Daniel Ust
http://uweb.superlink.net/neptune/
Noted on 12-22-2001
<<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. 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. 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. 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.
<<That might have been his rhetoric, but actual Fed and international
monetary policy (often led by the Fed) was inflationary and risk
externalizing -- allowing risk takers to pass risk along. Examples of
the former include the lowering of interests from 1996 until 2000.
Examples of the latter include the repeated instance of government
funded or arranged bailouts -- in Mexico, Asia, Russia, and of Long Term
Capital Management. Such bailouts pass the buck on risk taking.>>
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.
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