tag:blogger.com,1999:blog-5442825777886761537.post6710893412608145336..comments2023-04-27T11:21:20.431+02:00Comments on stickman's corral: Are charts of oil priced in gold really that impressive?Grant McDermotthttp://www.blogger.com/profile/11868318397832070394noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5442825777886761537.post-20529727880198948752012-09-13T14:26:02.436+02:002012-09-13T14:26:02.436+02:00That's an entirely reasonable assertion, altho...That's an entirely reasonable assertion, although -- as I have pointed out in the post -- price changes in these commodities have largely been driven by the cost of energy... which is itself subject to a variety of exogenous demand and supply factors. This is particularly true in more recent years. (Of course, there are substantial linkages between energy and non-energy commodities even ruling out such input-output causation, since they both react to the general economic environment.)Grant McDermotthttps://www.blogger.com/profile/11868318397832070394noreply@blogger.comtag:blogger.com,1999:blog-5442825777886761537.post-19194257667029753542012-09-13T14:09:26.487+02:002012-09-13T14:09:26.487+02:00If not "oil prices" instead of "pet...If not "oil prices" instead of "petrol prices". This is really squabbling over semantics now, but you have two basic options:<br /><br />a) That the petrol price increased to R12/litre is not owed to higher petrol prices...<br /><br />vs<br /><br />b) That the petrol price increased to R12/litre is not owed to higher oil prices...<br /><br />Clearly, option (a) makes no sense because it is internally inconsistent!Grant McDermotthttps://www.blogger.com/profile/11868318397832070394noreply@blogger.comtag:blogger.com,1999:blog-5442825777886761537.post-57968421438804985202012-09-13T13:58:16.363+02:002012-09-13T13:58:16.363+02:00If not what?If not what?Chrishttp://chrislbecker.com/noreply@blogger.comtag:blogger.com,1999:blog-5442825777886761537.post-40146879380308881862012-09-13T13:54:12.138+02:002012-09-13T13:54:12.138+02:00The point of the comment is to highlight that trui...The point of the comment is to highlight that truism, it is not an argument in favour of whether the economy is doing "better" or "worse."<br /><br />I get that commodity prices declined precipitously for a three decade period leading up to the mid-2000 boom, my argument is that prices would have fallen even further had it not been for the increase of the paper money supply before mid-2000. Chrishttp://chrislbecker.com/noreply@blogger.comtag:blogger.com,1999:blog-5442825777886761537.post-80708192958231013662012-09-13T13:37:41.166+02:002012-09-13T13:37:41.166+02:00My argument is that it the exchange ratio of all c...<i>My argument is that it the exchange ratio of all commodities will tend to be more or less constant over time...</i><br /><br />But this is simply a truism based on common input factors. Among other things, what really matters for the economy is what real wages are doing. There are also <a href="http://mattrognlie.com/2011/05/01/why-target-the-cpi/" rel="nofollow">good reasons</a> not to target a price index for macroeconomic stabilisation, but now we are veering off topic :) <br /><br /><i>... the exchange ratio of paper monies will go down against all commodities.</i><br /><br />As a definitive statement, this is not true. Commodity prices declined precipitously over a near three-decade period leading up to the mid-2000 boom. E.g. See Figure 1 of <a href="http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2010/07/21/000158349_20100721110120/Rendered/PDF/WPS5371.pdf" rel="nofollow">this</a> paper.Grant McDermotthttps://www.blogger.com/profile/11868318397832070394noreply@blogger.comtag:blogger.com,1999:blog-5442825777886761537.post-68013248178198623852012-09-13T13:18:23.773+02:002012-09-13T13:18:23.773+02:00If not, you are effectively saying "the high ...If not, you are effectively saying <i>"the high petrol price is not owed to higher petrol prices."</i><br /><br />I know that praxeologists enjoy their tautologies, but this is surely a step too far even for you!Grant McDermotthttps://www.blogger.com/profile/11868318397832070394noreply@blogger.comtag:blogger.com,1999:blog-5442825777886761537.post-20427443326222033772012-09-13T13:00:34.066+02:002012-09-13T13:00:34.066+02:00PS. You write "[I assume by petrol prices he ...PS. You write "[I assume by petrol prices he obviously means oil prices.]"<br /><br />When I discuss the "petrol price", I am talking about the pump price of petrol you would put in your vehicle. Since when does a barrel of oil cost R12? Chrishttp://chrislbecker.com/noreply@blogger.comtag:blogger.com,1999:blog-5442825777886761537.post-83324316740969286842012-09-13T12:55:42.221+02:002012-09-13T12:55:42.221+02:00Hey bud, My argument is that it the exchange ratio...Hey bud, My argument is that it the exchange ratio of all commodities will tend to be more or less constant over time, but that the exchange ratio of paper monies will go down against all commodities.Chrishttp://chrislbecker.com/noreply@blogger.com