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

To: bart13 who wrote (88533)	11/6/2007 3:38:21 PM
From: GST	Read Replies (1) \| Respond to of 110194

<But if I'm tracking with you, it'll be much more likely that future oil price increases will be based on supply & demand or sentiment factors like expectations of war than money supply/inflation.> If you are tracking with me you will not use the term "money supply/inflation". If you are tracking with me you would use the words money supply when referring to money supply. You would would use the words credit contraction when referring to credit contraction -- etc. And when you referred to "inflation" you would in some way or other be talking about persistent price increases, and likewise for deflation you would in some shape of form be talking about persistent price decreases. Oil could easily double from here -- and it would have very little to do with money supply, but if it is a persistent increase in price it would be inflation. Credit and/or money supply could sharply contract but if it did not push prices lower then it would not be deflation. I want to look at what is going on now -- today -- from the point of view of somebody who is tracking reality, not a little cult of economists who have decided that they will create their own weird meanings for words in order to ignore reality. In reality, we are confronted by strong inflationary pressures, including a weakening dollar, a very low savings rate and out of control deficits on the government, trade and current accounts, not to mention the mess in the mortgage market and consumer debt. A contracting US economy in the midst of a booming global expansion aggravates all of the above mentioned inflationary pressures. The problem for those who worship at the holy grail of money supply is that this is contrary to their expectations, therefore it must be ignored.

To: bart13 who wrote (88533)	11/6/2007 3:46:57 PM
From: Joe Stocks	Respond to of 110194

>>My actual opinion is that most of the increases up to about 2006 were mostly inflation and "catch up", and since then have been more "peak oil" and supply & demand based<< I agree. As far as current prices supply and demand has been some what turned on it's head.... The current crude price has little to nothing to do with now available oil. Right now Jan oil is cheaper than Dec.. Feb is cheaper than Feb. With high prices, those that need to buy oil for storage are waiting for lower prices as the backwardization in crude prices would indicate. Problem is that oil held up during seasonally weak period this year. Those storing oil did not fill their tanks waiting for cheaper oil. Therefor stored inventories have gone down while empty tankers sit in the mideast waiting for someone to buy. In the mean time low inventories have kept spot prices high. Those short current DEc contracts may be forced to buy at the higher prices, keeping prices yet higher while inventories go lower. Of course peak oil is another factor, but in my opinion is not the problem here in the very short term. The dollar if much more of a factor and will also keep a bid under crude prices.