From: Technotranscendence (neptune@mars.superlink.net)
Date: Sun Dec 23 2001 - 05:10:57 MST
On Sunday, December 23, 2001 1:41 AM Spudboy100@aol.com wrote:
>> See also http://www.wtrg.com/prices.htm , which doesn't show the kind
of
>> correlation you're talking about. During much of the 1980s, crude
oil
>> prices were well above current prices, yet, by most lights, these
were
>> boom times. I also think the oil shortage of the 1970s did have an
>> economic economic, but the inflation of the same period was much more
>> significant and not driven by oil prices, but instead by the US going
>> off the gold standard and the using inflation to monetize government
>> debt. (I'm not a gold bug here. I don't the gold standard is a cure
>> all for banking ills. If a central bank remains in place, a lot of
the
>> same problems will play out, gold or no. See Kevin Dowd's
>> _Laissez-Faire Banking_ and many of his other works on banking.)
>
> I believe you have a persuasive, argument there.
Thank you. I'll continue to research the issue to make sure.
> My only contention was that
> during the 80's the general citizenry was aware of the previous 2 oil
shocks
> from OPEC, and was better prepared psychologically to deal with it.
I think there was a lot more going on than that. First, the previous
oil shocks led to changes in the whole oil market. There was a lot of
exploration and efficiency increasing moves in the 1970s. I.e., when
the price of oil goes up, it makes new exploration and inefficient wells
suddenly much more profitable. Second, there was deregulation in the
late 1970s, early 1980s, including the removal of price fixing. This
allowed the oild markets to work much more efficiently. Third, the
entire network of futures markets became much more global and faster
responding just due to deregulation there and increasing technology and
experience in these areas. (I mention "experience" because as people
become more experienced with certain types of coordination and market
instruments, they are able to apply these more quickly and with less
consternation.)
> The
> generation that spent their childhood in the 1980's rather then the
70's are
> less focused on energy as an economic issue, rather then a purely,
> environmental issue.
Some of this is, no doubt, true, but it doesn't explain the whole
picture. See above.
> I would contant this has some impact on such things as
> panic buying, and irrationality of the marketplace, discussed in our
previous
> posts. On the evening of 9-11, gasoline was selling to record crowds
for 5.00
> per gallon at some fuel stations in Ohio. Up the road it was going for
1.49 a
> gallon, and stayed at that price before slowly falling.
Notably, this was only very short term. I'm just glad some idiots in
government didn't further regulate the gasoline markets. If they had,
we would have had a situation that was isolated and short lived
determining a policy that would probably outlive all the people in the
life extension movement.:/
> Argentina is now facing such decisions now and if they follow the
Russion
> 1998 model, their economy should recover, by doing something that
> international trade advocates would demurr--buying and selling
domestic
> products and services. Because thet now do this, rather then rely on
> international trade to revive their economy, the Russians are
experiencing a
> double-digit growth spurt.
Argentina is an example of the global risk externalization problem
(thanks to the IMF -- even the _New York Times_ seems to understand
this, reading their online edition -- and the Fed) as well inflation.
Without these, I doubt Argentina's economy would be imploding. It might
not be an economic powerhouse, but it certainly wouldn't be a basket
case.
Cheers!
Daniel Ust
http://uweb.superlink.net/neptune/
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