ECONOMICS 001

[Frankn]

What causes inflation and what ends it?
Background:The spending of people is based on alloted amounts of their pay that stretch from necessities to wants. Necessities start with food and the wants include things like lotto tickets entertainment,etc. Inflation starts when a greedy supplier of a necessity decides to increase his profit margin. In this case It was BIG OIL. They have bin walking up the price of oil and thus gas and diesel. This sets off a domino effect as all other industries pass on this cost. The price of food has risen because of tractor fuel cost as well as transportation cost. This means people are cutting back on their wants spending to cover the added cost. How will it end? It is happening now. the manufacturers of wants are suffering a loss of sales so they are lowering their prices to attract new sales. I have noticed that camera equipment prices are dropping. In the past month I have noticed $20 & $40 drops in prices of cameras and lighting equipment. People will cut back on necessities to grab the discounted products. At this point the price of oil will start to drop. Frank

 

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[Smee]

What causes inflation and what ends it?
Background:The spending of people is based on alloted amounts of their pay that stretch from necessities to wants. Necessities start with food and the wants include things like lotto tickets entertainment,etc. Inflation starts when a greedy supplier of a necessity decides to increase his profit margin. In this case It was BIG OIL. They have bin walking up the price of oil and thus gas and diesel. This sets off a domino effect as all other industries pass on this cost. The price of food has risen because of tractor fuel cost as well as transportation cost. This means people are cutting back on their wants spending to cover the added cost. How will it end? It is happening now. the manufacturers of wants are suffering a loss of sales so they are lowering their prices to attract new sales. I have noticed that camera equipment prices are dropping. In the past month I have noticed $20 & $40 drops in prices of cameras and lighting equipment. People will cut back on necessities to grab the discounted products. At this point the price of oil will start to drop. Frank

Missed one very important point. It isn't the oil companies who raise the price, it is the traders. This involves persons who speculate on the price of oil by the purchase of "oil futures" etc. They can run the price up just like they did last time. It is the markets.

Now, "speculators" have been responsible for every single depression we have had in this country. They try to "corner the market" and the little man be damned.

Like the Wizard of Oz said: "Pay no attention to the man behind the curtain."

As long as they can deceive you, then just as with the Mafia in the 60's, they can operate with impunity.

Who are these "Speculators"? You'd be surprised how many of them are the same liberal minded political type people who accuse big oil of being greedy. Think about it.

 

[Dave44]

I am near smee on this one. The thing is,, all the things you consume are going up, not according to the core index, which doesn't measure inflationary daily use items. We are all being deceived, the oil prices going up fit into another design, look into it.
The real point is, Americans must be punished for driving too much. The only way to do that is with high gas prices or tax fuel to the point that we accept mass transit and we all move to concentrated areas so that we may be contained better. There is no other reason for ignoring the needs of energy in the country that use to be the most free in the world.
We have enough oil in this country and our holdings that we could send prices to 10$/barrel. much less natural gas and coal.
I am all for alternative fuel when it is no longer imaginary. Let the entrepreneur figure it out and get out of the way. But how would big government survive if it did not dictate how these fuels were taxed at the start?

 

[Frankn]

The way I look at it is as an American I have the right to choose how much I drive. There is no mass transit where I live. I lived in the city once, but never again. It is not to my liking to have neighbors that close. The government has no right to tell me how to live my life. That's where the life liberty and persuit of happiness comes in.
Take a look around. The price of consumer electronics is DROPING. This is attracting money from necessities. Other prices will follow. Frank

 

[bigscoop]

Whatever the market will bear, that's the realistic limit, and this simple truth applies to most everything. We complain about high prices but we continue to buy with no noticable decline in demand. Consumers could cripple everything if they would just quit buying but that will never happen because many of these personal comforts and conveniences are now an engrained part of our daily culture. Nearly everything is consumer based so ultimately the consumer controls most of the demand and the pricing. If you were selling what-nots for $2 and discovered you could sell just as many for $5 what would you do? On the other hand, if all of you customers were offering you a "take-it-or-leave-it $1.75 offer" you'd probably accept the smaller profit margin in favor of staying in business. Consumer dollars control nearly all the pricing in this country.

 

[olroy70]

Nobama wants gas prices to be the same as Europe..........

everything here depends on gas prices, so he picked the right formula to ruin us, when he stopped most of the drilling permits........

And, the way he is campaigning, he has a good chance of another term. If that happens, we will be a third world country!

moving to the right is just a ploy to get re-elected, and then, he will have opened his way to ruin us completely!!!

 

[Frankn]

To a socialist, third world sounds great. Everyone is on the same level,that is the ground floor.

 

[Frankn]

Bigscoop, There are exceptions to supply and demand. You can cut back on food, but you have to eat.
The same applies to oil. When you have a monopoly controlling the supply, you have to pay the price. Most people can't get to work without burning fuel. That is car or mass transit. and since the Pres won't let us drill here he is handing us over to the monopoly. Frank

 

[olroy70]

Actually, under socialism, there are two classes....


the haves, like nobama, who can take trips every weekend:

and, the have nots, who are to broke and hungry to go anywhere!!!!!!!!

