[heroineworshipper]

CNN wrote:
> with oil prices now retreating below $90 a barrel after
> flirting with $100, the market - and Fed - probably has
> even less reason to worry about inflation

Bet U didn't expect $90 oil to be deflationary, but with a ponderous flood of newly printed money keeping housing afloat, now it is.

[Micki]

The central banks have successfully sold the concept that high prices are inflationary so that no blame would be cast on the money printers.

Oil price isn't inflationary or deflationary, it is however to some degree the symptom of inflation/deflation.

When the total money supply increases this will show up in higer prices of goods as more money compete to buy stuff and the other way around for contracting money supply.

If the amount of money in circulation doesn't change and there is an increase in oil price, this will be offset by less spending elsewhere and therefore isn't inflationary. (Same thing of course applies to items that increase in cost as a result of higer oil price.)

Lowering of oil price when amount of money in circulation remains constant, would result either in increased savings or increased spending on other items (or just more purchase of oil/pretrol).

Money being saved instead of spent would of course show up as negative in the consumer discretionary sector, but the banks/financial institutions would use that money for investments that most likely generate the spending elsewhere.

[patrick_b]

$this->bbcode_second_pass_quote('heroineworshipper', 'C')NN wrote:
> with oil prices now retreating below $90 a barrel after
> flirting with $100, the market - and Fed - probably has
> even less reason to worry about inflation

Bet U didn't expect $90 oil to be deflationary, but with a ponderous flood of newly printed money keeping housing afloat, now it is.

[Kingcoal]

I've come to the conclusion that the world economy has a collective fear of the unknown. The Chinese don't want to contemplate what will happen if they slip below a 7% annual growth rate. To a lesser degree, the rest of the worlds exporters are in the same boat. It's fear of the unknown that keeps the debt monetization going and if it keeps going like it is, we will have deflation. Why? Because the US right now has a credit crunch internally. People are struggling under the mountain of huge monthly mortgage payments. The housing industry, a huge source of jobs in the modern US economy, is faltering. Commodities, such as oil, are becoming more expensive. The obvious result is that American households will keep on tightening and demand reduction will be the result. Even with a severely depreciated currency, Americans are finding it difficult to buy things at cut-rate prices. It's getting to the point that it doesn't matter how cheap it is, if your really don't need it to survive, which is the case with most imported manufactured products, then you don't buy it and save your money for your debt payments.

I think we are heading for a worldwide recession which will include deflation of all prices. We still aren't past peak oil production, obviously supply still meets demand. Once we're on that down slope, however...

[Micki]

$this->bbcode_second_pass_quote('', 'I')'ve come to the conclusion that the world economy has a collective fear of the unknown. The Chinese don't want to contemplate what will happen if they slip below a 7% annual growth rate. To a lesser degree, the rest of the worlds exporters are in the same boat. It's fear of the unknown that keeps the debt monetization going and if it keeps going like it is, we will have deflation. Why? Because the US right now has a credit crunch internally. People are struggling under the mountain of huge monthly mortgage payments. The housing industry, a huge source of jobs in the modern US economy, is faltering. Commodities, such as oil, are becoming more expensive.

[Kingcoal]

Demand has gone up and so has supply. Believe me, I lived through the oil embargos of the 70's and 80's, I can still go to any gas station at any time and buy gas. You couldn't do that back then. Gas stations were running out of gas, that's what I'm talking about. While I might concead that we probably have peaked on higher grades of crude, I don't think that we've peaked yet overall.

When talking about inflation/deflation, I'm only concidering the US. China is going full steam, manufacturing like crazy and building more factories. If demand goes down, they will start practically giving the crap away - that's the only model they know.

[Temperedoil]

$this->bbcode_second_pass_quote('Kingcoal', ' ')We still aren't past peak oil production, obviously supply still meets demand. Once we're on that down slope, however...

[Kingcoal]

I agree that we are probably AT peak, but not POST peak. The theory holds that we can remain on the plateau for several years. However, once we reach the down slope, it will become very apparent. The argument will be over.

[Doly]

$this->bbcode_second_pass_quote('Kingcoal', 'T')he theory holds that we can remain on the plateau for several years. However, once we reach the down slope, it will become very apparent.

[Kingcoal]

$this->bbcode_second_pass_quote('Doly', '')$this->bbcode_second_pass_quote('Kingcoal', 'T')he theory holds that we can remain on the plateau for several years. However, once we reach the down slope, it will become very apparent.

[RedStateGreen]

I think the price of gasoline is being kept artificially low. Once whatever function this is fulfilling has passed, I expect prices to rise once again.

[joewp]

$this->bbcode_second_pass_quote('RedStateGreen', 'I') think the price of gasoline is being kept artificially low. Once whatever function this is fulfilling has passed, I expect prices to rise once again.

[MrBill]

$this->bbcode_second_pass_quote('heroineworshipper', 'C')NN wrote:
> with oil prices now retreating below $90 a barrel after
> flirting with $100, the market - and Fed - probably has
> even less reason to worry about inflation

Bet U didn't expect $90 oil to be deflationary, but with a ponderous flood of newly printed money keeping housing afloat, now it is.