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Michael Pento continues:


“It’s not just dollars that have been eroding in value because the price of oil in Euros is at an all-time record high.  But the sad truth is that each iteration of QE, either in the U.S. or around the globe, has sent oil prices skyrocketing, inflation soaring and the economy into the tank.


In the summer of 2008, oil prices hit an all-time record high of $147 per barrel and gas prices hit a record $4.16 cents per gallon.  This helped send the global economy into the Great Recession.  Then in Q1 of 2011, QEII sent oil prices back to $114 per barrel and gas back above $4 a gallon....


Continue reading the Michael Pento piece below...




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“Predictably, U.S. GDP once again plummeted, falling from 2.3% in Q4 2010, to 0.4% in the following quarter.  Today, oil prices are back to $110 per barrel and gas prices are surging to more than $4 per gallon.  Expect a slowdown in the economy similar to what has occurred every other time gas prices hovered around the $4 level.


The reason why oil prices are rising is the same reason why food and import prices are soaring as well.  Paper currencies across the world are losing their purchasing power against real assets that cannot be increased by fiat.  Of course, the Pollyannas on Wall Street will tell you that oil is rising because of a rebounding economy.


However, the facts are that oil demand is down 6% YOY, while inventories are at a six month high.  If the global economy was indeed recovering why is the demand for oil down?  In reality, the global economy is very weak and the U.S. is far removed from a sustainable recovery.


Japanese GDP dropped 2.3% in Q4 and the European Union is in recession, with last quarter’s GDP falling 0.3%.  And Greece has entered into a depression with GDP down 7% last quarter and falling sharply.  Emerging market economies will be hard pressed to keep up their ebullient growth rates when the developed world’s demand for foreign made goods is collapsing.


Meanwhile, the U.S. continues to run trillion dollar annual deficits and the unemployment rate is 8.3%.  Inflation is destroying the nation’s savings and the economy is suffering through a protracted period of stagflation.  But perhaps the worst situation of all is that the Fed’s free-money policy has set the economy up for the biggest interest rate shock in history.  It’s really not much of a mystery why investors have fled to gold and oil as an alternative to owning paper, which can only offer a negative return after inflation.”


To Learn more about Michael Pento’s financial management services CLICK HERE. 


© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


Eric King

KingWorldNews.com

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