President Obama repeatedly failed to indicate any desire to move toward the middle.
Instead, he chose to use sharp language and the threat of his veto pen to reprimand congress and ignore the desires of the voting public. The main takeaway from the state of the union message concentrated into a demand for another round of new taxation, which the president attempted to justify based on the claim that the American economy has turned the corner and is now rapidly moving forward.
The True State of the American Economy
Lower gas prices at the pump and continuing record low home mortgage interest rates may seem like excellent indicators of a recovering economy, but is this really true or just more media hype?
While it is well known that home mortgage rates are being suppressed by the FED’s continued printing of money under the guise of quantitative easing, the reasons behind the lower gas prices are not so widely known.
The recent increases in the production have put the United States back into the role as the leading producer of oil and gas, worldwide. This influx of oil into the global market has created pressure on Middle Eastern oil, forcing the per barrel price to drop drastically. At first glance, this would seem like the sole factor in the newly reduced price per gallon that Americans are currently enjoying at the pump.
However, a second factor is also responsible for bringing down the price of gas and it is one that is rarely mentioned. This second factor is the sharp decrease in the actual demand for gas in America. In fact, the consumption rate of gasoline in the United States is now at its lowest level in ten years.
If the Economy is Recovering, Why Are Americans Consuming Less Gasoline?
When the question of reduced gasoline consumption is raised, Americans are likely to hear that this is the positive result of driving newer vehicles that are designed to get much better mileage. While this factor may exhibit a small amount of influence on fuel consumption figures, a much more likely cause is the fact that Americans are driving less because so many of them are no longer employed.
While the government statistics for current unemployment in America is now proclaimed to be a mere 5.6 percent, this figure only tracks the newly unemployed. Americans who have been unemployed for a period long enough to exhaust their unemployment benefits are no longer counted, as well as the millions who have not been able to find full time work.
If all types of unemployment statistics were accurately figured, this shadowy number would more than likely fall between 20 and 25 percent of the population, or nearly one in every four Americans. With no job to commute to, and little money to spend, far less gasoline is consumed and when demand falls, gas prices also fall.
Oil Prices Exert Extreme Pressure Around the World
Lower gasoline prices may be a mixed blessing for Americans, but for some other countries, the effects of falling oil prices have been a harsh reminder of past struggles for their people. Largely dependent upon oil, Russia, Venezuela, Iran, Brazil, Nigeria and other major oil producing nations are now seeing their economies crippled over the falling oil prices.
The fallout will become even worse, when these nations are unable to meet their obligations toward their creditors, such as China, on goods purchased or funds borrowed. Over the past few decades, the world’s economy has become so intermeshed, that any instance of economic decline in one country quickly becomes a source of concern for the entire world.
Will Increasing Tensions in Europe Once Again Be the Pivot Point for War?
History books tell us that World War II came about due to rising tensions in Europe and even former Russian leader, Mikhail Gorbachev is concerned that history may be about to repeat itself. In a recent interview with the German publication, Der Spiegel, Mr. Gorbachev spoke of his concerns about the Ukrainian situation and what could occur if NATO and the United States continue to take actions, including increasing sanctions, against an already economically beleaguered Russia.
The Ukraine, however, is not the only source of the tensions that are quickly mounting in Europe. The recent terrorist attack on a French magazine has sparked a wave of political demonstrations and more acts of violence in all parts of Europe. In addition, this senseless act of terror is placing pressure on France’s relationship with other countries, including Israel, who is also dealing with an increasingly hostile situation on their own turf.
Where Does it End?
As major economies flail and political tensions increase, many Americans are now trying to predict what the future holds. More than ever before, Americans are seeing the need to prepare for the worst, even while hoping for the best. For many, this means taking steps to prepare their families for whatever will come and in most cases, this type of preparation will rely on gold, silver and other precious metals and commodities that will retain their value, even when green paper dollars are no longer accepted.
If you are observing the issues of the world and wondering if the pivot point has arrived, now is the time to take action to preserve the health and safety of your family, even in times of economic depression and war. Prepare now by investing in the true value of gold.
By ETF Daily News