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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: mishedlo who wrote (39733)8/25/2005 1:42:25 PM
From: GST  Read Replies (2) of 110194
 
<Whether or not oil price increases are inflationary> This is getting silly. Oil prices are in themselves inflationary -- about that there is no question. They also slow the economy, and about that there is no question. Oil price jumps are often associated with stagflation -- that is certainly not hard to figure out.

But what happens to other prices is speculative -- you make an assumption that oil price inflation will trigger widespread deflation in other prices due to falling demand. But it is beyond silly to say that soaring oil prices are not inflationary. The direct result is simple enough -- oil prices make people a little more poor. If poverty ever does bring down the price of a movie ticket it will be scant consolation to all those who cannot attend because oil inflation has eaten up their stagnant incomes -- in a word, they are suffering from stagflation.
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