truth and the big lie, page-18

  1. 873 Posts.
    re: truth and the big lie-oil Hi Dlux,

    I think the article you posted says it rather succintly.

    "For weeks now, economists have watched the steep rise in oil prices and concluded that a combination of improved energy efficiency and market competition have buffered the U.S. economy against the inflation and other economic problems triggered by earlier oil shocks.
    Since the first Arab oil embargo in 1973, American industry has shaved by about 50 percent the amount of oil it takes to produce $1 of economic output. During the latest oil spike, the fear of losing customers has led businesses to trim profits, squeeze other costs, or postpone investment and hiring instead of increasing prices to consumers."

    And therein lies the difference between now and the 1970's/1980's. Back in those days, huge U.S monopolies still had pricing power - they were price setters and, by comparison to now, they were relatively untroubled by competition of the domestic or overseas kind. They could, and they did pass on immediately the costs of oil, straight through to the buyers/consumers, even if these oil inputs were small, or not directly related to their particular end value-added products. This behaviour sparked off a prices-wages spiral that resulted in stagflation, as workers and business fought between each other to get the upper hand...

    It's a question of degree now. Of course there will be some inflationary effect on our economy from recent prices. But it will be completely laughable when compared to 2-3 decades ago. I can't believe the array of so-called experts out there... who actually write for paying subscribers... that have got this issue so completely and utterly wrong. They have made themselves look like bloody Year 10 Commerce students with their lack of appreciation of the structural changes that have taken place in Western economies since the 70's and 80's. Many of them have a vested interest in ramping inflation in order to ramp gold, but they have been caught out, in no small way. Oil prices have been high for a while now and these kiddies have a rapidly closing window of opportunity to prove their outlandish claims about inflation and oil.

    Looking at the lastest PPI/CPI figures it seems we may have a flicker of oil price effect coming through now. Peter Costello has got in early already with a disclaimer about inflation due to oil for the December numbers I think.



    Cheers,


    Christian


 
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