Gas hasn't changed in value since 1950s

[Maxxthepenguin]

Look at it yourself. Silver and Gas have been going up at a similar pace.

Since our trucks and foods don't rely on silver, per say, I say it's a very good indication of inflation.


edit: I realize that gas is very volatile (no pun intended lol) so there is some discrepancy, but considering that 50+ years, it's very minor.

That was the most minor part of the post. Good job at ignoring the fucking point. Go back, and look at the paragraph. Respond to that.

Two things fluctuating similarly (show a graph, please), give me a reason to care... or are we looking at some silver/gas conspiracy here?

[Nystul]

first of all, am I the only one having trouble with this graph? Anyone see what I'm seeing?
http://i75.photobucket.com/albums/i3...edium_Term.png

Secondly, it has been pretty clear to me that our current recession breaks down as such:

First, gas prices going up are due to three main factors:
1. Worldwide demand has increased immensely, especially in the last 10 years with the emergence of increased demand from China and India. This high demand has not really been offset by increased production, and therefore things like hurricane damage to processing plants or other interruptions in supply can really fuck with the prices.

2. The value of the dollar has gone down, and this is something that has been happening for a long time. If your dollar is worth less, then when you buy a commodity from a foreign body you have to pay more to get what you once did. If you've been playing FFXI then you should have a pretty competent handle on how inflation and deflation affects currency value and purchasing power.

3. Beginning with 9-11, gas speculation began to increase- people expected with the invasion of Afghanistan and subsequent talk and actual invasion of Iraq that this would cause instability in the middle ease and therefore lead to high gas prices. As such for years we've had this coming.

Combine higher demand, a decrease in currency value, and increase in gas prices due to speculation within the market and boom- high gas prices.

While we are in somewhat of a recession, it's not *really* as bad as it's made out to be. The biggest problem is that people got so high on the markets going up up up that they stopped bothering to save. Spend now, things are great keep spending! So that of course leads to bad mortgage loans and people having houses that they cant afford. When the market starts to sag, we realize that we're overextended. Had things been more rational before the downturn- and there will always be downturns no matter what anyone does- it wouldn't be so bad right now. How far have we really fallen?

It's hot out today- like 90+ degrees. If, tomorrow, it would drop to 55 it would feel absolutely freezing. Break out the long pants! However, when it's March, and I've been dealing with months of 30-40 degree weather, the first day over 55 is glorious! What a warm day, let us go outside! The point is that perspective means a lot. Economically- as far as the markets are concerned- where are we? Were we all shitting bricks the last time the market was at this place? Is it that bad? I don't think so. And honestly if it forces some...humility? back into the market and our spending habits then all the better. If things contract a little I don't think thats bad. Save money. Spend less. Be more fiscally realistic and responsible. Don't buy a huge house and have 6 kids when you are on a 85k a year salary. Eat at home more. Buy less processed food. Drive a more fuel efficient car. Explore alternative and independent energy sources. The economy was overinflated anyway. We were beyond means. If anything this slowdown coming when it has will put our feet back on the ground a little.



**Edit I would argue that the value of the dollar going down is not due to simply "the fed prints more money" but rather that the US economy sagging a little and the current instability of our economy as well as growing economies elsewhere. If you're going to say it's simply because they print more then you're going to need to come up with some kind of evidence- the fed has printed money every day for decades. They don't start up when the dollar weakens. They intend to print as much as what leaves circulation. If you have evidence that they changed production levels in order to flood the market then I'd be happy look at that.

[Amele]

apparently this thread should've been titled "NEWSFLASH: SWEET CRUDE AND AG BOTH COMMODITIES!"

gas prices are rising because of basically 2 causes: 1) weakening dollar, 2) supply of oil peaked in 2005.

why the dollar is weakening isn't as easy to explain but fundamentally comes down to the Fed: in response to the war-for-profit the Fed buried interest rates to keep the incumbent in office, then kept them buried to prop up the economy (that was being drained by the war-for-profit) - we've now reached a proverbial rock and hard place situation, trash the dollar to prop up the economy, or trash the economy to keep the dollar from imitating the Wiemar papiermark or the Soviet Ruble.

so basically, when faced with the choice of "depression" or "dollar = toilet paper" the Fed went with "dollar = toilet paper"; ignoring that inflationary pressure will put the US economy into a tailspin anyway since we don't actually make anything anymore - and is hiding it from John Q. Public the whole way by no longer releasing M3 so we don't have a good handle on how many "dollars" exist anymore.

add in the farce that is post-food post-fuel CPI and is it any wonder that all of America is basically insolvent?

