There's a difference between the truth and the whole truth.
Truth: oil prices are rising rapidly... assuming you pay for the oil in United States Dollars. However, if you happen to live in Switzerland and pay for oil in Swiss Francs, the price of oil isn't rising so quickly.
Ten years ago, the Swiss Franc was worth 55 US cents. Today it's worth $1.13. That's a compound annual depreciation rate of 7.5% for the Dollar. Switzerland isn't immune to the problems of the world; in some respects they are more exposed to world problems than the US. For example, the Swiss must import 100% of their oil and natural gas.
If you don't care for Switzerland, a comparison against any major currency in the western world follows the same trend.
What's going on? I am not an alarmist; I'm an avowed political centrist (and registered Democrat) with libertarian tendencies. But the whole truth is that the Dollar has been, and continues to be, savagely devalued in global markets where supply and demand determine the value of currencies. That's why gasoline prices here are up so much. Food prices, too. Unlike gold and silver, people actually need oil and food.
And why are investors outside the US fleeing the Dollar and driving down its value? Because they see clearly what we Americans refuse to recognize: the US cannot afford both its enormous military and a European full social fabric. The combination of two simultaneous wars and an aging population is killing the Dollar. This isn't about excessive short-term "stimulus" spending; it's about the long-term fiscal health of the US.
It doesn't matter how high Congress sets marginal tax rates for the wealthiest Americans; that's a red herring. Confiscate 100% of the income or even 100% of the wealth of the top 2%, and we still couldn't afford both the military and the social fabric at their current run rates.
Unfortunately, neither President Bush nor President Obama has had the courage to tell the American electorate the whole truth, namely that a decision must be made between the military and the social fabric. Instead we are led to believe that we can have our cake and eat it too. Nonsense! The longer we live in this illusion, the more dependent we become on cheap stuff from China -- because their cheap stuff is all we can afford. Oil and food don't come from China, incidentally.
Which do we cut, the enormous military or the social fabric or both? That's a question for another day, and it ought to be the central question in US national politics for this entire decade. But first, let's agree on the necessity of a cut somewhere.
