Bloomberg Businessweek published an article this week on Yahoo Finance on where the responsibility of increasing gas prices belonged.

Since the start of this year, gas prices have seen an increase of roughly 10% while oil refineries in the United States have gone down nearly 5%. Contrary to some mainstream thought, the President does not have sole, direct control over gas prices; however, policy making on his accord has not made things any better.

Part of the blame for the increase in prices are said to stem from the decrease in refineries, which would make sense under the fundamental economic laws of Supply and Demand, but there is so much more to it than that. The core problem originates back to a failed monetary policy mechanism in the US.

To put it in a nut shell: Gas prices aren’t increasing, the purchasing power of our fiat dollar is weakening. Anybody with a basic understanding of monetary policy can tell you that inflation of currency is nothing more than a hidden tax on the tax payers (considering the prices of market goods and services are driven up to offset the artificial depreciation of currency). What we can observe from increases in gas prices (or other consumer goods, for that matter) at any point in history is the reaction of market forces to artificial changes made by interventionist policies which are often unnecessary.

These types of instances are why we need to put monetary policy back into the heart of the discussion of economic reform. Otherwise, we will be another Greece or Weimar Republic.

-Nathan 

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