for orchestrated events…everyone knows Social Security is going to be bankrupt soon. Therefore, they have to come up with a means to try to keep this planned-bankruptcy system going for as long as possible and to keep the illusion going. So they decided to NOT give the usual COLA (cost-of-living-adjustment) to retirees this year based on the “cost of gasoline being down.” Who knows? They might use that pretext of “low cost of gasoline” to even CUT Social Security benefits/entitlements (their disability benefit is already completely bankrupt!). The dilemma for the criminal psychopathic elites (one of many) is how to cut these benefits and entitlements so that the people not only don’t revolt, but actually approve of their losing what is due them…I can’t wait to hear about some stupid Millennial approving of a new SS payroll tax markup from 6.2 percent to 10 percent (which means 20 percent for all the independent contractors…which many Millennials are now!)

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