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boggsman1



Joined: 24 Jun 2002
Posts: 3481
Location: at a computer

PostPosted: Fri Jan 07, 2011 9:34 am    Post subject: Reply with quote

mrgybe wrote:
A brief primer for those who erroneously believe that US debt levels have nothing to do with rising oil prices. The US deficits and increasing debt levels are contributing to the decline in the value of the dollar. The international crude market is a dollar denominated market. When the value of the dollar falls, the price of crude rises. If demand remained constant, but the dollar weakened, crude prices (and consequently gasoline prices in the US) would rise.

Separately, those who point to CPI based inflation statistics as proof of the lack of inflation, may be unaware that the CPI excludes changes in food and energy costs, both of which are on the rise at a faster rate than core inflation.

Im well aware of both measures of CPI, both core and non core. But the reason food and energy are not included is because their volatility is multiples of the other components, statisitcs and economic theory need a reasonable sample to determine trends.In regards to split GOVT, and its successes, particularly a Dem prez, with Rethug Congress...you can research my views on this forum, and find I get very excited when this set-up exists.
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mrgybe



Joined: 01 Jul 2008
Posts: 2549

PostPosted: Fri Jan 07, 2011 10:33 am    Post subject: Reply with quote

swchandler wrote:
Let's be frank mrgybe, the price of gasoline has nothing to do with the condition of the American economy.


You could not be more wrong. The condition of the US economy is a principal driver of gasoline prices. If the US economy is strong, that typically lifts other economies around the world causing an increase in demand for energy. Increased demand causes energy prices to rise.....always has.

swchandler wrote:
Oil producers will take advantage, if the situation readily serves their interests. One only needs to look at huge oil company profits over time.


Even the most superficial analysis reveals that oil company profits are not even close to the earnings in a multitude of other industries over time. Oil company profits are large because the companies are large. Absolute profit is meaningless without context. Return on capital employed is a meaningful statistic.......not profit. Oil company returns are very average.
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mrgybe



Joined: 01 Jul 2008
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PostPosted: Fri Jan 07, 2011 10:58 am    Post subject: Reply with quote

boggsman1 wrote:
the reason food and energy are not included is because their volatility is multiples of the other components


For most people, two of the largest items of expenditure are food and energy. Posters who throw out statistics which ignore those two key elements, and demean Bard for pointing out that there is more to the story, are treading on very thin ice.
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boggsman1



Joined: 24 Jun 2002
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Location: at a computer

PostPosted: Fri Jan 07, 2011 11:15 am    Post subject: Reply with quote

Not me, if inflation exists, Im terrified, but it does not exist to the extent that we are worried about it today. I demean anyone who compares the USA with Zimbabwe. There is a reason why the dollar is the worlds reserve currency. Mr G . if you are in the fear camp, thats fine, a lot of people are, but I guess you must have missed the best place to be in the last two years, USA stocks. With regards to CPI, shelter is 3X food and energy, and shelter is in a MASSIVE DEFLATIONARY trend.
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boggsman1



Joined: 24 Jun 2002
Posts: 3481
Location: at a computer

PostPosted: Fri Jan 07, 2011 11:45 am    Post subject: Reply with quote

mrgybe wrote:
swchandler wrote:
Let's be frank mrgybe, the price of gasoline has nothing to do with the condition of the American economy.


You could not be more wrong. The condition of the US economy is a principal driver of gasoline prices. If the US economy is strong, that typically lifts other economies around the world causing an increase in demand for energy. Increased demand causes energy prices to rise.....always has.

swchandler wrote:
Oil producers will take advantage, if the situation readily serves their interests. One only needs to look at huge oil company profits over time.


Even the most superficial analysis reveals that oil company profits are not even close to the earnings in a multitude of other industries over time. Oil company profits are large because the companies are large. Absolute profit is meaningless without context. Return on capital employed is a meaningful statistic.......not profit. Oil company returns are very average.

Mr. glad you finally came around and admitted that the US economy is strong. Welcome to the bull market!
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mrgybe



Joined: 01 Jul 2008
Posts: 2549

PostPosted: Fri Jan 07, 2011 11:50 am    Post subject: Reply with quote

My comment was directed at those who disgorge pejoratives like "ignorant fool" and "idiot". I agree that the correlation with Zimbabwe, a country I know very well, is a stretch.......presumably chosen for effect.

boggsman1 wrote:
With regards to CPI, shelter is 3X food and energy, and shelter is in a MASSIVE DEFLATIONARY trend.


