Say Anything Blog

Larry Kudlow covered this very point extensively last week, both on his show and on his blog, under the heading Kudlow 101: This Ain’t the 1970’s.

Today’s increase in the price of crude is the result of increased worldwide demand, and thus is a signal of global economic growth, not inflation

You’ll note that in the 1970s, commodities and the 10-year bond rate both went up together. That was inflationary. Heck, bond rates reached around 15 percent at one point. They’ve been sliding down for several decades. Now commodities are booming, while bond rates are at rock bottom, hovering just above 4-percent.

It’s all about low tax rates worldwide. It’s all about strong, global, free market capitalism creating high demand for commodities. Production can’t keep up, that’s all that’s going on. That’s why prices are high.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Bat: As you may remember, I think the textbook(static) model of inflation is incomplete, at best.  The real impact of inflation is when the price increases without a commensurate increase in value.  Our system is so good at creating value that we really have very little inflation.  We are getting so much value out of each barrel of oil that it’s worth it to us.
Things are worth what people are willing to pay for them.

Leftie political philosophy, from a DU commenter:

It doesn’t matter if it’s true or not. RUMOR IS TRUTH. The modern laws of media hype and political warfare have a useful tenet: Repeat ANYTHING or raise false concern over ANYTHING and it is likely to be planted in the conscious/subconscious of many voters.

R108,

I couldn’t agree with you more.  My first PC was a 486/25 with 4 megs of ram, a 14” monitor, a floppy drive, and Windows 3.1 over MS-DOS.  It cost a little under $3000.

From housing to transportation to clothing to all manner of technology, our economy is littered with ever increasing value for the money we spend while our choices are expanding daily.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

It is interesting how you can take one little tidbit of positive information from a questionable source and make entire disasters and tragedies disappear.

Who is this good for? The oil companies who have already posted the highest profits on record are mentioned more than once. Is it good for the average American commuting to work while his dollar has decreased in value?

Usually, increasing value means that you get more for the same amount or, ideally, like a PC, more for less. When you pay more for the same thing with deflated dollars, it’s called inflation.

The American market is absorbing these higher costs because, they have us over a barrel and we don’t have a choice. A devalued money supply is being reapportioned. The oil companies are getting more and everyone else is getting less. Nothing is good about this.

ews48,

While I agree that NPR is a “questionable source” as you put it, the fact is that the increasing price of crude oil is not a sign of inflation, but a sign of world economic growth.

Likewise, the drop in the dollar versus other currencies such as the Euro and the Pound is not indicative of a weak US economy, but rather the largely artificial strength of those two currencies due to overly restrictive monetary policies of both the European Central Bank and the Bank of England.  I expect both central banks to change those policies within the next several months, reducing their respective interest rates and thus “weakening” both currencies relative to the dollar.

If the Fed does not reduce interest rates further in December, as I expect they will not, I’d short the Euro and buy dollars.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

When you pay more for the same thing
with deflated dollars, it’s called inflation. It’s not “the same thing”; this is what you are missing.  As we get more and more value out of a barrel of oil, its value increases. Your premise is wrong, so you draw the wrong conclusion.

The American market is absorbing these higher costs because, they have us over a barrel and we don’t have a choice. Typical flawed Marxist premise.  With you fools, it’s all about “class struggle”, which means you miss the truth, which is the cooperation between capital and labor to produce ever increasing amounts of wealth. A devalued money supply is being reapportioned. Another false premise. The oil companies are getting more and everyone else is getting less. It’s not a “fixed pie”; everybody is getting more. You’re still missing it. Nothing is good about this. That only applies to your flawed Marxist reasoning; we’re prospering.  You make the same “static analysis” mistake over and over again.

Leftie political philosophy, from a DU commenter:

It doesn’t matter if it’s true or not. RUMOR IS TRUTH. The modern laws of media hype and political warfare have a useful tenet: Repeat ANYTHING or raise false concern over ANYTHING and it is likely to be planted in the conscious/subconscious of many voters.

Bat: As I’m sure you know, the integrity of a source is only significant when the information is false or in doubt.  When it’s true, the origin of it is not relevant.  Questioning the source is just another lying leftie tactic; they use it when they have no factual counter-argument.  When you don’t like the message, attack the character of the messenger.

Leftie political philosophy, from a DU commenter:

It doesn’t matter if it’s true or not. RUMOR IS TRUTH. The modern laws of media hype and political warfare have a useful tenet: Repeat ANYTHING or raise false concern over ANYTHING and it is likely to be planted in the conscious/subconscious of many voters.

R108,

What you say about the integrity, or lack of it, of the source is true, of course.  But I couldn’t resist the temptation to tweak the liberals who regard NPR with the same reverence once reserved for FDR’s fireside chats or the Oracle of Delphi… particularly as it is subsidized by a substantial segment of unwilling taxpayers.

NPR is why I chortle every time a liberal whines about conservative talk radio or yammers on about the “Fairness Doctrine.”

“Poverty of goods is easily cured; poverty of the mind is irreparable.”