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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (21460)	1/15/2005 7:52:18 PM
From: SouthFloridaGuy	Respond to of 116555

<<Gold is a buy because of what the world-wide response to deflation has been and will continue to be.>> When <deflation> and if <money out of helicopters> that even happens is so far in the future that its not even worth spending any additional time. You are also not taking into account the absolute levels of money that would have to be created to make up for both debt destruction and the lack of credit availability. The Fed isn't the only one who can "print" money.

To: yard_man who wrote (21460)	1/17/2005 3:20:32 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 116555

<<Gasoline use is inelastic and we may be making a peak>> That's a bit of a myth....jack up gas prices to 5 bucks a gallon and you'll see how "elastic" it can be!<NG>

To: yard_man who wrote (21460)	1/17/2005 4:32:45 PM
From: CalculatedRisk	Read Replies (3) \| Respond to of 116555

Over the years, there has been some excellent economic analysis on the price elasticity of gasoline. (If I can find some of the papers I will post them - most are from the late '70s and early '80s for obvious reasons). Both the supply and demand curves are very steep for gasoline. This leads to large price swings. In the short term, the demand for gas is fairly inelastic. In the medium term (say 5 years), gas use is elastic ... people will use less, buy smaller cars, etc ... and more production will come on line. HOWEVER, if we are at peak oil production (it will probably happen anywhere from now to 15 years from now), by the time people respond to the price increase by reducing usage ... there will be another shock as production falls. This cycle of price shocks, reduced usage, then another price shock will repeat itself until we find a viable alternative to gasoline.