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To: Ilaine who wrote (104559)	5/24/2001 2:12:13 PM
From: Jack of All Trades	Read Replies (2) \| Respond to of 436258

But in a simple sense, when there is no demand, production is cut back, hense sending the supply shinking at some pt... Then this causes a increase in demand vs the current supply which moves the price back up and we do it all over again...

To: Ilaine who wrote (104559)	5/24/2001 2:50:51 PM
From: craig crawford	Respond to of 436258

>> Sorry, you're mistaken about this. In fact, the depression probably started in 1927, in Germany.<< Oh you want to get all technical on me and talk about other countries? >> The boom in the US stock market was disjunct from global economic conditions, and also US business conditions, which began to worsen in the summer of 1929, sooner for agriculture (1926). << Yeah and the boom in the US stock market in the last couple of years was disjunct from global economic conditions as well. You do remember the depression's that hit Asian economies in 1998? The US shook it off and had one more blow-off top. You could make the same argument in the 20's. There were problems in Germany and other places around the world and we shook it off for a couple more years before the whole thing came down like a house of cards. You're not telling me anything that I don't already know, and we are following the script quite nicely. You said conditions started to worsen for agriculture sooner--well why do you think people stopped flocking to agriculture? Because everyone had their attention and investment focused on technology. How many people do you know that want to go start a sugar or cotton plantation? Not many. People would rather start an internet company and be a billionaire overnight. Do you see why we could have a shortage in natural resources developing? Has it been profitable to open a mine recently? Was it profitable at $10 a barrel to drill for oil a couple of years ago? Was it worth the trouble to fight all the regulations and environmentalist wackos to build a power generation plant, or develop a mine, or drill for oil? No, and that's precisely why there is a glut in technology and a shortage in raw materials. Do you see why commodities suffer in times of great paper wealth?? Do you see why now there is a glut of technology and people are getting discouraged with paper assets & they might wake up one day and see oil, coal, gas, metals and other shortages? Do you see why they might want to shift their money away from tech and focus on the new internet ipo's...coal & electricity generation stocks? >> Even the stock market was not what it appeared. On September 7, 1929, Business Week reported that of the 2,002 stocks listed on the NYSE, 1614 were lower on August 2 than on January 2, and only 388 had advanced. << Well most people think we peaked in 2000 on March 10th. More stocks were down than up in 1998, 1999, and 2000. Once again the script plays exactly the same and you are telling me something that I am already aware of. I don't see how it supports your point (I'm not sure what your point is) >> The bottom fell out of the US economy in late spring, 1930, touching off a round of bank failures, and business failures, culminating, in 1931, in the Great Depression in the US. Other countries had a different time-table. << Ok, so what's your point again? >> I don't mean to discourage you from investing in commodities - but I think your reasoning is flawed. << Ok, apparently now I found the point you're trying to make. >> Commodity prices drop when there is no demand, and go up when there is demand. << Hah! Aren't you forgetting something? That is there is another half of the equation....supply! >> There is no incentive to produce them without demand. << Precisely! Why do you think in the last 10 years people start internet companies instead of going into farming?? Therefore the incentive to produce has been waning over the last decade and supply shortages are cropping up. >> If you think that the economy is recovering, or that we are facing inflation, << Hello? I think it's quite clear that I think we are facing inflation in the coming years. In fact we have had inflation for quite a while, and it's finally coming to a head. The government manipulates the data for their own benefit so they try to con the public into believing there is no inflation. >> or that demand from another source (China, say) will increase << Once again, yes. I think that China is on track to opening its doors to capitalism and that will create a huge surge in demand for raw materials. This stuff isn't that complicated. Commodities trade on supply & demand. Supply has been waning over the last decade and demand is going to increase in the coming years. Lower supply, higher demand = prices have to go up! Add a whiff of inflation to the mix and prices are going to SOAR. P.S. The most simple parry to your argument is to point to oil/gas/coal/platinum/palladium/electricity etc. Those have all skyrocketed even in the face of a near recession, proving that weak economic conditions don't necessarily lower demand enough to keep prices from rising. After all commodities start to boom people will be buying them just because they are going up and the demand will increase even more. Since there has been a dwindling base of suppliers they will be sitting in the catbird seat getting whatever price they want!

To: Ilaine who wrote (104559)	5/24/2001 3:11:39 PM
From: LLCF	Read Replies (3) \| Respond to of 436258

I was under the impression that gold/silver and shares in such performed very well in the 30's? As far as other commodities I don't know... are you sure they collapse as well? As far as agriculture conditions worsening earlier I believe the advent of machinery had much to do with this no?? More a structural thing, and certainly contributed to the soup lines and such in the ensuing downturn. On that note I wonder if the employment patterns today have any special ramifications if we have a downturn. DAK