Stop the Nonsense About the "Falling Dollar" Being the Cause of Rising Gasoline Prices

Louis Woodhill, Forbes contributor says he applies "unconventional logic to economic issues". He proves it with this headline report Gasoline Prices Are Not Rising, the Dollar Is Falling

Forget the "logic" and skip straight to reality.

Crude Monthly



US Dollar Monthly



That's "unconventional" thinking for sure.

As for why the price of gasoline is rising, how about a discussion of ...

1. Peak oil
2. Supply disruption in the Mideast
3. Unsustainable growth in China
4. Liquidity spigots in the US, Europe, Japan, and China

... because the falling dollar theory sure is not the right answer.

Nor does this statement from the article make much sense "At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot."

Really? Why can we be certain of that?

I get the fact he likes gold, and so do I. However, while the factors driving gold and oil overlap to a degree, they are not identical, and as I have pointed out gold can rise in deflation (it already has).

Woodhill's comment "because the dollar is currently a floating, undefined, fiat currency, there is no inherent limit to how far the price of gold in dollars can rise, and therefore no ultimate ceiling on gasoline prices" is technically true, but only in the context of hyperinflation.

Otherwise there is indeed a practical limit on the rise of the price of oil. Moreover, and as I have explained many times, many ways, the odds of hyperinflation in the US are extremely small.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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