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Welcome to the "Wolf Creek Pass" School of Monetary Policy

I don’t know if you folks remember that hit ditty: a humorous tune about two truckers attempting to manhandle an out-of-control 1948 Peterbilt down the “other side” of Wolf Creek Pass – a death-taunting section of U.S. Highway 160 where the elevation drops a hefty 5,000 feet in a relatively short distance.

The song’s two characters – a truck driver named Earl and his brother, who’s his partner as well as the song’s narrator – are taking a flatbed load of chickens on a speedy trip down this winding, two-lane Colorado highway. After the narrator gives Earl the above-mentioned warning, the ancient semi’s brakes fail.

From there on down, the narrator tells us that the brothers’ trip “just wasn’t real pretty.” The truck careened around hairpins and switchbacks, and then raced at an uncontrolled 110 mph toward a tunnel with “clearance to the 12-foot line” – with chicken crates sadly “stacked to 13-9.”

The drivers and the runaway Peterbilt “went down and around and around and down ’til we run outta ground at the edge of town… and bashed into the side of the feed store – in downtown Pagosa Springs.”

Believe it or not, I started thinking about this funny old country tune the other night – right after I’d read a piece about QE3 and the U.S. Federal Reserve.

As zany as it first sounds, the parallels are striking.

  • Featured Story

    It is Deja Vu All Over Again in the Energy Markets

    There's been quite a bit of news on whether the government will tap the Strategic Petroleum Reserve (SPR) to combat rising gasoline prices.

    I get the feeling I've been here before.

    In fact, I wrote about this very topic just three weeks ago. And sure enough, we had conflicting reports on the subject yesterday.

    But despite what my wife Marina may think, I don't cause events in the oil markets merely by writing or talking about them.

    She remains convinced that when I go on television and discuss higher oil and gas prices, my words provide energy firms the green light to raise them.

    The reality is that I just know how politicians think (and panic) when it comes to the energy markets. So please, refrain from shooting the messenger.

    Yesterday we also witnessed mixed messages from both politicians and the market.

    Crude oil prices initially dove more than $3 per barrel in both London and New York when the story broke that there was a joint U.S.-U.K. agreement to release volume from each country's strategic reserves.

    Later in the afternoon, prices shot back up quickly in New York (by that time the market had closed in London) following a White House denial that any such deal was in the works.

    Still nobody inside the Beltway is claiming the idea is now off the table.

    Was yesterday a trial balloon? Some junior staff member with an itchy dialing finger?

    A hasty press release?

    All are certainly possibilities.

    But the confusion created in the aftermath of the "leak" hides one very simple, inconvenient truth.

    There are few, if any, genuine options to offset rising gasoline prices.

    Everything we need to do will take a few years to work out.

    And it should. But you and I need to continue this conversation.

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