What is Digg?89 Comments
- inactive, on 05/31/2008, -5/+49buried for misleading title..
"Dow Chemical Co , the biggest U.S. chemical manufacturer, said on Wednesday it would raise prices for all products by up to 20 percent, the latest signal that escalating energy prices were stoking inflation."
That does not mean that inflation is 20% - rpi22, on 05/31/2008, -7/+26Instead of cringing when you go to the supermarket, invest a portion of your savings in a modest portfolio of commodities as an inflation hedge and each time you see a price rise in your groceries, you will rejoice to see about equal returns on your commodities portfolios. Gold, SILVER, oil, corn, soybeans, coffee, wheat, etc.
Currently, real interest rates are negative. That means you loose money keeping your savings in a bank and actually make money just by taking out loans. With government CPI around 4% and Fed Funds rate around 2%, thats a -2% real interest rate. However, looking at real inflation using the same metrics as back when Volcker was Fed Pres, real inflation is 11% and real interest rates are -9%.
http://seekingalpha.com/article/78660-the-white-el ... - ReidFleming, on 05/31/2008, -2/+15No, no. You misunderstand. The title doesn't contain the typo you think. I bet you thought 'Inlfation' was just a misspelling. In reality, it should read:
"In L'fation"
A French term for 'The fattening of Industry Wallets'. - StaticThunder, on 05/30/2008, -3/+15Considering that plastics use oil as a feedstock, this doesn't surprise me at all. On the other hand, one can still buy soap made from animal or vegetable fat.
- mykalimba, on 05/31/2008, -6/+17Oh my gosh. The inlfation -- when will it stop?
- mj1903, on 05/31/2008, -3/+13Terrible advice.
If I place a barrel of oil in your living room the worth of it will rise or fall depending totally on supply or demand, an inexact science hence why it is called speculation. Otherwise the oil does nothing.
If I instead place some shares of a good company in your living room it will continue to throw off cash for a very long time to come and it is also fairly immune to the ravages of inflation as it can readily adjust the price of the products it sells. This is called investing.
Therefore it's simply much better to not speculate and buy into a low price index fund for an extended (read years) period of time so you receive the average growth of the companies in your country. This is especially true when the market has been depreciated due to uncertainty caused by the price of commodities.
N.B. I do not hold a long or short person on any commodities as it is immoral for me to use my wealth to cause foodstuffs to become out of reach of those with less money, particularly those in third world countries. - inactive, on 05/31/2008, -0/+7Until supply catches up...
- bsonline, on 05/31/2008, -1/+8You spend 32 billion dollars (up from 8 billion) on fuel and see if you don't raise a price or two.
- frontporsche, on 05/31/2008, -1/+8If you're going to exaggerate the title, why didn't you claim "20% inflation in 4 days"?
- mijelh, on 05/31/2008, -0/+6Dollar inflation is in fact reducing gas prices for people on Eurozone, as most oil is paid in dollars
- senkmajer, on 05/31/2008, -0/+6@jbenson
shame on you for suggesting that increasing the supply of a product will reduce the cost of same. You're just showing off the fact that you paid attention in your economics classes. You're making the anti-free marketeers feel badly.
@ ReidFleming.
No, nuclear plants are not being built in the US. They are blocked at every turn. 30 are currently being built around the world, 0 of them are in the US. France gets over 3/4 of its electricity from nuclear, Japan almost 1/3, we get less than 1/5. No new nuclear power plant has been ordered in the US in 25 years and the most recent one finally went online in 2007 after decades (yes, decades) of litigation, regulation, and good-old-fashioned-lawyerin'.
edited from an earlier post of mine:
We could use clean hydro, but it hurts the fish.
We could use wave turbines, but it messes with the currents.
We could use wind, but it hurts birds and bats.
We could use nuclear, like France, but we're scared... even though hardcore environmentalists are starting to see this as a real viable alternative... but we've regulated ourselves out of that option.
At this time, solar power is an unreliable and cost prohibitive option and currently throws of toxic chemicals in the production process.
We are trying corn, but the big secrets are that: it burns much less efficiently, it costs a lot of energy for it production, it is only affordable because it is so heavily subsidized, it has help make food prices skyrocket.
Congratulations, folks. We have officially regulated and litigated ourselves out of global competitiveness. - buckrogers1965, on 05/31/2008, -0/+6But supply and demand works in animal and vegetable fat soaps too. As more people switch, that price will go up too.
- Filter, on 05/31/2008, -1/+6It's not 20% inflation, it's just them raising their prices. There is a difference. There is inflation going on but it's not because Dow upped their prices, Dow is upping their prices because of inflation.
