That 70’s Show

There is no shortage
 of theories as to why Americans are finding themselves staring 
helplessly at rising gas prices, but few of them are real. In fact, much 
of the prevailing wisdom offered by television pundits is false.

He was a relative unknown when he campaigned for president of an America 
that was worn down from foreign intervention, a sick economy and
 Republican rule. His outsider status brought with him a new brand of
 hope that the media devoured allowing his star to rise quickly and shine
 brightly. Upon taking the presidency, however, the beleaguered economy
 stubbornly refused to show signs of life, energy prices rose to 
troubling levels and the Middle East began to spin wildly out of
 control. Things were so bad he even had to step in and bail out an
American car company with government funds.

After only three years, it was all over but for the counting. His star
 faded quickly as the once-media darling became anathema to an
 increasingly conservative American public that spent the last year of 
his term looking for a new “Mr. Right” in every sense.

Such was the fate of Jimmy Carter, who never had a shot at re-election;
 and a good argument can be made that Barack Obama will suffer the same 
fate under nearly identical circumstances.

There is so much involved in the making and unmaking of a president that
 it’s unfair to boil a career down to only a few factors. But in Jimmy
 Carter’s case I believe it is fair to say that three primary issues were
 the undoing of his presidency: the hostage crisis in Iran, stagflation
 and fuel prices at the pump.

Iran wasn’t a military crisis as much as it was an embarrassment to the
United States, though talk of a nuclear Iran was percolating even then.
 Prior meddling in the Middle East came back to haunt us in a situation 
we couldn’t control, with Carter ill-equipped to handle the predicament
 of Americans held hostage in Tehran. Rising oil prices—the result of the 
Iranian revolution in 1979 and the panic that ensued in the trading
 markets—brought about a second shortage within a decade and with it 
hysteria and inflation. This upward pressure from fuel prices in an
 already inflationary environment spurred the Federal Reserve to begin
 chasing inflation with high interest rates.

In his book Currency Wars, James Rickards addresses the impact of 
American monetary policy on the global economy and cites the “50 percent 
decline in the purchasing power of the dollar from 1977 to 1981.” He
 goes on to depict “a world gone mad,” noting that, “A new term, 
’stagflation,’ was used to describe the unprecedented combination of 
high inflation and stagnation happening in the United States.” 
Most people recall the moment when interest rates reached as high as 20 
percent during this period and point to it as the height of insanity
 during the Carter years. In actuality then-Fed Chairman Paul Volcker 
under Ronald Reagan did this as a one-time shock to the system.  It was
 done in conjunction with vigorous tax cuts to spark consumer spending, a 
tightening of the monetary policy to strengthen the dollar and the
 latent effect of increased oil production, both domestic and abroad.
 With the exception of the tax cuts, these policies and factors would 
likely have occurred anyway as Volcker was a Carter appointee and it was
 Carter who loosened the valve on domestic oil production. Furthermore,
 Reagan would go on to reverse many of these initial tax cuts in a way 
that would make conservatives and Tea Party activists blush today.
 Either way, Jimmy Carter was a victim of pitiful economic circumstances 
that will forever be his legacy in the White House.

Rickards draws some comparisons between the ’70s and today, most notably
 deriding Federal Reserve Chairman Ben Bernanke’s actions of Quantitative 
Easing, a fancy name for printing money—the same currency devaluation
 scheme employed by Nixon—calling them “runaway fiscal and monetary 
policies, which were flooding the world with dollars and causing global
 inflation in food and energy prices.”

This is an interesting point to hang on for a bit. There is no shortage
 of theories as to why Americans are finding themselves staring 
helplessly at rising gas prices, but few of them are real. In fact, much 
of the prevailing wisdom offered by television pundits is false. It’s
 not Obama’s refusal to “drill baby drill” or increased demand from 
China. It’s not Libya or Iran, either. It’s the abundance of liquidity 
in the markets matched with the ability of investment banks, hedge funds
 and oil companies to trade energy futures on commodities exchanges
 without any limits or transparency. And this is the result of 30 years
of deregulation beginning with Carter and continuing through Obama.

Before the commodities exchanges were deregulated there were few safe 
places to “park” excess capital during volatile periods. Today these
 exchanges are the perfect shelters for investors with excess liquidity
 because many of them are allowed to stand on all sides of the 
transaction. An investor such as an investment bank or an oil company 
can be the buyer, seller, broker and manufacturer, and can therefore
more easily predict the future behavior of pricing by both forecasting 
the future price of a commodity it owns while moving the market with
 enormous capital infusions. It’s more than the ultimate hedge. It’s a

With a crisis brewing in Iran, the markets and pundits are once again in 
a tizzy, and consumers are bracing for the worst. This brings us to what 
might be the nail in Barack Obama’s coffin: inflation.
 When fuel prices rise, even for a brief period, it shows up within
 months in our food and other consumables. It’s a necessary evil in the
 production of nearly everything we consume on the planet, which is why
 it’s so utterly dangerous to leave the process of trading energy futures 
unregulated. Oil doesn’t have to reach $200 per barrel to destroy any
 hope of economic recovery and, worse, force mass starvation around the

If the price is sustained at $100-plus per barrel without relief
 while we continue to suppress interest rates and flood the market with
 the dollar, Bernanke and Co. will have difficulty stemming the natural
 tide of inflation as it works its way around the globe in the things we
 buy and the food we eat.
 Bernanke’s announcement that the Fed will continue to artificially 
suppress interest rates through 2014 and the government’s steadfast
 refusal to implement any reasonable regulation in the markets is a 
self-fulfilling prophecy as investors continue to seek safe harbor for
 their funds in the only market they have any ability to control. This
 will prevent any crash in oil prices that would naturally occur, as we
 witnessed in 2008 when oil hit $147 per barrel then plummeted shortly

