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The Misunderstood Link Between Oil, Natural Gas and Inflation

By Dr. Kent Moors, Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI - June 29, 2013

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The Misunderstood Link Between Oil, Natural Gas and Inflation

By Dr. Kent Moors, Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI - June 29, 2013

Energy prices, particularly oil and natural gas, are no longer a direct driver of inflation. Oil and gas prices have been resilient in the absence of inflation.

The deeper reason for the upward move in prices has been the Fed's easy money and low interest rate policies.

Oil and gas are giving investors greater leverage to make profits in upcoming market gyrations. Dr. Kent Moors explains.<

The QE3 Dangers Bernanke Isn’t Telling You About

By Diane Alter, Contributing Writer, Money Morning - September 26, 2012

Hoping the third time is the charm, the U.S. Federal Reserve voted on Sept. 13 to launch another bond-buying program, QE3.

Equity and commodity markets cheered the Fed's move. Stocks rallied and analysts raised precious metals price forecasts.

QE3 differs from the first two rounds in that it is an aggressive open-ended purchase program of $40 billion per month of mortgage-backed securities. The buying is slated to continue until we reach substantial and sustained improvement in the U.S. economy, which won't be a short-term achievement.

The program aims to lower long-term interest rates, stoke consumer demand and bring down the elevated unemployment rate.

But some opponents think the latest stimulus measure from Fed Chairman Ben Bernanke will fail to achieve any of that.

In fact, the QE3 doubters have a lot to say - and anyone with money in the markets right now should pay attention to what could happen.

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How QE3 – Like QE1 and QE2 – Will Trigger Inflation

By Jonathan Yates, Money Morning - September 18, 2012

The traditional safe haven assets of gold (NYSE: GLD) and silver (NYSE: SLV) have surged in price due to the announcement of the latest round of quantitative easing, QE3 - but those aren't the only assets QE3 will push higher.

While QE3 might seem harmless to U.S. consumers, it is present every time they gas up their cars or buy food at the grocery store.

In fact, all three rounds of quantitative easing have led to higher priced commodities.

Whether you realize it or not, QE3 - same as the stimulus programs before it - is adding greatly to the costs of everyday life. QE3 is directly leading to higher prices for oil, food and the cost of imported goods.

Over time, that results in a tremendous consumer expense in all product and service categories.

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Steak, Hamburger and Dog Food: How the Government Lies About the Real Inflation Rate

By David Zeiler, Associate Editor, Money Morning • @DavidGZeiler - March 8, 2012

More experts are saying what most Americans have suspected for years - the real inflation rate is much higher than the government is willing to admit.

Officially, the U.S. Bureau of Labor Statistics (BLS) says the inflation rate, or Consumer Price Index (CPI), for 2011 was 3%.

But a report issued last week by the non-profit group American Institute for Economic Research (AIER) says the U.S. inflation rate for 2011 is far higher - 8%.

AIER used criteria based only on common daily expenditures to more accurately reflect how inflation affects consumers. Their index excluded less-frequently purchased items, like automobiles.

Economic consultant John Williams, an outspoken critic of the government's economic statistics, contends things are even worse.

Using the government's old methodology from 1980 - before politicians started to monkey with the formula - he calculates the real inflation rate is north of 10%.

That's more than triple the government's figure.

Among the few in government who see this as a problem is Republican presidential candidate Rep. Ron Paul, R-TX.

"You know this argument that the prices are going up about 2%, nobody believes it," Paul bluntly told U.S. Federal Reserve Chairman Ben Bernanke during a hearing last week. "People on fixed incomes - they're really hurting, the middle class is really hurting because their inflation rate is very much higher than the government tries to tell them and that's why they lose trust in government."

Changes to the Real Inflation Rate

Over the years, the government has made a series of adjustments to how it calculates the CPI, ostensibly to make it more accurate.

However, critics like Williams say the inflation rate formula has been changed to serve political ends.

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