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Price ceilings are foolish as they usually cause shortages! Markets always tend towards equilibrium. If a good is priced too high, people will not have enough money to afford the goods, not many will sell. If not many sell, the company cannot make money. So the prices must come down. If the prices go too low, the company will be either unwilling, or unable, to supply too close to what it costs them to make a unit of goods, but people would want to buy more than they would at the higher price. So, markets end up moving towards the middle. Companies like to produce and supply as much as buyers want to buy for what buyers are willing to pay for a given product.

Everyone remembers the shortages of fuel in the 70's oil crisis. Well, that was, as far as common knowledge can tell, caused by price caps on fuel. If oil companies couldn't get market value for the Oil, it was more profitable for them to cap the wells and sell as little as they needed to until things eased up. If market prices for oil doubled to $200, I guarantee you there is no oil company that wouldn't supply all the oil you wanted to buy. If oil dropped to $10 a barrel over night, I guarantee you that you wouldn't find any oil to buy.

I do want to prove to you that gas is still between 25 and 30 cents a gallon. The only thing that has changed is prices. Sounds like a paradox? Or perhaps an oxymoron? Well, I really can. See, when gas WAS that cheap, we were still using silver currency. Our coins were 90% silver at the time, and much of the paper was backed by silver also. If you take a dime minted in 1964 or before, there is approximately .07 ounces troy pure Silver in each one... .07234 if they are un-circulated... Right now, at today's spot price, the value of the silver in a dime, is almost $1.30. Gas is what, 3.50 or so? It has been a couple weeks since I had to fuel up. Well, if you divide $3.50 a gallon by $1.30 per silver dime, you get approximately 27 cents a gallon if you were still using REAL money backed by silver.

The real culprit for rising prices is not the Saudis, it is not reduced oil reserves, it is not tankers sinking or refineries blowing up causing the high prices. The real price, in terms of 1964 money, the year we started going off the Silver standard, well, '65 was our first year off, we are still buying gas for 27 cents a gallon!

The reason you are poorer now than you were then is, your wages haven't tripled with the price of Gas. Your social security checks haven't tripled. Your interest rate in your savings account isn't keeping up with inflation. Even stocks rarely beat the inflation rate. But as you can see, in terms of Gold and Silver, costs are relatively constant. It would ultimately be foolish for the Government to cap fuel prices. If they want to help, they need to eliminate the Federal Reserve, and coin Gold and Silver once more, as our founding fathers intended this country to do.

Learn more about this author, Adam Koch.
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