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Retail Expert Craig Johnson: 'Clueless Beltway Blowhards' Oblivious to Gas, Food Prices

By    |   Tuesday, 26 Apr 2011 01:53 PM

Washington, D.C., politicians are clueless when it comes to tackling inflation because they have the power to lower energy and food prices but they aren't doing so, says Craig Johnson, president of retail consultancy Customer Growth Partners.

The Fed is printing money in order to spur more economic growth, but all that's doing is just weakening the dollar, thus making fuel and other commodities more expensive, he told Newsmax.TV.

Agriculture policy is diverting too much corn to the production of ethanol, which is driving up food prices.

The solution, Johnson says, is to change ethanol policies, produce more oil, natural gas and coal at home and stop printing money.

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Otherwise food and energy prices will keep climbing and make the populace angrier.

"Americans are getting crushed by the energy inflation and the food-price inflation that we're seeing. A lot of the folks in Washington who don't think there's an energy problem are these clueless beltway blowhards who haven't pumped their own gas or bought their own groceries in years," Johnson says.

"And they think it's not part of the core inflation, so it doesn't matter. Well, it matters to Americans."

Since the 1970s, high energy prices have coincided if not triggered all six recessions in the United States save the one in 2001, which came in wake of the 9/11 terrorist attacks.

Today, energy prices are up about 35 percent year over year, and food prices are up about 10 percent year over year, and when they reach about 6 percent of household spending, recessions tend to ensue.

"We're at the 6 percent mark now and heading north. And that's just gasoline and energy prices. When you add in food inflation, that's even a bigger take out of the budget," Johnson says.

This time, however, Washington is causing problem. Take high food prices.

"Unfortunately, it's mostly made in Washington, because first of all, corn, which is the single biggest element of the food chain, so to speak, is getting pushed up by these stupid ethanol subsidies where corn is being diverted to making ethanol totally uneconomically," Johnson says.

"And then secondly, because of the weak dollar, also made in Washington under Bernanke's Fed, is making commodities overall — this is worldwide —rise, and that is hurting not just American consumers, but even hurting people in the emerging economies and in poor countries."

To lower fuel costs for the long term, America needs to drill at home, otherwise, we'll let OPEC influence our economy.

"Fortunately we have a huge amount of oil in this country, and we have a huge amount of natural gas, which we ought to be unleashing. We're the Saudi Arabia of natural gas, we're also the Saudi Arabia of coal."

"Those are the kinds of things that we should be doing from the Obama point of view. But from the Bernanke point of view, we have to stop this easy money, weak dollar thing."

Americans, meanwhile, are more likely to blame Democrats than Republicans for high gasoline prices, recent polls show.

A New York Times/CBS News poll shows 70 percent believe the country is headed in the wrong direction and 57 percent don’t like the way President Barack Obama is handling the economy, the Christian Science Monitor reports.

A National Journal poll of political insiders shows a great majority – including 75 percent of Democratic insiders – predicting that their party will be "hurt more by rising gas prices," the newspaper adds.

Obama gets a break in a McClatchy-Marist poll, which shows that while 11 percent blame Obama and Democrats for pricey fuel while 36 percent blame volatility in the Middle East, and 34 percent say big oil companies deserve the blame, according to the Christian Science Monitor.

"Whenever gas prices shoot up, like clockwork, you see politicians racing to the cameras, waving three-point plans for two dollar gas," Obama says.

"You see people trying to grab headlines or score a few points. The truth is, there's no silver bullet that can bring down gas prices right away."

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Washington, D.C., politicians are clueless when it comes to tackling inflation because they have the power to lower energy and food prices but they aren't doing so, says Craig Johnson, president of retail consultancy Customer Growth Partners. The Fed is printing money in...
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2011-53-26
Tuesday, 26 Apr 2011 01:53 PM
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