 

[spartacus53]

I have noticed that camera equipment prices are dropping. In the past month I have noticed $20 & $40 drops in prices of cameras and lighting equipment. People will cut back on necessities to grab the discounted products. At this point the price of oil will start to drop. Frank

The only reason for cameras dropping in price is that they are already obsolete due to the new phones out there... Like many products once they have outlived there use, they are trash. Thanks to Kindle, several of the book chains will also go the way of the horse and carriage and yet we call it progress

 

[Frankn]

Spart, I am talking professional and amateur cameras and lighting equipment. Example: The Sony Alpha NEX5 which just came out Has dropped about $40 in the last two months And that is the latest technology. A small mirorless changeable lens camera. There is nothing old tec about it. The lighting system, which is comprised of 2 lamps, stands and powerpack has dropped $20 from last month to this month. I get the pro mags and I follow pricing. Frank

 

[spartacus53]

There is no need to follow pricing, it's a little thing called supply and demand.

 

[olroy70]

and, sometime, it is who is making the law........

I especially like the no drilling, no way!

everything goes up that way, since wind or solar energy doesnt deliver the goods we need. ONLY OIL!

 

[Frankn]

*** Well I have taken a lot of hits on my opinion with other opinions, the big difference being I have backed up my opinions with facts while most other opinions have been just catch phrases or old standards with no backing to show how they applied.
The fact of the matter is that my opinion that the recession has come full cycle and is rounding the corner is in fact happening. The manufacturers have built inventory and it is tied up in warehouses. They must unload it or go out of business. The only way to do that is to cut their profit margin by cutting their prices. What we have coming up is bargain time for consumers. This will draw money away from necessities like oil and food. The final effect will be the lowering of these prices, but this will take months to show up.
I have mentioned camera and lighting price drops and I have noticed some software price drops also.
I even expect metal detector prices to drop. It will be vailed by the introduction of new more economically priced units, but these units will be the same on the inside as the present higher priced units. Hay! E Bay just dropped it's charges, doesn't that follow thru?

The fact is the manufacturers will create the demand by reducing prices and the economy will pick up.
OK lets hear your opinions, but back them with facts. FRANK

 

[olroy70]

Cost of getting anything to market is increasing rapidly. The results will be higher prices...

The fact can be seen by walking by your local gas station, and looking at the price of diesel!!!!!!!!!!! (walk, so you dont notice your pocket books shrinking fast!)

That IS the increasing cost!!!!!!

 

[Frankn]

As I said in my last post, it will take several months to see fuel and food drop. The rise in fuel cost is cutting into sales as I stated but the manufactures are hurting so bad in the sales dept. that they will lower their prices to move their inventory. Sure fuel and food are still rising but look at other consumer goods. As I said electronics will fall first followed by other manufacturers. This diversion of spending will finally cause a drop in fuel and food but that is the last link in the chain so that part will take months.
Forget fuel and food for now, check manufactured goods price movements and you will see the trend of the economy. Fuel and food are the first to go up and the last to come down. Frank

 

[spartacus53]

The fact is the manufacturers will create the demand by reducing prices and the economy will pick up.
OK lets hear your opinions, but back them with facts. FRANK

OK I think we have having a problem with the word "demand", keep in mind that a price point has little bearing on demand. Here's an example, a manufacturer has a warehouse busting at the seams with rotary dial telephones. He can reduce the price all he wants and still have all of them as there is no demand for that product. As for electronics like cameras, they are all becoming obsolete almost as soon as they roll off the manufacturing line Now you have raised the point of professional vs. general consumer cameras. Dollars to donuts there is by far a greater market for general product consumption versus professional consumption, and sadly these products have been replaced by cell phones.

On to fuel

olroy70 said it best, rising fuel prices will have a negative impact on any growth, sad part is that it's not just the fuel, but fewer driver's. This is an area I will argue until the cows come home. I've been in the transportation field for over 30 years, seen many trends, but what is happening now is the most frightening. For years it has been a shipper's market whereas he was able to dictate to trucking company's what he would pay.. This is not happening at this time, and truckers are starting to call the shots to move product. If you don't like the price carry it yourself. For year trucking company's lived on a lower margin profit, but that will be changing this year. The cost of fuel in additional to other regulation changes make it harder for drivers to make a living. I'm not sure if you know this, but the is a FSC (Fuel Sur Charge) that ranges from 20-45% on freight charges at this time. Many of the owner Operator's are parking their trucks and looking for other work, so now we are faced with a driver shortage Some trucking company's can now cherry pick their freight in some cases, if you don't want to pay the price, find a sucker that will accept your offer. Last week I had a customer tell me they would tender a load if I met their price. Once they gave me the details and what they would pay, I told them I could get it 1/2 way to the destination. I then asked for the company they were using and I said at those prices I'll let them carry all of my freight.

 

[Dave44]

One more thing,, You cannot forget fuel and food,, That is the thing needed most as all the others are luxuries, most people do not count these in the analysis of inflation,, I still do not understand that.

 

[bigscoop]

Frankn, here's a little economics question for you. If I had a large vault full of pure gold and a million acres with a huge reserve of crude, what would it be worth if nobody wanted it?

Demand; the recent housing bust should have taught you something about, "supply and demand = value." This simple formula applies to everything......."everything!"

 

[Frankn]

So true Bigscoop, but let me ask a question," Who creates demand?"