Why are gas prices falling?Submitted by Phaminem on Tue, 12/18/2012 - 02:37
With all of the QE3's ($40 billion to buy MBS) and QE4's ($45 billion to buy U.S. Treasuries) coming out these last 6 months, I would think that gas prices would rise. My friend keeps using falling gas prices to say that the CPI is not as bad as I keep saying it is, and that the creation of money from the Fed is not really affecting our everyday lives. I see prices rising everywhere, but gas prices are decreasing dramatically. Can you educate me on this?
I also remember reading that CPI is luckily not increasing that much as of now because the banks are just bloated with reserve money and the money is not moving anywhere, because there's no incentive for them to loan out that much. Is this why CPI is not rising so rapidly? If so, what event will trigger the spilling of bank reserve money and therefore much higher prices for everything?