Bloomberg host Tom Keene noted America’s rising gas prices and asked the energy secretary, “What is the Granholm plan to increase oil production in America?”
Granholm immediately began laughing. “That is hilarious,” she said. “Would that I had the magic wand on this.”
Fox Business
Granholm responded that the OPEC cartel set oil prices and therefore she was powerless to do anything about it. It is shocking but not surprising to see the Energy Secretary so ignorant of market forces. Sure OPEC is a wanna-be cartel. But if it could set prices (it cannot) oil would hover around $60 just over the US production cost of about $57. The Team Biden’s war on anything carbon, actions against pipelines, and the FED and Congress increasing the money supply are all reasons inflation is at a thirty year high. Granholm’s actions are far more likely to continue increasing energy prices. As noted here last week, from early 2020 oil prices have completed five waves up and are now consolidating around $80.
Biden and Jerome Powell can claim inflation is transitory but he Deere Union settlement argues otherwise. It includes an $8,500 restart bonus, a 10% immediate raise, two 5% future raises, and two large bonuses before 2026. In the 1970s this was known as wage price push inflation. Inflation caused demands for higher wages which fed the inflation monster.
So why are interest rates still so low if inflation is at a 30-year high? The answer is that trillion dollar purchases by the FED have kept demand for low rate Treasuries high. And the resulting money supply increase has fueled stock prices to new highs.
Seeking to hitch their stock prices to the skyrocketing NASD, many companies are pretending to be ‘tech companies.’ Wework, an office rental company, tried this and now trades at 15% of its former high. Other examples are Peloton and Zillow.
The stock market continues to exhibit narrower breadth. Like oil prices, it is consolidating around 3 DJIA 36.000. It would take a weekly break of 34,115 to turn the trend down.
If the multi-trillion dollar Democrat juggernaut spending bill passes, look for even more goosed money supply and yes more inflation, too much money chasing too few goods. The Transportation Secretary is fantasizing that passing trillion dollar tax packages will improve anything.
