The crooners and screamers are out again over the weekend decrying "speculation" in oil futures.

Rick Santelli did a pretty good job of destroying that argument this morning on CNBC, surprisingly enough. He brought up the "inconvenient truth" that on the last day of a given contract, as the day winds down, all speculation must (by definition) cease on that contract, as anyone holding a long at the bell must take delivery, and anyone short at the bell must provide delivery.

He's right of course, but don't expect people to pay attention to the inconvenient thing called "facts" when emotion rules the political landscape.

See, here's the bottom line - if speculative distortions were the "primary drivers" of price, then we would see tremendous distortions in the price of the front month .vs. longer contracts on that last day. $10, 20, 30 or more. That is, if the "actual delivery price" of oil is really $100/bbl, and the speculative premium $30, one minute before the bell on expiration day only those people who will deliver (or take delivery) have open contracts. That last trade is going to take place at the actual delivery price - it simply must, by definition, as these contracts do not cash settle - they settle with actual barrels of oil changing hands for money!

Now is there a "speculative premium" in oil? Well, yes and no. The $250 billion in excess liquidity that is flying around has found a "safe haven" in oil and other commodities.

But this is not "speculative premium" in terms of market manipulation or "evil people", it is people buying oil and oil products as a stable store of value!

And what, pray tell, is wrong with this? We've got Bernanke running around literally shredding The Fed's balance sheet, deprecating US Treasury Bonds as a safe place to hide. He has turned what were pristine credit instruments into used toilet paper with wild abandon, stuck in the Ivory Tower world having made his speeches that "The Fed has a device called a printing press and can always arrest a deflation by using it."

Well Ben? This reminds one of Greenspan's speech when asked about FDIC insurance many years ago, when he said that "we can guarantee that you will receive your dollars, but not what they will be able to purchase."

The truth is that The Fed has not been hyperinflating anything. Liquidity is a loan, not a gift nor printing. Loans have to be paid back, with interest.

But - credit quality is credit quality, and at the end of the day the question for the markets comes down to asset allocation.

Since Bernanke has shown his willingness to shoot off his mouth with statements that call into question his sanity, in which he has stated outright that he will protect insolvent institutions and homeowners by destroying the credit quality of The United States, we should not be surprised if the market, over which Bernanke in fact has no control (his delusions of grandeur notwithstanding), decides to allocate assets away from those things which he has and can wipe his butt with!

So if you're talking about "distortions" and who's to blame, go talk to Bernanke. He has single-handedly created this mess and the responsibility lies with him. You cannot blame people for allocating assets in a way that they perceive as safe.

You cannot fault market participants' perception that US Treasury instruments are fundamentally unsound when your own Central Bankers make public statements and take actions that demonstrate their willingness to destroy the credit quality of same!

The simple fact of the matter is that everything that Bernanke (and before him Greenspan) has done over the last eight years has been fundamentally bankrupt. Willfully turning a blind eye to knowingly-fraudulent lending practices, from appraisal fraud to ratings agency fraud to intentionally-overstated incomes to insane leverage ratios within our investment and commercial banks, all of which has occurred with the explicit approval of The Fed and our Government, has led to an incredible debasement of the credit quality of United States Treasury paper.

Now that the bubble in housing has burst we have seen three quarters running of so-called "kitchen sink" losses from the banks and brokers, yet each quarter proves that the banks lied in the previous one when more losses are unearthed. Financial statements continue to show proof of "cooking" the numbers, with assets moved from one bucket to another in a vain attempt to avoid recognizing and reporting losses.

Yet The Fed, OCC, OTS, OFHEO and Congress continue to allow this nonsense to go on, with ZERO in the way of enforcement actions against these firms, while allowing them to backstop their balance sheets by exchanging illiquid and potentially worthless securities for The Fed's Treasuries. Even worse, all of this is being done in secret, from the contents of Bear Stearns' so-called "backstop" to the participants in the various alphabet soup credit facilities.

Even worse, Congress continues to spend hundreds of billions it doesn't have, thereby putting even more pressure on the bond market by forcing issue of more Treasury Bills and Bonds into a market that is increasingly treating their credit quality as something akin to used toilet paper.

This, in turn, has led people searching for a reasonable return to shift their bets to commodities on the premise that The United States will ultimately collapse under the weight of the fraud; that is, The Fed will choose to debase the debt of its host nation while Congress issues even more trash paper rather than force its patrons to recognize their losses and deal with the potential insolvency that may result.

So far this has proven to be an accurate bet.

In addition, consumer confidence continues to fall and inflation expectations are no longer "anchored" in any meaningful way, with the one-year expectation now over seven percent as of the Consumer Confidence report this morning.

If Congress and we the people don't like the outcome of this path of action - sky-high oil and other commodity prices along with ramping inflation expectations and sinking consumer confidence - then it is incumbent upon us to force these agencies to put a stop to the fraud, remove the backstops, and force the recognition of these hidden losses, restoring the credit quality of United States Treasury debt and The US Dollar!

When you look at the Case-Schiller housing index and Consumer Confidence numbers you see the truth - away from the fraud of Wall Street, The Fed and Congress, reality cannot be hidden. Home prices continue to decline at record rates. The worst areas of decline mirror the places where the fraud was most widespread - Florida, Nevada, and California. No sign of a bottom - at all. Foreclosure sales are finally starting to take off, moving the market from "denial" and "bargaining" towards "acceptance", which is necessary for the market to clear.

Consumers continue to expect that prices will rocket higher, with our consumer expectations now reaching those of CHINA.

Nobody believes the CPI numbers any more; the lies have continued for too long and consumers have literally given up on the government, assigning anything coming from a government mouthpiece ZERO credibility.

Time to choose America. Are you going to sit still while our politicians from both parties scream about "speculators" and "Oil Barons" when in fact the real problem is your Congressional Representatives and Senators and The Federal Reserve, who have personally and through proxies allowed the costs occasioned by the fraud of the last 10 years to be shifted into your gas tank?

80% of Americans neither participated in or profited from this scam.

Why are you tolerating being saddled with The Bill?