[Plow]

first of all, am I the only one having trouble with this graph? Anyone see what I'm seeing?

If you mean the year ahead thing it's because it takes time from when they take office to actually establish the effects of their budget policies.

That was the most minor part of the post. Good job at ignoring the fucking point. Go back, and look at the paragraph. Respond to that.

Two things fluctuating similarly (show a graph, please), give me a reason to care... or are we looking at some silver/gas conspiracy here?

http://www.zealllc.com/2005/sor.htm

That's basically a full page of someone discussing this topic. As you'll see, they are somewhat similar, but the ratio of ounces of silver to barrels of crude oil have consistently, but very "spikily" risen.

Which says even more when you consider that the percentage of gas price covering crude oil has risen massively.


(it's also someone trying to sell you silver by arguing that the current massive widening gap can't possibly be sustained, so while it pretty much proves that it's not a good indicator, and states repeatedly that it's understood that it's not a good indicator, he's still trying to argue in favor of a strong relationship)

[evilpaul]

The issue is not inflation-- inflation itself is good. The issue is that gas has a massive effect on inflation, and huge changes in gas cause huge changes in inflation-- fast changes in inflation are not good.

Inflation gives you a reason to actually spend extra money you have, while allowing for investment to provide a similar result to "sitting on your money" if there was no inflation.

Hyperinflation results in producers not being able to afford the resources required to produce, do I really need to go into what happens then?


edit: pretty much covers khamsin's comment too

Per dictionary.com

"A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services."

"a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency (opposed to deflation)"

You apparently aren't noticing that people can't spend more money on everything unless there is a larger quantity of money to spend.

You can't have hyper-inflation with people carrying around $10,000 bills and paying millions of dollars for lunch at a restraunt unless the government has created a massive fucking amount of money for them to pay with.

Inflation is the creation of money. Needing more money to pay for stuff because there's lots more money is just a side effect.

Inflation is only "good" if you're the one getting the new money first (or early) and getting to spend it before prices increase.

If you're my grandmother living on a fixed income who's savings is being wiped out as her dollars become worth less every day, then no inflation is not good.

If you work for a living and are trying to save money for a car or house or whatever else that you might want (to start a business or pay for college, etc) then having that chipped away at so some billionaires and the mega corporation welfare queens can get an extra '0' on the end of their bank accounts, then no inflation is not good.

I'm still waiting on an answer as to how people can spend more on gasoline and not spend less somewhere else?

Spending less on something else is called "reduced demand" that would tend to push prices down, not up.

[Plow]

Inflation is the creation of money. Needing more money to pay for stuff because there's lots more money is just a side effect.

Inflation is only "good" if you're the one getting the new money first (or early) and getting to spend it before prices increase.

If you're my grandmother living on a fixed income who's savings is being wiped out as her dollars become worth less every day, then no inflation is not good.

Your grandmother should have been investing rather than attempting to sit on her money when you know inflation is happening. People screwing themselves by not accounting for inflation is not = to inflation being bad.

If your "dollars" are actually products and services which become more valuable as the dollar devalues, you're not losing anything.

If you work for a living and are trying to save money for a car or house or whatever else that you might want (to start a business or pay for college, etc) then having that chipped away at so some billionaires and the mega corporation welfare queens can get an extra '0' on the end of their bank accounts, then no inflation is not good.

If you work for a living you're making more now than you were before inflation. Minimum wage has risen $2.30 since I got my first job 12 years ago, almost 50%.

I'm still waiting on an answer as to how people can spend more on gasoline and not spend less somewhere else?

Spending less on something else is called "reduced demand" that would tend to push prices down, not up.

You spend more on gasoline while not spending less somewhere else by not saving as much.

Hyperinflation actually does the opposite of what you're saying, it promotes extreme spending over any form of saving. The issue is when it becomes so intense and or unpredictable that even investing becomes unreasonable, which cuts supply and furthers the inflation.

[Bingbong]

Minimum wage hikes do more to increase inflation than they do to 'prevent' or 'fix' things.