- LokitheComplex, on 05/31/2008, -1/+6or the supply of people goes down
- Misogyny, on 05/31/2008, -0/+5"Inlfation". I think he was trying to be funny, and failed due to people's lack of attention to detail.
- noseeme, on 05/31/2008, -0/+5More like 2 hours. That's probably about how long the board meeting where they decided to raise their prices took. :)
- krazikamikaze, on 05/31/2008, -0/+4Hedging is terrible advice? Countless companies buy the raw materials they will need (or sell what they will produce) way ahead of time on the futures market so they can lock in a price and survive price spikes.
The price of oil depends on more than supply and demand. When the dollar goes down (as it has been) commodities like oil go up to keep the same value relative to other currencies. A weaker dollar eventually leads to higher prices as companies (like Dow) have to jack up prices when faced with higher import costs. So buying any sort of commodity will hedge against a falling dollar and the resulting increase in consumer prices.
Your stock may increase in terms of dollars, but a falling dollar means it may lose value compared to things like food. Plus higher import costs may reduce the company's profits and make the stock go down.
You'll probably make more money in stocks over the long run, but commodities will help reduce your risk when entering a recession. - noseeme, on 05/31/2008, -0/+4This wasn't currency inflation, this was inflation of a few certain product's prices. If this becomes more widespread however, that does drive national currency inflation.
- skidooer, on 05/31/2008, -1/+5Animal or vegetable fat based products cut into the food supply, increasing food prices. And we know how well that's been going over.
- franklymister, on 05/31/2008, -12/+15A price rise is not the same as inflation. Inflation is something that happens to a whole economy, not one company's prices.
The headline is sensationalist and inaccurate - buried as such. - brad3378, on 05/31/2008, -1/+4"Lose" not "Loose"
- jp12380, on 05/31/2008, -4/+7Certainly not any time soon esp if McCain somehow wins.
- noseeme, on 05/31/2008, -0/+3In some markets, like household products, their biggest competitors are S.C. Johnson Wax and Colgate-Palmolive.
- rpi22, on 05/31/2008, -0/+3Inflation is a rise in general level of prices of goods and services over time.
And yes, Dow products are in everything. If they raise prices you will see it EVERYWHERE. - krazikamikaze, on 05/31/2008, -0/+3I think his point is this:
Say you take out a $1000 loan at 2% interest. Then you use that to buy commodities. Since inflation is 4%, 1 year later your commodity will be worth $1040. Subtract $20 in interest and you make a profit of $20 or 2%. - had3l, on 05/31/2008, -0/+2Well, maybe he means he is setting the money loose.
- 3ugene, on 05/31/2008, -1/+3You think the effects of inflation happen over night or something? The whole economy (besides our military sector) is currenty crumbling.
Inflation happens when the Fed prints additional dollars to come up with the shortfall to pet projects(ie. the entire Iraq War...). All prices rise, just not at once. Some quicker than others.
Recession and Depression happen when things cost more. Which causes fewer products and services getting purchased. Which leads to less jobs. Rinse and Repeat until this country wakes the hell up to the greatest scam in history, the Federal Reserve. This is not Monopoly™. - wonderchemist, on 05/31/2008, -0/+2When the republicans controlled the house, senate and presidency, they did the same thing. Your are expecting a lot if you believe the folks in Washington can fix this problem, or any problem.
- jbenson2, on 05/31/2008, -11/+13Democrats continue to refuse exploring, drilling, and nuclear plants.
20% cost increase on energy related products.
Who would have figured? - toppgun, on 05/31/2008, -4/+6stagflation. price of everything goes up but people dont earn as much. same thing happened during the oil crisis of the 70s.
- skidooer, on 05/31/2008, -0/+2Are you implying that it's immoral for me to leave a crop in my grain bin instead of selling it as soon as it's harvested?
- logicet, on 05/31/2008, -0/+2Ron Paul is still a candidate for the GOP nomination. It will take a miracle, though... That's why we need to elect true conservatives like him, give him some company in The Congress.
- kemp34, on 05/31/2008, -0/+2It's called dollar debasement.
- Ericular, on 05/31/2008, -3/+5Buried for misleading, misspelled title. Who diggs this kind of crap?
- Stevanoski, on 05/31/2008, -0/+2way to go off topic and inject politics.
- Puppyfam, on 05/31/2008, -7/+9...And you think the Democrats are any better?!? I'm sorry, but no one running for office has a clue what they're doing in the economic front.
