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Strategies & Market Trends : Tech Stock Options
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To: MonsieurGonzo who wrote (52472)9/13/1998 10:02:00 PM
From: j g cordes   of 58727
 
MonsGonz.. IMHO, CrudeOil is no longer acting like a commodity, rather - it is now behaving as a proxy for something perceived to have currency.

Well, of course.. some excellent points. Its why the oil producing countries have found their currencies falling. The returns in dollars on their oil sales deflates their currency, especially so when paying off debt with less and less profit on their exports. Russia for example is the largest producer of oil in the world and has seen its currency fall with the price of oil to where its balance of payments became impossible.

This is not true just with oil, but with other commodities as well. This includes industrial products when they become so cheaply manufactured in so many places (like DRAM) that they drop the currencies of the producing countries.

What's worrisome are "spirals" of inflation or deflation. Both wreck havoc by destabilizing confidence to invest both capital and labor in new ventures. We may be facing a world deflationary spiral as even the richer countries find themselves lowering prices to meet sales and debt demands.

Increasing money supplies, inflating the total volume of money in the systems while encouraging economic growth and consumer spending at all levels is most often perceived as the way out.

Jim
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