[Amele]

Minimum wage has nothing to do with the current inflation pressures.

adjusted for inflation (using pre-1990's CPI and not the joke of one we have now) minimum wage is the same as it was in the 1950's.

american productivity went up 20% from 2000 to 2007; median hourly wage went up only 3%. If wages had tracked productivity from 2000 to 2007 (like they did from 1970 to 2000) the median hourly wage would be about 20,000$ higher than it is today. minimum wage would be 19.12$. (which is alot closer to what say; france's minimum of ~13.5$/hr; UK's 10.80$ and Australia's 14.20$ are; and is still less when you consider that even a minimum wage employee in these nations has comprehensive health care on top of their wage).

[evilpaul]

Your grandmother should have been investing rather than attempting to sit on her money when you know inflation is happening. People screwing themselves by not accounting for inflation is not = to inflation being bad.

If your "dollars" are actually products and services which become more valuable as the dollar devalues, you're not losing anything.

My grandmother wasn't stuffing singles into her mattress, he has a pension from a job (she worked 30 or 40 years at an airline), Social Security, etc.

The official inflation rate is something like 4.3% according to the numbers I saw a few days ago. Keep in mind that the "basket of goods" doesn't include gasoline and I don't think it included food either. Both if which are kind of important to people who aren't living off the land in the woods of Montana, obviously. So, if you were to count stuff people actually buy it's higher than the official numbers.

If you're old and going to retire you simply can't get a good return on an investment that beats out inflation and isn't very risky. Good luck finding a savings account that pays 5%.

Money is supposed to be a good store of value...that's supposed to be a defining characteristic. Deteriorating in value is kind of the opposite of storing value.

Inflation makes it difficult to plan and save for the future, and screws people that are on fixed incomes even if they get a (deliberately lower than actual inflation) cost of living increase. It requires people to take riskier investments just to keep up let alone get ahead. It really isn't good.

If you work for a living you're making more now than you were before inflation. Minimum wage has risen $2.30 since I got my first job 12 years ago, almost 50%.

Are you scheduled for a 5% raise at the end of the year? If so, can you PM me with employment information? You've got a kickass boss.

Wages almost never keep up with inflation rates. Ask somebody who's ~60 or so if they were getting 12% raises every year during the '70s stagflation. The answer is probably 'no'.

It screws over workers pretty well. Do the same work, make less money at the end of the year. Maybe get bumped into a higher tax bracket and make even less still.

Also, I'm not sure what the exact percentage is but a 50% increase over 12 years probably is a lousy APR increase. You're still living basically in poverty if you're out on your own and making the minimum wage anyway.

You spend more on gasoline while not spending less somewhere else by not saving as much.

Hyperinflation actually does the opposite of what you're saying, it promotes extreme spending over any form of saving. The issue is when it becomes so intense and or unpredictable that even investing becomes unreasonable, which cuts supply and furthers the inflation.

Americans have or nearly have a negative savings rate. They're borrowing (whether home equity loan or credit cards or however else) to spend more than they actually earn in a year. There's no way in this particular circumstance to save "less than not anything."

And while it's certainly true that people dump their currency as quickly as possible and buy up anything and everything once hyperinflation starts (there's a story of a guy during the German hyperinflation buying bed pans) and that further drives up the prices of everything it still doesn't explain: Where did all that money come from in the first place?

The answer is simple: The government printed it and handed it out to their friends. The prospect of stuff for nothing is appealing to people, so they printed more and more which undermined its value leading to price inflation.

At this point there's a fork in the road. The politicians and central bankers can either "tighten their belts" and raise interest rates (making even bigger piles of money in interest payments for the billionaires and multinational conglomerates that got all the money in the first place) and suck "liquidity" (read: dollars) out of the market and have a recession. This as people right now can tell you if kind of unpleasant and fucks over normal people who lose their jobs, businesses, homes, marriages, etc in the process.

Or they can keep inflating and go full speed over the cliff. People lose confidence in the currency, and try to dump it. Politicians still need to spend money on all sorts of crap and to hook up their buddies, so they print more and more of it. And soon enough they're printing up $10,000,000 bills and you can barely get a loaf of bread for one (if you're living in Zimbabwe was it? As a recent example). And you get total economic collapse, and widespread sufferring until a new money is adopted and people start to recover. A few millionaires jumped out windows, but the politicians and their buddies are still living comfortably and still quite wealthy.

