How to Roll in the Modern Economy

One needs to read an article like this every once in a while. OPEC wants the Oil Prices of yestermonth, but not the Oil surplus of yesteryear. Oil prices have already broken the World economies, in that they have channeled what Investment has still continued. Mining operations have risen in Cost by my estimate of 30%, and Construction Costs by over 20%. Oil prices brought major disturbance to Household Incomes, bringing the shortage of Cash which incited the Mortgage Crisis; lighting a Match in the Powder Room. Tourism must be considered to have declined by an equal Percentage, all due to the Energy prices. All Commodities reflect Oil price increases through a 14-month infection Period; but express about 3 times the Price reduction resistence as Oil, when it comes Time to cut Prices (What goes up like a Rocket, can come down like poured Concrete). Producers of any Product exhibit continuous concentration in maintenance of Pricing for the Product at the highest level the Market will bear, while total Market Demand barely observes Pricing for the Product, until and when such Pricing affects their Production schedules.

I have always enjoyed the Word ‘dithering’, as it does encompass so much human behavior; most notably the Fed’s recent reactions. The Fed behavior first initiated a Rate Cut which was excessive, frightened the Market, and highlighted their lack of real impact on the economy in the first place. Now, when the economy is still expressing the highest inflationary pressures in a long time, the Fed talks about keeping the fed fund rate low to propel economic growth; a function it will never generate. I do not know when such knowledgeable people will recognize Investment is not a function of monetary volume, but of Investment opportunity. No one will engage major debt until they believe they can produce a Product line which will be economically competitive with the World market for the Product. Attempting to entice Production based on bad Numbers is not valuable.

Bryan Caplan may be Right on this one (which is not to say that he is wrong very often). Teaser rates only inform the Customer: What is coming has Price Shock, but We will get you addicted to the Product first. There is that rare Individual who has both opportunity, Time and Insight to play off the Teasers on each other, going back and forth between Providers, as they grant the best deal. The Problem, though, lay in it always being a spiral upward, never a retreat from inhumane Pricing. The Consumer can assume the attitude I express, and develop amplified Dread of unknown Costs, and naturally deny the extension of the Teaser. lgl