One of the hallmarks of Marxism is a fundamental misunderstanding of the way that capital works. The President displays this ignorance proudly as he blames “speculators” for rising oil prices. I quote:
“The problem is, is that oil is sold on these world markets, and speculators and people make various bets, and they say, ‘you know what, we think that maybe there’s a 20 percent chance that something might happen in the Middle East that might disrupt oil supply,'” he said.
“‘So we’re going to bet that oil is going to go up real high.’ And that spikes up prices significantly,” said the president, who recently launched his reelection campaign.
That’s his assessment of the root cause: evil borrowers and lenders are manipulating markets for profit, causing poverty and hunger for the rest of us.
This Marxist has no idea how the world works. All he knows is the warped vision taught by his bell-jar professors who also have no idea how the world works, but are sure that their way must be better.
Here is the way it works. Any large corporation which did not hedge would be at a far greater risk of going bankrupt, and would be able to employ far fewer people. The company’s capacity for innovation and change, or any other sort of risk would be tied up in staving off cash cycles and business cycles.
Aside from cash hedges, there are supply chain hedges. Even discounting foreign exchange holdings, corporations remain in business because they are able to honor their commitments. In accepting an order for goods, a corporation has made a commitment. The business must be stable enough to honor that commitment by providing in the future an item priced now. They therefore will seek every opportunity to lock in future purchases of their own at a price negotiated now. This is what the President refers to as speculation.
Even if you try to meet him halfway and assume that what he says is somehow true, his arguments are easy to demolish even from the inside. But what he says is not true. This is a simple matter of supply and demand. Not only are we short of supply right now, but it is obvious that we will be short of supply in the near- and mid-term future. This is because of the policies undertaken by this administration which tie the hands of those Americans who would like to produce oil, but are instead reduced to transporting it from abroad.
This President’s policies are turning our business of production into a skimming operation which ships tankers full of cash to the middle east in exchange for their oil, while our own unemployed stare at idle wells. If this President is serious about “creating” jobs, or at least allowing the businesses which lost them to get them back, then he should allow the businesses which lost them to get them back.
But this President is having none of it. He not unwisely declines to confront his simplistic and familiar straw men, those wicked top-hatted plutocrats whom he has loved to hate since his professors introduced them in the children’s books popular at Universities these days, and instead turns his menacing eye on his actual enemy: American business.
“We’re now in a position where we can investigate if there’s unfair speculation. We’re going to be monitoring gas stations to make sure there isn’t any price gouging that’s taking advantage of consumers,” promised Obama.
He posits price controls as the answer, and those will fail, because price controls, like much of his chosen philosophy and religion of economic belief, simply do not work. So the administration will continue its job-destroying rampage through the affairs of Americans, keeping its boot on the neck of business, leaving behind a scorched and jobless wasteland of debt and decay for our children. Problems caused by too much government meddling in what it does not understand and cannot solve will be made worse by more government meddling, while touted as a solution.
Russia is only capable of recovering because there is an America. China is only capable of succeeding because there is an America. If America falls to Marxism, our children will live as peasants and there will be no way to regain what was lost. Not for a thousand years.
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