So again, the rich make out like bandits (literally), the middle class gets fucked or wiped out entirely, and the poor get shit on some more. Unless you own several private islands or are a government contractor, inflation isn't good for you.

[Churchill]

Hi Plow, your chart shows current gas prices as well as gas prices for each prior year.

How does that reflect the dollar being weaker again? Does it reflect the inverse relationship to gold price increase and dollar decrease, the flat gas-gold rate? The flat silver-gas rate?

What part of that chart tells me anything except that gas has gone up? Using the 2007 dollar, which was already on its way to being the weak piece of shit it is now, is hardly a quantifiable way of expressing anything.

All I see is that in 1999 I'd have paid 20 cents more for my gas if I had 2007 money, which is abhorrently incorrect.

What are the bases/standards for the graph? lol seriously.

lol3-4%. lolfed. nice topic guartz.

[Churchill]

You realize that Fed printing bills isn't the only source of inflation, it can also happen due to foreign exchange markets selling their holdings on US currency (which...is a valid thing to do these days), right? Just putting that out there.

They did it because of the Fed, chicken/egg etc. Problem only compounded as the market and foreign nations/businesses adapted to the dollar being worthless.

[Churchill]

Not that I necessarily agree with guartz, but European truckers have been throwing shitfits recently over this very issue. Gas goes up, but they can't charge more for their services, meaning that the end consumer doesn't absorb the price... the trucking companies do.

bye bye ground shipping, same thing here in america.

[miokomioko]

Precious metals have always been pretty decent economic indicators.

[Tyche]

Not that I necessarily agree with guartz, but European truckers have been throwing shitfits recently over this very issue. Gas goes up, but they can't charge more for their services, meaning that the end consumer doesn't absorb the price... the trucking companies do.

The people paying for trucking costs are absorbing the prices (read: the consumers in the end). When you schedule a truck shipment, whether it be an LTL, small parcell, full freight, whatever, a fuel surcharge cost is added into the cost of the shipment. This surcharge changes almost daily to reflect the current costs of fuel. Most truckers are employed under the TEAMSTERS and their payrate is locked in with the current contract with the trucking company. The trucking company is going to make their money, they aren't going to lose out, so they use the fuel surcharge to adjust the prices they charge consumers almost daily. The truck drivers aren't doing any more work or less work, so they don't (why should they?) get increases as fuel costs increase. I'm sure the companies that end up paying for the frieght (whether that be the shipper or the consignee) pas those increased charges onto the consumer through product price hikes, hence, a growth in the consumer price index.

Edit: There are also people who drive their own trucks OTR that aren't employed by a union or by a company. Companies typically pay their fuel costs, and if they don't, I'd assume the private driver passes the increased fuel charges onto the company employing their services. If they don't, then that's their fault. Companies will still be more than happy to pay a higher premium to contract drivers instead of employing their own. It saves their company money in the end.

[Amele]

Hi Plow, your chart shows current gas prices as well as gas prices for each prior year.

How does that reflect the dollar being weaker again? Does it reflect the inverse relationship to gold price increase and dollar decrease, the flat gas-gold rate? The flat silver-gas rate?

What part of that chart tells me anything except that gas has gone up? Using the 2007 dollar, which was already on its way to being the weak piece of shit it is now, is hardly a quantifiable way of expressing anything.

All I see is that in 1999 I'd have paid 20 cents more for my gas if I had 2007 money, which is abhorrently incorrect.

What are the bases/standards for the graph? lol seriously.

lol3-4%. lolfed. nice topic guartz.

2007 dollar adjustment is to remove the effect of long-term currency fluctuation from the chart (a similar chart can be made using the 2000 dollar. the curve is the same the exact value in any given year would be different of course) - the point is that inflation adjusted the cost of gas has gone up (i.e. the cost of gas is not entirely due to inflation.)

it is not clear to me what index this graph is using for inflation adjustment (CPI-pre-90's, CPI-post-90's, or PCE)

concerning CPI and the changes in the 90's. inflation as measured by the Fed is not CPI, it is PCE. PCE does not include food or energy costs. just a 'rental equivalent' and various consumer products (communication, entertainment, toasters, etc.) CPI as measured by the Bureau of Labor Statistics does still include food and energy but in 1995 was adjusted by the Boskin Commission (these adjustments were a mixed bag; some are right some are not) and is generally about 1-2 percentage points lower than the pre-95 CPI.

modern CPI was basically a dodge by the US gov't to reduce a projected shortfall in Social Security by reducing the rate that payouts increase. the Fed prefers PCE because it's -not- inflation and allows them to maintain (as much as possible despite the evidence literally laying out in front of the public) the myth that you can grow forever without recession or significant inflationary pressure.

