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

To: patron_anejo_por_favor who wrote (50034)	4/24/2006 2:15:46 PM
From: mishedlo	Respond to of 116555

Canaries at the Periphery globaleconomicanalysis.blogspot.com Mish

To: patron_anejo_por_favor who wrote (50034)	4/24/2006 2:49:15 PM
From: Tommaso	Read Replies (2) \| Respond to of 116555

There was a time when I was as stubborn a Friedmanite as Mish is. But when you lose $200,000 partly as a result of your stubbornness, you realize there is something wrong with your outlook. If the output of goods and services available to the purchasing public is constrained by anything--war, famine, plague, or a shortage of vital resources--prices will rise even if the same amount of money is available as existed previously. Contrariwise, if the output of such goods and services increases enormously--as happened in the period 1985-2000--prices will hold steady or decline even if the money supply rises somewhat. The rising price of oil does not automatically add a premium onto all goods and services. But the constraint on human activity that an increasing shortage of oil exercises, and which is reflected in in its price, contributes to the price rise of other things. And particularly if governments are constantly creating more fiat money, the demand for such goods and services as are available will rise even faster, and will accelerate as people realize that money is a very poor store of value.