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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (39733)	8/25/2005 1:42:25 PM
From: GST	Read Replies (2) \| Respond to 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.

To: mishedlo who wrote (39733)	8/25/2005 1:45:35 PM
From: Oblomov	Read Replies (2) \| Respond to of 110194

I agree with you and bb. Higher oil prices will cause other spending, and credit, to contract. But, we are certainly in the minority here.

To: mishedlo who wrote (39733)	8/25/2005 2:24:31 PM
From: Richard Gampell	Read Replies (2) \| Respond to of 110194

I'm coming late to this discussion, so I apologize for trying your patience on the subject, but I think that those of you in the no-inflation camp still have some defending to do. Wages are not the be-all-end-all of wealth. Unless you maintain that our various inflated long-dated assets are going to depreciate massively and quickly, there is still plenty of "wealth" out there to buy iPods and oil both, regardless of wage/job stagnation. I guess some people are implicitly arguing that an oil-shock-induced credit-crunch is going to cause this quick and massive depreciation (and therefore be potentially deflationary), but otherwise it's simply not convincing to state that money spent on oil will be subtracted one-for-one from money spent elsewhere. -- Rich