[Darus Grey]

I'm amazed at some of the comments in this thread.

Silver isn't a good base of value? wtf

All commodities are good comparisons, and if you compare most of them you'll find that *generally* a pound of X will net you the same Y of oil today as it did in 1950.

No one has ever heard of the damn oil:gold ratio??? One of the major issues is for the last twenty years oil was *severely* under-valued, and it's locked back into gold again. Hell if you wanna speculate I'd go buy gold and platinum right now, they haven't fully caught up yet.

[Plow]

I'm amazed at some of the comments in this thread.

Silver isn't a good base of value? wtf

All commodities are good comparisons, and if you compare most of them you'll find that *generally* a pound of X will net you the same Y of oil today as it did in 1950.

No one has ever heard of the damn oil:gold ratio??? One of the major issues is for the last twenty years oil was *severely* under-valued, and it's locked back into gold again. Hell if you wanna speculate I'd go buy gold and platinum right now, they haven't fully caught up yet.

A. gold is widely accepted as a standard of value, there is essentially no place in the world where gold doesn't have its value, whereas silver can be a "decent" measuring stick but is not really accepted by most as a standard of any sort

B. silver is probably the most wildly fluctuating precious metal


There's essentially never any question as to the value of gold, comparing the value of gold to the value of silver over time creates a hugely varying ratio.

[Amele]

I'm amazed at some of the comments in this thread.

Silver isn't a good base of value? wtf

All commodities are good comparisons, and if you compare most of them you'll find that *generally* a pound of X will net you the same Y of oil today as it did in 1950.

No one has ever heard of the damn oil:gold ratio??? One of the major issues is for the last twenty years oil was *severely* under-valued, and it's locked back into gold again. Hell if you wanna speculate I'd go buy gold and platinum right now, they haven't fully caught up yet.

gold is a bad market for speculation right now; it's swinging because of instability in world stock markets and the desire of more people to get into something that's actually fungible. I can't speak for Plat I haven't been watching it.

and crude -is- a commodity so it's basically tautological to say: "the relative ratio of these [mostly stable] commodities hasn't changed in X years" no shit, that's what commodities do if they're stable. (I recognize you're saying the same thing - just adding my voice to it).

gas *is* rising in cost on the global market - it's controlled by a cartel, the cartel is in the business of making money - meet constrained supply and unconstrained demand etc.

OPEC basically gives DeBeers wetdreams about what would happen if someone found a way to burn diamonds. But OPEC isn't why gas is high. gas is high because of other pressures, some of which are inflationary and some of which are increased demand.

this is the same for most modern industrial commodities (which includes metals such as gold and silver) which is why all industrial commodities are high. The increased demand isn't going anywhere unless oil hits 300USD(2005)/bbl or more before global transport switches off petrol.*


300USD(2005)/bbl is when the world net GDP is entirely consumed in buying oil; which would cause the world economy to come to a screeching halt overnight basically.

[Quixotic]

They did it because of the Fed, chicken/egg etc. Problem only compounded as the market and foreign nations/businesses adapted to the dollar being worthless.

Was just pointing out that the problem isn't as one dimensional as guartz initially stated.

[Darus Grey]

gold is a bad market for speculation right now; it's swinging because of instability in world stock markets and the desire of more people to get into something that's actually fungible. I can't speak for Plat I haven't been watching it.

As a professional commodity speculator I'd disagree. Gold needs to get to about $1260 USD before it gets into full step with the value of other commodities in terms of compared value, right now it's very under-priced. Platinum is going to sink in the future and then rebound in a heavy way, there simply is not enough of it to meet demands.

Though just in general I think commodities are an excellent investment right now. We're talking another decade or so, but we're heading to some major shortages of some industrial metals(Platinum, Copper, Zinc), and we're already low on some electrical use ones(Hafnium, Indium, Gallium).