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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: John Vosilla who wrote (56480)3/22/2006 11:46:06 AM
From: TimbaBear  Read Replies (1) of 110194
 
Would you agree pass through of rising RE and energy prices are main drivers of the cost push side of inflation?

Well, John, I'm not exactly sure I have a handle on all of the major forces at play in this inflation but certainly rising RE costs and energy costs have to be recouped. Somehow folks have been led to believe that profits are just so high that these extra costs are just absorbed somehow without end users having to feel the pain. In some sectors perhaps that's true. But the story of the US economy has been one of how it has switched from a manufacturing base to a service base and the service base has certainly had no problem passing the added costs along.

The traditional forces of too much money and too much credit are definitely at least partially responsible for the higher real estate prices. The higher energy prices though stem from two other main factors: geopolitical tensions which don't seem to be transitory and demand outstripping supply.

I think some other big forces are also at play and one of the largest is that the fiat currencies are coming under increasing doubt about the strength of the fiat in some of the most widely used currencies. How this interplays with the other big influences is what is tough for me to get a good handle on.

Timba
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