So it is with great interest that I read this past week about the President's initial response to rising gas prices. What or who was to blame? According to the President, speculators. Nameless, faceless speculators. They are to blame for the rising price of crude oil up and the accompanying price at the pump!

The problem is ... 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, so we're going to bet that oil is going to go up real high. And that spikes up prices significantly.

Now this interested me because I worked in the petroleum industry and I studied energy law at law school, and I have taken a strong interest in macroeconomics in recent years. (I read Market Ticker and Zero Hedge if you are wondering.) I'm going to disregard for this note the fact that higher gas prices are not objectionable at all to our President, despite the fact that they are connected to every product we buy. He doesn't have a problem with high gas prices, only that they become high on a gradual basis.

I'm also going to ignore the moratorium on drilling in the Gulf and general opposition to domestic exploration and production of petroleum by this Administration. No, the main culprit here isn't the nameless, faceless "speculators" that are now the object of the President's scorn, but government policy itself, both with the Federal Reserve (monetary) and the budget deficits accrued in recent years (fiscal). What is going on is that the government is trying to deflect blame to these nameless, faceless speculators for their own disastrous fiscal and monetary policies.

In other words, they think you are stupid. Let me remind you that the Federal Reserve (Fed) began "quantitative easing" (using printed money to buy assets, chiefly Treasury Bonds) in September 2008 with over $2 trillion. "QE1" continued through the end of the first quarter of 2010, the end of March 2010. Thereafter, we got QE2, which continues to this very day but is slowly wrapping up. QE2 is a third the size of QE1, but it means the same: monetizing debt. On the fiscal side, our President has ran up a lot of debt in the past two years, despite running in 2008 on a "net spending cut." He's up to nearly $4 trillion in debt over just a little more than two years. How are we financing this? Well, the Fed is stepping up to buy 70% of treasuries. They're doing it with printed money, "quantitative easing." What's the effect of this? You're dollar is worth less. Using printed money to buy the debt of the same country will inflate the currency. Our dollar is not backed by anything. It floats. Therefore, the money that you have has been drastically devalued since the onset of "quantitative easing." This is what I call "loose money." Why is it important to you? Because inflation is a stealth tax on every dollar you have.

Who does this hurt the most? The poor and those on fixed incomes. To any progressives reading this who really do want to help the poor reach the middle class and get off government assistance, is the way to help them through a stealth 20% tax on every dollar they have in their pocket, a unilateral tax that bypasses Congress? That stealth, regressive tax can only drive more middle class into being poor, right? Shouldn't we want every dollar they own to have maximum purchasing power, to be worth as much as possible? Does this have anything to do, you suppose, with the record number on food stamps, one in six Americans?

These are the ravages of a loose monetary policy, high-deficit, spendthrift government. It is impoverishment. It is precisely the opposite of what is necessary for a true, strong recovery. A true recovery will feature fiscal responsibility and a strong dollar. The President ran in part on such a platform in 2008, promising a "net spending cut." Had he ran on trillion-dollar deficits and monetizing debt, he would've never been elected. Such a strong recovery will have to wait until the President and Fed Chairman are replaced, beginning in 2013.

This spendthrift, loose (and reckless) policy is also reflected in the price of gold and silver, which are historical safe harbors from inflation because (as precious metals) they store value and are never worthless. Gold as of this writing was over $1500/oz, silver over $46/oz. Gold at the beginning of the Obama Administration was just over $850/oz, silver at under $11.50/oz. Just this month, the price of silver skyrocketed from $40/oz to $45/oz in only 12 days. The loss of confidence in the dollar has been striking.

So, they are hoping that you don't pay attention to their fiscal and monetary policy. They want you to blame nameless, faceless "speculators" for the rise in the price of gas, even though everything else has risen, thanks to their loose monetary policy and spendthrift fiscal policy. They want you to ignore the rise in commodity prices and the drastic hike in gold and silver. They think you'll go after the nameless, faceless "speculators" because they think you are stupid. My question is this: Are they right about you?