Quote from the1:
It isn't hard to figure out what a big rally in crude will do to the economy. When gas prices consumers will be very choosey about where they drive their car and what they drive it for. High gas prices cut into discretionary income so that's less money to be spent at PF Changs or the local movie theatre. Back in 2008 when crude was heading toward 147 the S&P became almost perfectly inversely correlated to the price of crude. It was like holding the price of crude in front of a mirror to see what the S&P looked like. The higher crude goes the lower the S&P goes and the more pressure the economy faces.
When o when will Bernanke raise interest rates? Their measure of inflation is obviously misleading but one thing you can argue with is the rising price of oil. I wouldn't be surprised to see crude head in the direction of $147 this summer. Or, perhaps traders will sell that event?
Quote from sjfan:
No, you are moderator of www.elitetrader.com; In the scheme of world finance and economics, practice and theory, that's all you are.
Quote from morganist:
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Quote from sjfan:
It's just not productive to debate with you. We've done so in the past. You don't have a the prerequisites to have a technical discussion and are too willfully (and unproductively) stubborn to have a layman's discussion. You are solely concerned with "inventing" your new macro economics without having first understood what it is that people have done.
That's why I hold you in disdain: you are a charlatan.
I was actually having a rather good and productive conversation with locutus on monetary policies before you came back.
Quote from morganist:
You still haven't answered any of my arguments. You have resorted to personal attacks again.
Incidentally one of my specialist areas is monetary policy. In fact I was recently asked to write a paper for the government in my country on the limitations of the current system and some alternatives that could work.
Believe me your discussion with locustus was far from productive.
Also all of the understanding of monetary policy is incorrect look at the situation it has created with excess private debt. Credit in my opinion should not be used in relation to aggregate demand control. In fact I would say that credit in entirety is defunct.
You still haven't answered my arguments. And you won't because you can not. You could prove me wrong, so why don't you?
Quote from morganist:
Here is a question on the comments on my blog. Below is the answer I have given.
The reason I have put this is because all the links to the post were from this website so it means it was someone here that wrote it. This is the answer.
Coupon Deal said...
This can't be right. If I pay for Oil in USD, it is the same as I pay for it in EUR (adjusted for the exchange rate). FOREX allows me to always exchange my EUR to USD and back instantaneously.
27 February 2011 16:06
Morganist said...
I don't think you understand the point. You need to buy dollars to buy the oil so you buy dollars. You would not then buy back euro's with the money you spent buying dollars. That would make no sense the reason you bought the dollars was to buy the oil because you need the oil. The dollar is not then used to buy the euro because you bought it for a purpose, which was to buy the oil.
The greater the demand for the dollar the higher the price rise, supply and demand. Because people need to buy oil they demand the dollar to buy the oil. They do not demand the euro because they cannot buy the oil in euro's.
The reason that you can buy the euro back at the same price instantaneously is for that exact reason. The market has not had time to adjust to the greater demand for the dollar because you have only just bought it so the price is the same. If you waited a bit and other people needed to buy dollars to buy the oil then you would see the price change because the new demand would have altered it. You have explained why you are wrong in your own argument. You defeated your own argument.
So there are two factors here that you have to account for. The first is that the dollar needs to be held for a reason or necessity. This creates higher demand than for the euro or other currencies. Two the instantaneous exchange of currency does not allow for the increased demand for that currency to be reflected in the price yet. Remember the oil then has to bought in dollars after the dollar has been bought. Creating a delay in both the oil price alteration that the greater demand the new purchase creates and also creating a delay in the price alteration in the dollar that the new demand in oil price creates.
The alteration in prices is not instantaneous it may be fast in efficient market hypothesis but it is not instantaneous. Also there is another commodity that has to be bought which then has a cyclical impact on the original commodity this takes further time and escalates the alteration.
Does that answer your question.
Quote from sjfan:
I am indeed attacking you as a person - I've done so since the very first post I made on this thread, so you can stop pointing it out;
I've pointed out to you that it has not been productive to discuss your ideas; So I refuse to do so. I have no interest in addressing your fringe (and incoherent) ideas much like an astrophysicist might not find the idea of arguing with an astrologist on his theories (not that I'm comparing myself to astrophysicists. They are far smarter than I).
Now you say you've been asked to write a paper for your government. Excellent. Why don't you post the said paper (which surely you'd be very proud of) here (or link to whatever journal it's published in) and I'll be happy to try again and to have a discussion with you within the context of that paper. At least the conversation can be better framed than your usual scatterness (yes, that's another personal attack).
Quote from kashirin:
Have you ever lived in hyperinflation environment where currency depreciates at least 10-20% a month?
I have. A lot of transactions were still in local currency but velocity was enormous, after transaction money where changed back into hard currency instantly
The same will happen with the dollar, despite oil is transacted in dollars - market participants will abandon dollar - dollar will lose reserve status and even if oil prices increase ten fold it will not increase demand for dollars - it will increase velocity of dollars and that will increase inflation dramatically
Quote from morganist:
What is your position. Who are you. I have allowed you to know who I am. Tell me who you are if you are a phd were do work. Put up one of your papers. Let me see what you understand.
Quote from sjfan:
No. I have nothing to prove.
This board is an entertaining diversion. As I have said in other threads over the years, I trade liquid rates institutionally. I was trained in economics. Beyond that, I have nothing more I want to share.
You saw you are writing a paper on behalf of your government - you should be happy to share that since you want to be viewed as a macro economics (whereas I'm just a here for entertainment).
And I'll keep on saying every time you ask - I won't argue with you on thoughts on merits because it has never been productive to have technical conversations with you; You think I'm misguided; and I think you are misguided. There's no point to it.