- Peter Kinder resigns federal agency post, concludes position unnecessary and waste of tax dollars (6/16/18)2
- Stormy Daniels to visit East Cape Girardeau (6/13/18)20
- Longtime downtown Cape bartender Marcellus Jones remembered by friends (6/12/18)2
- A community rallies behind Honorable Young Men's Club (6/16/18)1
- Couple charged in beating death at Brick's (6/13/18)
- Southeast to spend $150,000 to refresh brand with Ohio firm (6/19/18)5
- New urban dance studio opens on Broadway (6/15/18)2
- Jackson natives compete in 260-mile canoe race (6/16/18)1
- Feeding deer in Bollinger, Cape and Perry counties prohibited soon to help curb spread of CWD (6/13/18)7
- New Zaxby's restaurant open in Cape (6/13/18)3
Energy prices don't cause inflation
To the editor:
"Inflation Surges on Energy Prices" trumpeted a Wall Street Journal headline Wednesday. From the AP the same day, "Consumer prices shot up in June ... with two-thirds of the surge blamed on soaring energy prices." A week before, the Missourian ran an article on the inflation in Saudi Arabia. While Saudis are only paying 45 cents for a gallon of gasoline, "inflation that has hit 30-year highs on everything else in the kingdom is making Saudis feel poorer despite the flush of oil money." Today's headlines suggest that the rise in oil prices causes inflation in the U.S. Last week's headlines reveal double-digit inflation in an economy where gasoline sells at a price the U.S. hasn't seen in nearly 40 years.
This begs the question "Do rising energy prices cause inflation?" The answer is unequivocally no.
What happens when farmers experience a bumper crop? Grain prices go down. What happens when the Federal Reserve produces a bumper crop of dollars? The price of the dollar (i.e., its value relative to everything else) goes down. We see this decline directly when it takes more dollars to buy foreign currencies. We see the euro price of the dollar fall, the pound price of the dollar fall. ... Domestically, a fall in the price of the dollar means higher prices for goods and services (and gasoline). The fact that these changes occur neither immediately nor simultaneously allows the Fed to avoid any blame.
PETE KERR, Cape Girardeau