Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Biden’s Gas Money Giveaway Would Only Make Things Worse

  by    0   1

These people never learn. Or they just don’t care.

The Biden administration is reportedly still considering sending out gas rebate cards to help Americans cope with rising gasoline prices. But this kind of government handout is one of the primary reasons we’re suffering through this inflation firestorm to begin with.

Of course, Biden blames Putin for rising prices. “It’s outrageous what the war in Ukraine is causing,” Biden said during a June 18 speech.

Supply restrictions due to economic sanctions on Russia are certainly part of the equation. Russia ranked as the world’s #2 oil producer in 2021. But oil prices were rising prior to the Russian invasion of Ukraine.

 

If rising prices aren’t all “Putin’s fault,” who do we blame?

The finger points straight at the Federal Reserve and the US government.

During the pandemic, federal, state and local governments forced everybody to stay at home. The US economy ground to a halt. In response, the Federal Reserve launched QE infinity. In less than two years, the Fed pumped nearly $4.5 trillion of new money into the economy. The federal government got in on the action and handed out trillions of dollars in stimulus money.

The result was predictable.

People were sitting at home producing nothing. The supply of goods and services contracted sharply. But thanks to stimulus demand remained robust. With their pockets stuffed full of stimmy money, American consumers kept right on spending. This was a recipe for rising prices. There was more money in the system chasing fewer goods and services. Prices rose. Everything became more expensive — including gasoline.

Today, we’re paying the price. We’re paying for our stimulus checks through the inflation tax.

On top of that inflation tax, oil prices are being pressured upward by supply shortages. This is classic supply and demand dynamics. When supplies shrink, prices rise, causing demand to fall. As people feel the pinch of rising prices, they drive less, protecting the remaining supply. So, what happens if Uncle Joe passes out money to defray gasoline expenses? Demand will increase, putting further pressure on the limited supply. And as a result, prices will rise.

On top of that, the US government is broke. That means any plan to hand out money will necessitate raising taxes or more borrowing. If the government raises taxes on oil companies, that will simply increase their costs. That will eventually get passed on to you. If oil companies don’t pass the costs on to consumers, it will impact their ability to produce more oil in the future. Supply problems will persist. Prices will remain high.

And if the government simply goes the borrowing route, the Fed will have to monetize that debt by printing more money and injecting it into the economy. In other words, even more inflation to drive general prices higher in the future.

The government handout “cure” for higher gas prices is literally the recipe for higher gas prices.

Student Loan Bubble Free Report

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

What the Baltimore Bridge Disaster Could Mean for the Economy

While the total annihilation of the Francis Scott Key Bridge in Baltimore probably isn’t a “Black Swan” big enough to trigger a global collapse, it adds potent fuel to several fires in an already fragile global economy.

READ MORE →

Piketty’s Inequality Con

If you ask a liberal politician who their favorite economist is, there are three likely responses. One response is a panicked change of topic. From the slightly more sophisticated politicians who skim the New York Times, you might hear Paul Krugman. From the politicians who style themselves intellectuals of the left, you’d hear Thomas Piketty.

READ MORE →

The End of Japan’s Negative Interest Rates: What It Means for Gold

The Bank of Japan’s historic move to end the country’s negative interest rate policy after nearly two decades triggered a jolt upward to new all-time highs for gold against the yen. But what are the implications for gold in the medium and longer term? The answer is far from simple. 

READ MORE →

The BLM’s Quiet War on Precious Metals

The Bureau of Land Management is a federal agency that controls 245 million acres of land and controls 30% of the country’s mineral resources. On the East Coast, it manages little land but manages an enormous share of Western states. It owns over two-thirds of Nevada. This gives the federal government enormous sway over the West. Want […]

READ MORE →

PIMCO: The Fed Needs More Unemployment

Analysts at PIMCO say that for the Fed to reach its goal of lowering inflation to 2%, we need fewer people to be employed. Reduced incentives to offer raises and bonuses and less spending from the “resilient” American consumer can help cool down inflationary pressure. But there’s an elephant in the room: Why do we let a […]

READ MORE →

About The Author

Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It's Your Dime interview series.
View all posts by

Comments are closed.

Call Now