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.

Crude Oil vs. Fuel Prices: Wars and Rumors of Wars

The industry is not sustainable at $50, $60 or even $70 a barrel. Prices will return to approx. $150 a barrel by 2010 and may then surpass this.

If we think the recession is tough now with $50 a bbl oil imagine when what prices and unemployment will do at $150 a bbl in one to two years.

A large part of the coming supply shortage can be blamed on government intervention.

Ten Non-Predictions for 2009, Part I

I agree with your Non-predictions however I do expect the government debt bubble to pop in 2009. If not it is only a matter of time.

It's good to see there are some non-Keynesians out there however none of us are policy makers. The witch doctors who served the bubble brew are still in charge so hold on for another year of unintended consequences.

Investment Ideas for an Inflationary Environment

John L.

Based on your recommendations sounds like you are preparing for increases in the general price level (remember, inlfation is an increase in the money supply which causes increases in prices in general). If rising prices are your forecast I agree. Eventually, some of the new money being created will find its way into circulation "buying things." The Fed's and the Treasury's goal is to reinflate the economy so we should all be prepared for a depreciating dollar in the near future.

RE: AlexR's comment:

Alex, of course the Fed smells inflation as they create it by printing money. That is the definition of inflation an increase in the money supply "creating money out of thin air." Inflation is ALWAYS a monetary phenomenon. How can the legitimately Fed fight inflation when they create it?