President Obama's failure to support America's allies in the Middle East and his dithering endorsement of chaos in the region will send oil and gasoline prices skyrocketing, triggering a massive bout of stagflation. This vicious cycle of rising prices, decreased consumption and ever-higher prices (as vendors seek to recover higher fixed costs) will cripple the American economy for years to come.
This is Obama's true legacy.
Consider what he has done to push up oil and gas prices:
-- Endorsed spreading chaos in the Middle East.
-- First banned and now slowed down off shore oil drilling.
-- Considering curbs on fracking (horizontal drilling to unlock shale deposits in the Northeast -- a potent new source of oil).
-- Imposing a carbon tax on domestically produced coal and oil through EPA mandate.
-- Proposed an end to tax advantages designed to encourage oil drilling and exploration.
Now Obama is reaping the fruits of these misguided policies -- $4 gas soon to go up to $5 or $6! And the fuel price increases will take their place alongside food price rises. Food prices for corn, soybeans, wheat and other basic crops have almost doubled in the past year.
(The Consumer Price Index deliberately understates fuel and food inflation in its formula to avoid triggering cost of living adjustment increases in private pay and government programs).
Finally, he has encouraged the Federal Reserve Board to almost triple the money supply, over $1 trillion of it based on the purchase of worthless mortgage-backed securities.
Since the Fed has got to stop printing money soon lest it become wallpaper, interest rates, too, will rise -- also contributing to the cost-push price inflation.
But the economy cannot afford to pay these higher prices. Consumer demand, which accounts of three-quarters of gross domestic product, is already stagnant. With inflation, it will drop. Then, unable to recoup their costs, vendors will be forced to raise prices even higher. An inflationary psychology will take hold of the economy. Higher interest rates will be needed to break its hold, forcing us into yet another recession, this one fully courtesy of President Obama.
He put the demand of the Egyptian people for political change ahead of America's need for financial stability. He was so enraptured by being "on the right side of history" that he forgot about his role as the head of our economy and its vulnerability to the very instability his policies fanned.