Comments on: The Ghost of ’70s Inflation and the Ghost of ’30s Deflation Will Scare the Living Daylights Out of Us

By: tom

tom — Mon, 30 Jun 2008 06:20:49 +0000

All these arguments still address oil prices as been predominantly a supply-demand influence. When the price per barrel falls in thenot-too-distant future, the derivatives market will play a substantial role in that engineering process with S-D relationships more or less the same.

By: karl

karl — Mon, 30 Jun 2008 02:24:04 +0000

I heard that the north pole is going to disappear soon, which (they said) will allow oil and gas exploration where the polar cap once was. Apparently there are a lot of reserves up there which have remained inaccessible because of the ice. Of course, it depends on how correct scientists are regarding the ice depletion, and how much and how easy the oil is to harvest as to whether this will have any impact on the oil problem.

There looks to be plenty of oil lying around - they're finding new oil all the time, its just that it is lying in harder to reach places.

As was noted on this site in the past, the price of "easy" oil may reach the point where exploration and harvesting of this harder to reach oil will become viable.

By: Merv Nash

Merv Nash — Mon, 30 Jun 2008 01:19:19 +0000

Dear Charles, The problem is building the infrastructure to bring the oil on line, Did you watch the TV prog last week showing the Tar Sands site. Massive equipment working around the clock. Lady truck drivers earning 100kpa. The whole town awash in money. The pristine forest wilderness devastated. Tree huggers broken hearted. But production like never before and its output not even making a dent in the shortage of world demand.
I reckon that the producers have hiked the price to pay for setting up the production facilities so they don't have to borrow any money and beholding to the banks. Smart move, hey!

By: Charles Norville

Charles Norville — Sun, 29 Jun 2008 14:18:30 +0000

I'm wondering what would happen if the US started to exploit its vast reserves of shale oil. Can anyone including the author Bill Bonner explain my possible uninformed inquiry? Am I missing something, is it just to difficult to switch from crude oil production revenues to shale oil - isn't shale oil technology highly lucrative at 2000 prices what are we waiting for? Hmm what, high unemployment labour to dig the stuff out with pick and shovel?

By: Smack MacDougal

Smack MacDougal — Fri, 27 Jun 2008 18:07:12 +0000

Inflation and Deflation are processes, deliberately undertaken by Central Bankers.

Just because each word has a "..flation" part does not mean these words label opposite concepts.

Inflation happens when Central Banks cut interest rates in hopes of increasing the Efficiency of Money (ratio of Money in Circulation to New Commercial Credit).

Deflation happens when Central Banks raise interest rates in hopes of killing excess, speculative credit. Also, Central Banks change banking rules to restrict credit formation to lauch deflation.

Effects of Inflation when Inflation does not increase the Efficiency of Money include: Currency debasement, Rapid price rises in Commodities with rapid price falls in illiquid assets or other things of wealth.

Effects of Deflation include: Falling output in manufacturing as credit cycles get shortened. Falling employment as manufacturers cut output.

By: Merv Nash

Merv Nash — Fri, 27 Jun 2008 13:23:49 +0000

MISSED OPPORTUNITIES OF MAGNITUDE
It's amazing how much clearer rear vision is than foresight.
If the American nation had only foreseen the end of oil while there was plenty of it and everybody thought America was the greatest country on earth and had it encouraged its inventors and genius to develop another source of power in the meantime it would still be loved and admired around the world and would never have needed or even contemplated going to war and would never have been the target of terrorists.

By: Ross

Ross — Fri, 27 Jun 2008 09:12:19 +0000

For Australia, if the terms of trade were to change, it is a replay of the 1890's. Now we have an increasingly desperate treasury saying they will go past the COMECON era barter traded RMBS (Glen prays each night "please God never let our RMBS be rationally risk rated") to now be proposing to swap bonds issued while we are in surplus for swapping with Australian corporate debt (at least there was deficit when they issued war bonds). That is the supposed backstop funding for use if the threat of foreign local bank branches not recycling the hot money passed through in their excessive short term local funding (source BIS). And the treasury's chief idiot is going wombat watching for 5 weeks....