Further fracture in relations with Iran and high oil prices 
will also crush any hopes the European Union has of recovery. And with 
the determined stance that austerity is the EU’s chosen path to
 prosperity, the United States faces the additional problem of having its 
No. 1 consumer of U.S. exports absolutely cash-strapped and constricting
 even further.
 Barack Obama’s re-election hopes are really a matter of timing more than 
anything because the conclusions above are simply common sense and

Any chance he had to calm this gathering storm has already
 passed, leaving him at the mercy of the global markets, which are
 teetering on a gigantic bubble. His oratory and confidence are outgunned
 by a conservative media machine pouring on the pressure by falsely 
blaming his energy policy for high oil prices and stoking the fire with
 Iran, thus creating all the necessary traps for his demise. Even if he 
were able to truly force real change in the oversight of the financial
 markets, it would spook Wall Street and could incite panic. And any 
attempt to quiet the saber-rattling between Washington and Tehran would
 make him appear weak compared to a bloodthirsty slate of GOP opponents.

Obama’s only option is to pray the storm doesn’t touch down between now
 and Nov. 6. If it does, instead of occupying the White House in January, 
he’ll be building houses with Jimmy Carter, while Mitt Romney tries to 
figure out where to park all of Anne’s Cadillacs.

Author: Jed Morey

Jed Morey is the publisher of the Long Island Press, LI's Cultural Arts and Investigative News Journal. The Press has a monthly circulation of 100,000, and, welcomes more than 500,000 unique visitors every month. He serves on the board of the Holocaust Memorial and Tolerance Center in Nassau County, as well as the President's Council of Big Brothers and Big Sisters of Long Island. In addition to the contributions on this blog, Morey authors a column for the Long Island Press titled "Off The Reservation" and is a staunch advocate for Indian rights. The column was voted Best Column in New York by the NY Press Association in 2010 and third overall in the nation among alternative publications by the Association of Alternative Weeklies in 2012. Morey lives in Glen Cove with his wife, Eden White, and their two daughters.

6 thoughts on “That 70’s Show”

  1. >No double digit inflation (Ron Paul’s Fed fixation to the contrary notwithstanding).

    >We all knew Ronald Reagan and Mittens & Ricketts ain’t no Gipper.

    >Though the neo-cons would dearly love to have their Likudnik pals draw the U.S. into an Iranian assault before the election, this Admin [a]knows Iranian nukes aren’t close to prime time and [b]the widespread fallout that would result include higher gas prices that Republicants are already fobbing off on the Prez.

    >As George Will points out, “History repeats itself until it doesn’t.”

    >Off the Reservation is OFF-TARGET on this one, though it will certainly appeal to lots of people’s wishful thinking.

  2. No double digit inflation, yet. But as I said, it’s inevitable. QE and high fuel prices are forcing inflation abroad and it’s working its way back around the globe. Just in time for the election.

    No, he ain’t no Gipper. However, men the country has been less enthusiastic about have found their way into the White House. Remember, this isn’t about Carter and Obama being the same or their would be replacements, it’s about the circumstances surrounding their tenures being eerily similar.

    Point being, again, that the administration knows what’s up but no matter how they approach Iran the neo-cons hold the messaging cards.

    History repeats itself. Period. Never not.

    Still off target?

  3. >There won’t be anything close to double-digit inflation.

    >A powerful candidate is a huge part of the electoral equation.

    >The neo-cons might have the messaging but they don’t have the missiles. The Commander-in-Chief does. The Israelis can attack, but not with max mission impact without the U.S. There’s been a lot of posturing over the prospects. Bottom-line, it will only happen, if at all, in a limited strike.

    >As for historical repetition, there’s tragedy and farce, and pilots cancelled before the season begins.

  4. Never say never.

    Fillmore, Pierce and Buchanan (only gay president, btw) somehow got elected, and all in a row! Lackluster candidates have found their way to the top more than once.

    I never said the neo-cons had missiles, nor did I say we’re going to war. The threat of war is enough to blame oil prices on despite being false and any sign of weakness Barry shows will be exploited. Moreover, all of the experts agree, including the ones you cite in articles here, that the Iranian arsenal is so deep within their territory that a limited strike isn’t even an option. We’re not going into Iran but it will be used against BO either way.

    As history does indeed repeat itself, so shall I. History always repeats itself.

  5. Tsk, tsk, my good Moreyarity, you need to hit your Wikipedia before you throw down.

    VP Fillmore became prez after Zach Taylor kicked the bucket. Next, Pierce beat a guy nicknamed “Old Fuss & Feathers.” Buchanan, channeling Ken Mehlman, fear-mongered by declaring that electing the anti-slavery first-ever Republican, Fremont, would lead to civil war. Rather prescient, actually. None of them beat an incumbent.

    Actually mediocrity would be vast improvement on what the Republicants spitball our way. How I long for the days when Sen Roman Hruska (R-NE) defended his vote to place a mediocrity like Harold G Carswell on the Supreme Court: “There are a lot of mediocre judges and people and lawyers. They are entitled to a little representation, aren’t they?”

  6. You have bested me again, my dear Holmes. I was speaking about the precedent of the lackluster president but you are entirely correct regarding the circumstances related to the three I mentioned. And, no, Mitt is no Gipper. But I still feel as though the stage is set for a catastrophic fall this fall and that inflation is mathematically probable thus providing the trifecta – Iran, gas prices and inflation – for Obama to contend with, all of which would be too much to overcome.

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