Posted on 01/06/2015 12:08:44 PM PST by Kaslin
You mean like all those people that hold off buying electronics and computers because they will be cheaper next year?
>> It should be clear to anyone that consumers individually, and an economy collectively, benefit from lower energy prices.
Plus, low energy prices really tweak the enviroweenies. That’s fun to watch.
Good article but I wish he had included in his analysis inflation/deflation vis a vis cash/debt. I think that’s an important part of the calculus.
Then why not include it yourself?
The strong dollar will make foreign goods cheaper for U.S. but also makes U.S. good more expensive for others. Many U.S. companies with heavy reliance on foreign sales will find 2015 a difficult year.
Thanks for posting. I had not read that take before.
“deflation” = rising purchasing power of the dollar. How is that bad?
It’s not bad, but some people with degrees in economics think it’s bad.
It’s good because it retains and possibly increases the value of savings and property.
I see a potential problem with oil prices going down... high enough oil prices would have driven up the cost of transporting goods from overseas and reduced some of the outsourcing... leading to jobs coming back here.
I wonder if lower transportation costs will lead to more outsourcing and more imports?
>> Then why not include it yourself?
Good question with a simple answer!
I’m not as smart as Schiff (and others of his stature). I’d like to see what THEY have to say.
Well, I am enjoying the lower gas prices, but they are still higher than they were when that arrogant pos occupant was inaugurated for his first term
In theory you can hold off and wait for that future price drop, but in practice you eventually dive in and get that computer if you’re going to do anything useful other than wait.
The drop in oil price seems to be dragging down the stock market too. I guess the Saudis will have less money to invest?
Exactly, which is why saying that people will "forever wait until it's cheaper and kill the economy" is nonsense.
The gooberment is salivating over the low gas prices. They can’t wait to add new gasoline taxes while we are still use to $4 a gallon.
The oil speculators should have seen the warning signs when China and Russia signed that US$400 billion natural gas (and eventually petroleum) development deal that may encompass new gas and oil fields in eastern Siberia. As such, speculators are dumping oil like crazy because of the fear that OPEC may within the next 20-25 years lose most of its sales to its two biggest customers, the USA and China, which will create a gigantic glut of oil on the open worldwide market. And it doesn’t help that increasingly strict fuel economy mandates for motor vehicles worldwide could result in a levelling off and possible decline in sales of gasoline (petrol) and diesel fuel.
I think he mis-states the case. An overall deflation slows the economy primarily because wages are notoriously sticky on the downside. It’s far too difficult to get the existing labor force to accept individual pay cuts, so instead businesses facing lower sales (due to deflation) cut workers instead of wages.
This leaves the ones still working better off because they still have pre-deflation wages to buy deflated goods, but the layoffs drive employment down aggravating, or prolonging, what is already usually a monetary-induced recession.
The last time we experienced this we had the Great Depression. We really don’t want to go there again.
A drop in oil prices is good because it frees up personal resources, but the spending of those resources on other goods will drive up the prices of those goods, offsetting the effect on overall prices. It’s not deflation, but a repricing of goods relative to one another.
A family member consulted me on buying a computer a few years ago. I said that the computer you want right now will be half price next year, and she said she’d wait until next year, then.
OK, you’ll never buy one!
They haven’t dropped below 1.86 where you are?
Just hit 1.84 here.
Yes and no. Your liquid savings will increase in purchasing power, but your property will lose value, able to command progressively fewer of those dollars. Then the danger is that everyone will simultaneously move their assets to cash, further depressing the prices of investments. Look at Russia a few weeks ago when the currency was in free fall and people were rushing out to buy things ahead of price rises. Now imagine the opposite, with everyone trying to sell everything.
Leftists are bemoaning low prices for the same reason that they supported anything that raised prices -
they want “the masses” to use less of “their” resources.
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