None of the candidates has what it takes to do the right economic thing: stop trying to prevent a recession. In an economy based on a fiat currency, inflation/recession is a way of life... We inflate to keep people happy, and recession comes when people realize the inflation they've just enjoyed was a sham. If we keep putting off the inevitable recession, the upcoming correction gets more drastic (a depression).
As much as I thought Ron Paul was a nutter on some issues, he at least understood economics. :( - inactive, on 05/31/2008, -3/+5Thats not inflation.
End of story. - Almadiel, on 05/31/2008, -0/+2Yeah that has nothing to do with inflation. Inflation has to do with the value of currency, not of some set of products. Inaccurate.
- inactive, on 05/31/2008, -1/+3Epic spelling fail.
- ReidFleming, on 05/31/2008, -0/+2@senkmajer, I may have jumped the gun a little but it was because one of the Nuclear Engineers that I play golf with just got hired for new plant here (or maybe it was just a new reactor) and then will go to Texas to build another one (perhaps the South Texas Nuclear Generating Station? http://en.wikipedia.org/wiki/South_Texas_Project ).
- cosmicv, on 05/31/2008, -1/+3In case you haven't figured it out yet, globalization is happening and theres nothing you can do to stop it (or should you). i.e Money saved from buying a cheaper product from overseas may go into local retailers now, where it didn't before. The oversea retailer may have stock or funds issued that your 401k account is invested in. Its all intertwined now...quick thinking about it being us vs them.
Yes, theres some issues still to be worked out, but they will automatically get ironed out as countries evolve. India alone has cut its poverty rates in half in the last decade just because of the IT industry and now Africa is experiencing faster growth in most of its economies. Its not the end of the world. - Stevanoski, on 05/31/2008, -1/+2Ok, 1. If you want more of something you tax it less and give it breaks where ever possible. Is this not the theory behind the flatearthers and wind/solar energy.
2. If it works for those industries, why would you think you can produce more oil if you do the opposite to the petroleum industry?
3. Is it just not the fact that you have been brainwashed into hating Oil Companies? - G3N3SIS, on 05/31/2008, -0/+1He wasn't being serious, look how the poster spelled 'inflation' :)
- rpi22, on 05/31/2008, -0/+1Commodities markets are driven by greed and fear. My point is that inflation will invariably lead to more inflation as speculators see profit opportunities by stocking on on all sorts of commodities. They will soon realize that they can buy dish detergent now and sell it later, below market price, for quite a hefty profit. That's known as selling into strength.
- rpi22, on 05/31/2008, -0/+1Not to mention, the "contrarians," aka idiot dolts, have been bad mouthing gold and silver for the entirety of this commodities bull market, a sure fire way to miss out on 200-300% returns over the past few years, way better than the average 9% returns on an IRA. But hey, why shouldn't we miss out on free money!?!?
Sure, you'd have to be on 'the fringe' to read the piss poor indicators for the dollar and predict gold would shoot from $250 to $1000, but I'm laughing all the way to the bank. Oh, and that's a shoe shine boy indicator that we're in a long term uptrend, one that's been going on for years.
People that sell stocks have NO INCENTIVE to tell their clients to invest in gold and silver, no matter how good the fundamental indicators are. Stock brokers make their bread and butter off of stock commissions, so of course they are always bullish on the stock market! - krazikamikaze, on 05/31/2008, -1/+2http://biz.yahoo.com/ap/080531/economy.html?.v=1
Economists were expecting our GDP growth to dip into negative territory, but this week we learned that GDP growth is actually accelerating as people spend their stimulus checks. Low interest rates will hopefully encourage the GDP growth to stick. It may only be temporary, but there's promise.
Inflation is definitely a problem. The Iraq war increased our debt causing the dollar to drop and reduced oil supply. Throw in some bad food harvests plus increasing demand for oil and food as China and India modernize and prices are increasing all over the place.
You can stop with the "Fed is the greatest scam in history" BS. The fed was key to insuring our GDP didn't dip too much into a guaranteed recession before the rebate checks kicked in. Inflation is definitely increasing as a result, but there's still time to allow the GDP to grow before increasing interest rates again to curb inflation. - crapmatic, on 05/31/2008, -0/+1Yeah, that stock in the living room will continue to throw off cash... mostly pennies that get lost in the sofa cushions.
- craiginct, on 05/31/2008, -0/+1You have to cover up your fuzzy accounting habits somehow.
- gonzap1, on 05/31/2008, -0/+1nice
- senkmajer, on 06/01/2008, -0/+1I don't disagree even one little bit. The Republicans got into office on the promise of conservative fiscal principals and promptly went into the "vote purchasing" business. The reason they have gotten their clocks cleaned in the last 8 years is because they stopped behaving like conservatives.
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