No, Gas Prices Are Not Going Up3 min read

I’m going to make a very bold assertion here… Gas prices are not going up.

Alright, that’s it. Aaron has completely lost his mind here. Call the guys with the long white coat and have them put me in a nice padded room.

Anybody who drives a vehicle knows we’re paying more at the pump. So it would seem silly to most that I’m saying gas prices are not going up. But bear with me, I’m going to explain exactly what I meant.

As of this writing, the national average for a gallon of gasoline is $3.93. It seems like every time you pull up to the pump, it’s higher than it was before.

So seriously, what is wrong with me that I would claim gas prices are not going up?

Well, it’s not really so much that the prices are going up. The dollar is going down. 

The dollar used to be backed by gold. This ended in 1971, and no major currency has been backed by a real commodity since. (Source.)

So what we have now is known as fiat money, that is, “money that is intrinsically useless; is used only as a medium of exchange.” The dollar is merely a piece of paper, backed by nothing but “full faith and credit of the US Government.” I’m sure I can take a guess at just how much faith those of you reading this article really have in said government…

Compared to gold, gas has been getting cheaper. Wait, what? Here, see for yourself:

  • In 1919, with gold at $20.67 an ounce, and gasoline at $0.255 per gallon, it would have cost 0.01232 oz. of gold to buy a gallon of gas.
  • In 1942, gold was $35/oz. and gasoline at $0.204/gallon, and it would have cost you 0.00584 oz. of gold to buy a gallon of gas.
  • In 1970, with gold at $36.07/oz., gasoline at $0.357/gallon, you would have coughed up 0.00989 oz. of gold to buy a gallon.
  • Today, with gold at $1,679/oz. (as of April 2nd at 11:35am CDT) , and gasoline at $3.925, you need only 0.00233 oz. of gold to buy a gallon of gasoline.

Gold is not going up, people. As a commodity, gold is holding steady. The dollar, that is, how many of these “worthless pieces of paper” it takes to buy an ounce of gold, is going down. The reasons for this are legion and I will not even attempt to cover them all in this article.

This will happen with any system of currency that does not have a commodity backing it.

The funniest thing about all of this, is you’ll never hear it from any of the politicos or the talking heads on the media. They will parade a plethora of reasons before you for your consideration, ranging from market speculators to that crazy guy in Iran that wants nukes. But they won’t mention fiat money or gold. Only that “crazy guy” Ron Paul is talking about it. Oh, and Forbes ran an article too (congratulations for not selling out to the “system”).

Our monetary policy, and indeed the entire federal reserve system (which is neither federal, nor a reserve) are suspect in all of this.

“Dog Tired” did a good job of explaining how the federal reserve works on his post over on Freedom Bunker.

It is what it is people. As always, I’m interested in your thoughts. Comment below.

Further Reading

Aaron Graves

Aaron Graves is a veteran and a staunch libertarian, consistently breaking ranks with his Conservative friends on social issues, and with his Liberal friends on economic issues. He is also the guy that wrote the crap that you just read. Sic Semper Tyrannis

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5 thoughts on “No, Gas Prices Are Not Going Up<span class="wtr-time-wrap after-title"><span class="wtr-time-number">3</span> min read</span>”

  1. Aaron, thanks for following up on my Freedom Bunker blog and doing the homework on gold vs gas. I’m impressed!

    I can see that you are well aware that solutions can only be found by identifying the root cause to the problems and fix that. But instead of going after the roots we just keep hacking away at the leaves, then wonder why the tree won’t die.

    Again, thanks for your insight.

    Paul Arnett aka Dog Tired

    Reply
    • I couldn’t have said it better myself Paul, hacking away at the leaves and leaving the roots intact.

      Thank you for following up here! I loved your article on Freedom Bunker!

      Reply

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