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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (23809)	8/18/2006 3:27:30 PM
From: J-L-S	Read Replies (1) \| Respond to of 42834

"I don't care what causes somethings price to inflate ..." Right. That's why you don't have a clue what inflation is or how it is caused; and it is why you don't understand the possibly deflationary aspects of higher energy costs. Everyone pays higher energy prices; consumers as well as producers. Producers cannot pass on their higher energy prices because consumers are also paying higher energy prices. That is why it is like a tax; and higher taxes can be deflationary. Your quote from the dictionary, "or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services", didn't need to be repeated, as it was in my earlier message. You should have put the last clause in bold: "caused by an increase in available currency and credit beyond the proportion of available goods and services." The condition in that clause must be met in order to meet the definition of inflation. You can’t meet the definition of “inflation” by meeting only the conditions in part of the statement. You must meet the conditions of the whole statement. Now, would you mind explaining how higher energy prices causes "an increase in available currency and credit beyond the proportion of available goods and services"? Rising taxes, like rising energy costs, reduces available currency. If you understood the second clause in the definition, you would understand why higher energy prices is equivalent to raising taxes. And since when is rising taxes inflationary? The raising of taxes results in the range of possibilities between neutral and deflationary.