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Old 22-04-2008, 04:51   #31
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Originally Posted by ssullivan View Post
David, I tend to disagree. I saw big investment $$ being thrown at housing while that rode up. Then, I saw big $$ being thrown at commodities while that is on its way up. In both cases, people made (are making) killings and specultating up the prices of things all people in our society need to survive - (food, shelter and energy).

I see the same people profiting from these rises in both cases.

I'm talking about the inflation of the price of houses, like the inflation of the price of oil, wheat, corn, fuel, etc...

It's speculation (a lot of it from hedge funds) that drives this.
I suspect I am going to regret this as this is a really complex topic surrounded by emotion so I will be as brief as possible Ö

Are commodities prices driven by demand? Yes, but like any tradable security, once speculators see there is money to be made they hop in the market and BOOM! Explosive rise. And it looks like everybody is making money. And then comes the average investor armed with too little cash and way too little information. But itís like showing to the party where everybody is just getting ready to leave. They may hang on a few moments to be polite and then they leave.

Now, letís add the next layer of complexity. Many commodities are priced exclusively in dollars (every heard of the petro-dollar?). You can buy them in Euros but the base price in dollars because of the historic stability.


Since 2002 we have devaluing our dollar. The dollar drops, the cost of the product rises because the supply of the commodity is stable to relative oversupply of dollars. Supply and demand. Here are now Fed Chairman Ben Bernakeís comments (also from 2002 as you may notice)
What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.[1]
The original rationale was avoiding the specter of deflation as youíll note from the speech. With the war, itís also an excellent way to pay for it in cheaper dollars. This confounded by faith in the dollar being in part undermined by a lack of faith in US policy. How much of an impact that is difficult to say and there is no reason to believe it to be a static factor either.

So what to do? I canít say. But it is safe to say no matter what you will need good information because you are very unlikely to outdo the experts who live this stuff.


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Old 22-04-2008, 05:34   #32
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Wheels, Maren, etc... Yup... that's what I said.
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Old 22-04-2008, 06:19   #33
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Wheels, Maren, etc... Yup... that's what I said.
Wasn't arguin'. Just addin' to.

One thing I forgot add is that booms (or bubbles) are becoming increasingly more frequent and I expect this to continue as markets become more interdependent.

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Old 22-04-2008, 07:23   #34
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Originally Posted by Chuck Baier View Post
To make this happen, and I believe it can
happen, it will take a concerted effort by all of us to finally take
charge of some of the circumstances that affect our lives. Here is how
I propose that you bring fuel prices back in line on a permanent basis.
If you target one oil company at a time, let's say we choose Shell Oil
for a starter, and beginning May 1st we stop buying ANY Shell products
until they bring fuel prices down to $1.50 per gallon.
This simply can't happen. The market forces are way stronger than your concerted effort could ever be.

Assuming you could even get the ball rolling, as soon as Shell dropped its price a single penny, consumers would flock to shell.

You want cheaper fuel? Drill for oil. Build refineries. Not in your backyard, you say? Then let me introduce you to Mr. $5.00 per gallon.
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Old 22-04-2008, 08:07   #35
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This simply can't happen. The market forces are way stronger than your concerted effort could ever be.

Assuming you could even get the ball rolling, as soon as Shell dropped its price a single penny, consumers would flock to shell.

You want cheaper fuel? Drill for oil. Build refineries. Not in your backyard, you say? Then let me introduce you to Mr. $5.00 per gallon.

And if you sailed too far you would fall off the edge of the world, and machines can't fly, and no way will man ever walk on the moon. Better to try something then to sit around and say it can't be done. It was done in Alabama when the minorities boycotted the local bus company and the face of civil rights changed forever and I bet some of the folks like you said "oh it won't make any difference". Surprise, surprise.
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Old 22-04-2008, 08:14   #36
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A very good percentage of what the US pays for oil is due to the drop in value of the dollar. the price of oil is not actually about oil, its about foriegn policy, the thinking behind the devaluaton of the dollar was that the American consumer would keep to their habits and the internal US economy would be fine, the crash in the housing market was not part of this equation and caught the Government unawares ( they can be soo blind!) Also a lot of other currencies are tied to the dollar, it can be sometimes helpful to the US to have other countries economies in a state of flux, the US economy is large enough to weather most storms, the price that is paid is ALWAYS paid by the working citizen and not by the wealthy
just my 0.02
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Old 22-04-2008, 08:15   #37
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I gave you a suggestion of something that would work. While it is better to try something than nothing, it is even better to try something that has been well reasoned.
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Old 22-04-2008, 08:25   #38
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A very good percentage of what the US pays for oil is due to the drop in value of the dollar. the price of oil is not actually about oil, its about foriegn policy, the thinking behind the devaluaton of the dollar was that the American consumer would keep to their habits and the internal US economy would be fine, the crash in the housing market was not part of this equation and caught the Government unawares ( they can be soo blind!) Also a lot of other currencies are tied to the dollar, it can be sometimes helpful to the US to have other countries economies in a state of flux, the US economy is large enough to weather most storms, the price that is paid is ALWAYS paid by the working citizen and not by the wealthy
just my 0.02
Respectfully, it is the devalued dollar that has helped to offset the damage done by the housing crash. While a devalued dollar might make it tougher to run our generators on the hook, it is a BOON to US manufacturing. That boon has almost completely offset the housing slowdown. And, tourism in the US is on the rise. And foreign investment in the US is on the rise.

