I'm no expert, but ...

By Don Kuehn

THE MEDIA AND THE PUBLIC appear to be slow in grasping the reason behind these unbelievably high gas prices. Now, I'm no expert, but it seems fairly simple: Oil is priced on world markets in U.S. dollars, and there hasn't been a weaker dollar in recent history.
The Bush administration's monetary policies, and the tinkering of the Federal Reserve, have combined to wrench most of the buying power out of the greenback.

Oil cost about $3 a barrel in 1970, and the dollar was strong. Then OPEC began manipulating oil prices by controlling supply. Sure, there were spikes in prices, but throughout the Bush administration oil has climbed until recently going through the roof, surpassing $113 a barrel. And the dollar has slumped.

Been abroad lately? The British pound traded recently at $2.03, the euro at $1.56, and even the once-laughingstock Canadian dollar is worth more than a U.S. buck ($1.01).
I may not be the sharpest knife in the drawer, but the Federal Reserve, going back to the tenure of Alan Greenspan and continuing into the Ben Bernanke era, is foundering.

The Fed has taken one knee-jerk action after another in its effort to stabilize the U.S. economy. Whether the decision-makers there have zigged when they should have zagged may not be known for some time. But they have done an awful lot of zigging lately.

In the past few months alone there have been numerous cuts in the discount rate and six cuts in the federal funds rate. Every cut does a little more to undermine the value of the dollar.

The central bank also has underwritten the bailout of the big investment bank Bear
Stearns and applied one Band-Aid after another to try retroactively to stabilize the failing economy.

While all of this rate cutting is going on, consumers like you and me are facing higher interest rates on credit card and other consumer accounts as lenders tighten their credit standards.

Energy prices at the consumer level in January were up 19.6 percent from the year before, and food prices were up 4.9 percent.

A few months ago, I wrote that I didn't think the economy would lapse into a full-blown recession. Now, I'm not so sure. Too many factors are coming together to drive this thing into a ditch. If you haven't been paying attention, gold, which was selling at around $250 an ounce pre-Bush, has recently traded above $1,000—a sure sign that the guys wearing the smarty-pants believe inflation is bubbling.

If you don't think you have a horse in this race, think again. It's your money and it's mine, too. I want the factors that have wrecked this economy to be resolved—and "normalcy" to return—so we all can prosper.