Inflation (split from oil thread)

[Kelraz Bladesinger]

I don't see the inflation as bad as you do Sanchek. In my line of work most of my gear is imported from Japan. Tapes, cameras, etc all cost the same or in some cases less as 4 years ago according to my books. Food is up, with a number of reasons why. Gas is the only expense I track that has dramatically shifted upwards. I'm sure its there, but that can't be the doubling factor.

[Sanchek]

In commodities like that, you should be seeing the price continually drop, not stay the same. I'm sure if you look at what people in Japan pay for the same things, they've been paying less and less than you.

Here's yet another example of foreign interests basically hitting us with leveraged buyouts: http://www.foxnews.com/story/0,2933,365630,00.html

[PheloniusRM]

The link Smidget pasted from Harvard has some very good points. Most of the doubling of the price of a barrel of oil has come from speculation. But what started the speculation? In Jan the shit started to hit the fan with the subprime scandal. Countrywide was in deep shit. The Fed then started to lower the interest rate so it could pump billions of dollars into the market to keep the big financial firms liquid. So when the big Capitalist companies made bad financial decisions and started losing tons of money, in comes the Socialist government to bail them out. So the big Capitalist company then moves out of the real estate market that they tanked. They then move to the commodity market with the new money the Socialist government gave them and proceed to tank that market too.

We the tax payer are paying twice for the failures of the big Capitalist financial instituions massive failures. Once because the value of the Dollar goes down as interest rates go down because more money enters the system. You lose buying power with a weaker dollar. Second because the new money that has devauled the dollars in your pocket are flooding the commodity market and driving gas prices up.

So the next time I go to Vegas and lose all my money, I will call up the fed and have them send me a check so I can go to the horse track next week.

[Sanchek]

Another recent example of the leverage that foreign money now has over us: http://www.bizjournals.com/atlanta/stories/2008/06/09/daily71.html?ana=from_rss

[Smidget]

For there to be speculation, there needs to be some place to stash the product to keep it off the market. Based on petroleum inventories around the US, there are only about 50 days worth of oil production that can be stored in tanks and stuff. I don't believe that to be sufficient for speculation. Two (http://calculatedrisk.blogspot.com/2008/05/oil-speculation-debate.html) blog posts (http://krugman.blogs.nytimes.com/2008/05/13/more-on-oil-and-speculation/) agreeing with my opinion.

My suspicion is that the claim of "speculation" is to persuade the populace that nothing needs to be changed - just to stop some un-named group of people. As a country, our current energy consumption is extravagantly high, so we really need to change it drastically. But if one can convince the public that it is only "speculation" then people will just tough it out rather than make the lifestyle changes that should be done. In the Soviet Union, shortages were always blamed on speculators (of which there were none) and saboteurs (of which there were plenty in the Kremlin).

As for inflation, my largest increase in spending has gone into food. Most of the items I purchase have gone up 20-50% in the last year (like bread going up 50%). The basmati rice I purchase at the local asian market has doubled in the last year.

[Sanchek]

If I understand correctly, almost all of the current oil speculation is on futures. So, storage isn't an issue. They're basically buying the right to purchase oil pumped in the near future at a given price (like options).