Who is hurt most by the devalued dollar? China, Walmart, and the other importers.

Did you know that every day Central Bank of Japan does everything it can to manipulate the value of its currency to be as low as possible? Why might that be?
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Old 22-04-2008, 08:30   #39
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Well, my habits have sure changed. No more coming in on Sunday to do the books. I do them on my regular trip to the shop. No more running to the store for a single item.

Since I am getting ready to leave for the Bahamas my plan is to wear out the spinnaker, and take advantage of every bit of breeze instead of running the iron.. Change the blades to a more effecient pitch on the wind generator, and get those solar panels back on the boat.

Seems like the price of food alone has gone up 40% in the last 6 months. I don't see the fuel going back to $1.50, but I do think we could at least stablize the price. It's not helping with the doller in the toilet, and the housing mess. I really think we in America have had it too easy for too long. We are spoiled, and it is time to tighten the belt, time to quit farming out everything to other countries. We need a paper revolution to send the message to those who call themselves our leaders.

Excuse me while I step down from my soapbox......
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Old 22-04-2008, 10:33   #40
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Respectfully, it is the devalued dollar that has helped to offset the damage done by the housing crash. While a devalued dollar might make it tougher to run our generators on the hook, it is a BOON to US manufacturing. That boon has almost completely offset the housing slowdown. And, tourism in the US is on the rise. And foreign investment in the US is on the rise.

Who is hurt most by the devalued dollar? China, Walmart, and the other importers.

Did you know that every day Central Bank of Japan does everything it can to manipulate the value of its currency to be as low as possible? Why might that be?
It makes makes Japanese products less expensive for their overseas customers. Was this meant to be a rhetorical question?

Japan is a country with almost no natural resources other than its people. If its people cannot take raw materials and convert them into something of use for export, then Japan has no economy and the Japanese leaders know this. A lower Yen makes their goods and services less expensive for their overseas customers.

Your point about a devalued USD makes perfect sense concerning improving our manufacturing base. It may even help revive our yacht manufacturing business if we can manage to compete against cheap foreign labor such is in South Africa or China (unlikely)
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Old 22-04-2008, 10:33   #41
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[quote=jzk;154943]. And foreign investment in the US is on the rise.

Who is hurt most by the devalued dollar? China, Walmart, and the other importers.

There are obviously two schools of thought on this. Obivously the monetary policy of this country is set up to keep healthy the stock market and international trade, this means that the ordinary person suffers and has to get used to a lower standard of living
As to the investment in the US this from the financial chronicle in California
"foreign investors have fled the U.S. market in record setting proportions, dumping U.S securities to the tune of to the tune of $163 billion. $69.3 billion in long-term securities, such as notes, bonds, and equities were sold off, an all time high. $29.7 billion in Treasury bonds were unloaded by foreign central banks in August 2007, compared to just $6.9 billion in July. $40.6 billion in U.S. equities were sold by foreign investors in August as well, due to recent Federal Reserve rate cuts that have the potential to drive the dollar lower at a sharply accelerated rate, spurring investors to move capital out of the country to avoid losses."
Not being an economist I am, like most people, hazy on the specifics but it does Irk me to see people profiting on a policy that causes hurt to the average citizen.
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Old 22-04-2008, 10:41   #42
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$1.50 per gallon TRY $10.90 PER GALLON

WHAT ARE THE HELL ARE YOU MOANING ABOUT AT $1.50 PER GALLON, TODAY I FILLED UP MY CAR WITH DIESEL AND THE PUMP PRICE IS £1.21 PER LITRE - NOTE STERLING £1.21 NOT USD PER LITRE NOT A GALLON.
WELCOME TO RIP OFF BRITAIN
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Old 22-04-2008, 11:01   #43
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Are the British people powerless to force their politicians to reduce their enormous taxes on fuel? Where does all this tax money go?

Ireney, I just paid $4.68/gallon for Diesel at the fuel dock. $1.50/gallon is not a realistic price for Diesel anywhere in the States. At the gas pumps for cars, it is roughly around $4/gallon. The federal tax on diesel is is 53.6 cents per gallon and the state taxes average around 29.2 cents per gallon.
Fuel tax - Wikipedia, the free encyclopedia




Need I say more as to why the price of oil has gone up? Unless one disbelieves in the laws of supply and demand. I wish I could have found a chart for 05 through 08....I would imagine the increased demand from China is even higher than stated here. The chart shows a three fold increase in retail oil consumption within China from 1997 through 2004.
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Old 22-04-2008, 12:06   #44
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Need I say more as to why the price of oil has gone up? Unless one disbelieves in the laws of supply and demand.
Yeah, I think you need to say more. As others have pointed out, part of the run up in prices is the declining value of the USD - the currency in which the international price is set. Just as important is that the supply side for oil is artificially controlled by a cartel called OPEC. Its members don't always agree or live up to their agreements, but when they do, they can effectively control the price.

Also, don't you find it interesting that the U.S. has spent 5 years doing so little to protect and exploit Iraqi oil reserves (3rd largest proven reserves in the world)? How come Iraqi oil production is barely more than pre war U.N. sanctioned levels?
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Old 22-04-2008, 12:36   #45
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Did you know that every day Central Bank of Japan does everything it can to manipulate the value of its currency to be as low as possible? Why might that be?[/FONT]
I think it is to personally screw with me. Every year I think the Japanese economy has bottomed and shows signs of turnaround and I invest more in their market. Every year the Central Bank catches wind of my investment and deflates. One of these years, I will teach them...
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