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Posted on 07/07/2008 9:49:33 AM PDT by Dukes Travels
Call this the Age of Commodities. Also think of this as the age in which commodities, long relegated to the cellar by economists and markets, have fought back. They have fought back with such vigor and catastrophic effect on global business that they may be the determining force in the November election. But Sens. John McCain and Barack Obama have been tiptoeing around the global crisis triggered by a run on commodities.
Wikipedia defines the category well: “A commodity is anything for which there is demand, but is supplied without qualitative differentiation across a market. In other words, copper is copper. Rice is rice. Stereos, on the other hand, come in varieties of quality. And the better a stereo is, the more it will cost. Whereas, the price of copper is universal, and fluctuates daily based on global supply and demand.”
The tricky thing about commodities is that they vary widely in cost, depending on marginal shortage or marginal overproduction. Think of a village that needs two bags of onions a month. If local farmers bring in two and a half bags, the local price will collapse. And if they produce one and a half bags, the price will soar. Worse, if there are too many onions, farmers will grow fewer the next year, and a shortage with high prices will result.
(Excerpt) Read more at northstarwriters.com ...
It’s the age of the “Brenanke Buck.”
The Bernanke Buck is a piece of paper freely printed with negative real interest rates that rapidly loses value to any potential hedge against inflation.
SP: (Bernanke)
Ben Bernanke is a monetary slut.
He’s giving it away on street corners.
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I'm no gold bug, but this graph pretty much proves that oil is being used as a hedge against inflation, just like gold.
When Ben spews dollars into the economy, they have to go somewhere. Easily sensing inflation, the markets are driven to inflation hedges, historically gold, and now too oil. Note that the price of oil in gold terms is precisely stable.
HEY BEN: GROW A PAIR!
Recessions aren't the end of the world. We needed a short sharp one last fall, and now, because Ben is a spineless wimp, we're in for a long slow hard recession. Good going, Benny.
No.
“Food at home” is up 5.8%.
“Gasoline (all types)” is up 20.8%
Source: http://www.bls.gov/news.release/cpi.t01.htm
“Mr Valentine has set the price. Well done, William. Very well done. Come on, Randolph, we’re gonna be late. “
Thanks for posting. Reading Llewellynn King is always a treat. I’ve heard him speak twice and find his comments and insights to be stimulating.
Margin call gentlemen.
Not today.
I chuckle every time I see a government produced statistic on inflation.
So what is your data set?
Although it’s subscriber based there are some interesting free articles listed under “latest & archives”.
Also: http://www.shadowstats.com/alternate_data
I have no expertise in these matters but can understand that the feds figures are constantly adjusted to paint a rosier picture.
Yep, it’s pretty hard for the government to “hedonically” adjust the cost of raw materials.
“I’m no gold bug, but this graph pretty much proves that oil is being used as a hedge against inflation, just like gold.”
It’s more an investment vehicle right now. The price is getting distorted to the upside because speculators are all piling into the long side of the trade. It’s the latest bubble and when it blows oil is going to drop quickly, probably to the vicinity of 70 bucks. The trick is guessing when that is going to be. Bubbles tend to grow larger and longer than you think they will.
I hope you’re right and it’s soon.
Unfortunately gasoline may not follow oil down when the price breaks, at least for awhile. There’s a problem of refinery shortages.
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