Federal Reserve and Monetary Policy: Oil and Another Manufacture Crises

Oil price will go higher, not lower. The historic data, as a guest on CNBC's Closing Bell (April 5, 2005) pointed out, has oil prices higher than expectation. This is due to the lack of “trade”, on the part of the US, in the “new – tradable” sectors of the economy. See John Maynard Keynes'
The General Theory of Employment, Interest, and Money

India has become the “back – office”, software developer, call center, computer network administrator and the future overseas US's telecommunication switch board operator (once the sell of Tyco's underwater fiber optic cable is sold to India). China has now become the factory floor of the US. The root view of these actions are predicted in Keynes paper. These countries, as well as other “cheap” labor countries, are now part of the US community. The effective tax system of the newly expanded US community is a progressive tax system. The “original” US citizen have a heavy tax burden, not a lite one as BushCo points out. A progressive tax system is one in which lower income wage earners pay little to no income tax. US citizens, on average, have a higher income than either China or India high wage earners. This implies that the US citizen is in fact picking up the tax bill of other low labor cost countries.

Oil prices will continue increase, because of the increase in demand, as long as US's income is redistribute to these newly expanded communities. High oil, as well as high commodity prices and a weak dollar is the price the US pays for “price” (in)stability.

Another guest on CNBC's Closing Bell stated that this month's job number was not inflationary. That means that if one wants to calculate the number of months it will take to employ the new entries into the US labor market then one would have to make some assumptions. It take 150, 000 new jobs to absorb the new entries.

150, 000 x 51 = 7, 650, 000 new entries from Bush's first term to March 2005.

Number of jobs needed to employ Bush's first term job entries is;
650, 000 – 2, 600, 000 = 5, 050, 000

Number of job needed to employ Bush's remaining term new entries;
45 x 150, 000 = 6, 750, 000

Average job creation just to absorb new entries is;
(5, 050, 000 + 6, 750, 000) / 45 = 262, 222

Another guest on CNBC's Closing Bell (April 5, 2005) stated that in his opinion, Heath-care equipment makers are the place to park your money. {CNBC is a good source of information. It is the only network one can watch Wall Street and Washington DC. elites stick their foot in their mouths.} Notice , he said the equipment makers, not the service providers. Manufacturers can off – shore the manufacturing of the equipment (higher profit margin). This implies that a new crises is being manufacture by Wall Street's elites. Here is the form they need to fill out and send to Capital Hill:

There is a crises in the (insert economic sector here) Heath-care sector. Our numbers indicate that there is a shortage of (insert job(s) description here) Nurses and other skilled health-care providers. We are asking Congress to allow (insert number here) 200, 000 new visas to be issue in order to avert this crises.
Thank You

(insert front group here) _________________________________
(insert scape goat here) _________________________________

---------------------------- CUT ALLONG THIS LINE ---------------------------------

Delete all e-mails and throw out all letters on this matter. Here is the name of the Law Firm that will be representing your front group before a Congressional Hearing:
(insert Law Firm here) ______________________________

Here is the list of key officials that will block any criminal proceeding into this matter.
(insert Key Officials here) ____________________________

____________________________

____________________________

Greenspan's speech was not really about oil prices, but on the technology of oil and gas drilling, recovery and its usage. Here is the link: Remarks by Chairman Alan Greenspan Energy Before the National Petrochemical and Refiners Association Conference, San Antonio, Texas(via satellite) April 5, 2005

The drop in oil prices is only a short term knee jerk reaction. Oil traders will take their profit for now, however, the long term problem of China's demand for oil and Abu Musab al-Zarqawi and the increase attacks in Iraq will once again propel oil prices higher. The lack of Green-speak in having a lasting impression on currency and bond traders will also show up in the oil pits.