Inflation statistics are only meaningful if they provide a guide to purchasing power. Lower house prices are suppressing inflation statistics........but have reduced property values put more money in your pocket to offset higher energy and food prices? Only new entrants to the property market benefit from lower prices.........they are a tiny fraction of those already in the market whose "shelter" outgoings remain unchanged (subject to refi's). So inflation stats are not a reflection of reality.

I'm not panicking about inflation, but I'm decidedly less complacent than others here.
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mrgybe



Joined: 01 Jul 2008
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PostPosted: Fri Jan 07, 2011 11:57 am    Post subject: Reply with quote

boggsman1 wrote:
Mr. glad you finally came around and admitted that the US economy is strong. Welcome to the bull market!


You may want to read my post again...........see the word "If". The US economy is not strong...........it is slowly improving as businesses adjust. Confidence is generally up now that Pelosi has handed over the gavel. Crude prices are reflecting that in part, and more mechanically, adjusting upward to the weakening dollar.
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boggsman1



Joined: 24 Jun 2002
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PostPosted: Fri Jan 07, 2011 12:03 pm    Post subject: Reply with quote

I agree with most. But, there are a lot of people who are renting, and a lot of people who are buying cheap clothing, cheap autos, cheap TVs and other electronic goods. A lot of big ticket items are less than they were 11 years ago, that is important. Inflation will come at some point, and it will be ugly, but NOT unitl we see meaningful gains in income, personal income. As long as we have slack in the labor markets, and imports flowing in from China, inflation will be a non event. Bard's main argument that Berspankys printing press guarantees runaway inflation is bunk....he's been helicoptering bags of money into the economy for almost 4 years now, and prices are flat at most at the consumer level.
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boggsman1



Joined: 24 Jun 2002
Posts: 3481
Location: at a computer

PostPosted: Fri Jan 07, 2011 12:09 pm    Post subject: Reply with quote

mrgybe wrote:
boggsman1 wrote:
Mr. glad you finally came around and admitted that the US economy is strong. Welcome to the bull market!


You may want to read my post again...........see the word "If". The US economy is not strong...........it is slowly improving as businesses adjust. Confidence is generally up now that Pelosi has handed over the gavel. Crude prices are reflecting that in part, and more mechanically, adjusting upward to the weakening dollar.

aaaah, the back track. We can agree to disagree, I think the economy is strong, especially out here.. if you dont belive me, ask Marc Zuckerberg, he's at the CES show in Las Vegas.
BTW- the dollar index against world currencies, is flat while oil has rallied from 81-92, so your correlation is a little off, I think oil is reflecting many many positive US indicators:ISM, retail sales, Industrial production, and many others.
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mac



Joined: 07 Mar 1999
Posts: 4987

PostPosted: Fri Jan 07, 2011 12:28 pm    Post subject: Reply with quote

There you go again mrgybe. Putting words into my mouth to spout about liberals and pejoratives. On the latter, I will not be bullied and I will respond to insults at least as strongly. You may have figure that out already.

I despair of you righties ever getting logic lessons right. I did not argue that the CPI is the only economic indicator that might be consulted, I said it is the "bible", because it is the commonly accepted indicator used for most contract negotiations. I also did not say that it covers all price issues, nor did I say that I have no worry about debt load causing inflation. What I said is that a little research into the commonly used tools is better than anecdotal evidence. For crying out loud, bard cited food riots--which this morning's newspapers tells us where in Morocco. What that has to do with fiscal policy or Nancy Pelosi--or maybe even fuel prices I don't know. I do know it bears no resemblance to a logical argument. Nor of course, did stevenbard's ad hominem attack on me, or his renewed attack, after asking us all to be nice, on us San Francisco girlies. I think it is his panties that are all in a twist.

Economic contractions cause reduced demand, which affects prices in a deflationary way. It may well be that there are inflationary pressures that will re-emerge with economic recovery--that is certain to happen with some limited resources like rare metals and energy. It may also be that the overall deflation of housing prices from the housing bubble obscures other trends in the CPI. Of course that would require an argument, a little research, and an adult conversation. Something a little more sophisticated than attacking Nancy Pelosi or San Francisco girly men--from a safe distance.
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