austrian63

Rising Rates, Oil Prices Could Trample Green Shoots

Oil will most likely pass the $100/bbl point before year-end. Mad-Hedge Fund Traised good points above re: the world getting smaller. It will take time for economies to adjust. In the interim, expect much higher prices for food, clothing, raw materials, along with energy and interest rates (cost of money). In essence, the scarcity of resources will become apparent except for labor.

Much higher production costs and currency devaluation will depress the dmand for labor in the U.S. There can be no gain without pain. We cannot have booms that seriously misallocate resources fueled by massive money supply growth without the pain of re-adjustment. The more our government does to prevent the short-term pain of recession the more likely we will have long-term pain. This will become more apparent as energy prices begin spiking again late this year and in 2010.

A Strong U.S. Dollar Isn't in Anyone's Best Interest

Right on. We are actually consuming capital now. As we continue this our ability to produce will fall more and more over time as we consume more and more of our capital base with zero % interest rates and continued borrowing. Debt is subject to the same law of diminishing marginal utility that money is.


On Apr 03 02:48 PM clam75 wrote:

> Mr. Harless is supportive of statist intervention in the economy,
> as this article demonstrates. Moreover, he wrote a book entitled
> _The Indebted Society_ that had a forward from John Kenneth Galbraith.
> A Publisher's Weekly review of his book indicates that he calls for
> "tax-sheltered personal savings, legal job protection for older workers,
> extension of unemployment benefits and drastically slashing the federal
> deficit by further taxing the top fifth of U.S. households." So,
> from his point of view, a weak dollar and interventionist state would
> be positive.
>
> As an Austrian School follower, I believe the opposite is true: a
> strong currency reflects people's desire to purchase things produced
> by the nation where that currency is in use; they need that particular
> currency because they need to pay for the items they purchase. That
> brings to light a key problem for America: our production capacity
> has been declining for years because of interventionist government
> and unsound money. Until we can re-establish production, the dollar
> is going to continue declining in value.

A Strong U.S. Dollar Isn't in Anyone's Best Interest

12345 is correct.

From 2001 through 2007 the U.S. $ depreciated against the Euro and gold not to mention oil and other commodities. How could this support Harless' claim of a strong U.S. $ during this period?

Not to fear, the dollar will begin depreciating heavily against real goods by the end of 2009 or in 2010. The current monetary inflation - inflation is not rising prices but an increase in the supply of money, which then leads to rising prices - will guarantee this. Money is like all other goods and subject to the law of diminishing marginal utility. Each additional unit, created out of thin air, reduces the value of all previous units. This effect will be even more pronounced if production, the quantity of goods and services available for purchase in the economy, stays flat or decreases over time. Then you will have even more monetary units chasing a smaller inventory of goods and services.


Mr. Harless will get his wish as the U.S. $ will weaken over the next several years more than we can imagine.


On Apr 03 01:48 PM 12345 wrote:

> “A strong dollar is in our national interest,” still echoes through
> the air in the District of Columbia. Never mind that the strong dollar
> was largely responsible for the housing boom that led to the current
> bust."
>
>
> WHAT! The Dollar was falling fast during the Boom, cheap money and
> a weak Dollar is what drove housing prices so high. How can a strong
> Dollar drive prices up?