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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: bond_bubble who wrote (39729)	8/25/2005 1:21:43 PM
From: mishedlo	Read Replies (3) of 110194

What you DONT understand is that, if oil prices increases the other spending falls!!! You are stupidly assuming that people will spend all the money on oil AND also spend on ALL other items that they are currently buying!! That is not the reality (unless wage increases). In reality, they will stop spending on ipods, tvs, cars, movies etc. and hence those prices will fall - there will be deflation in those items because oil prices went up (ofcourse there is inflation in oil but deflation in movie tickets, cars, tvs, ipods etc - So, net, is it inflation or deflation) - If you still dont understand, let me know which part you dont understand. Exactly And thank you for stating so. I get tired of defending my position. In the 70's wages were going up (mine went up dramatically in the late 70's) and inflation expectations were high as well. That combination led to high interest rates. Wages are NOT going up now and neither are jobs. Whether or not oil price increases are inflationary or not depends on passthru and wages and jobs. Unless someone has a time machine, this is not 1970. Rising oil prices right now are simply not inflationary. Mish

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