What's putting the most pressure on the economy right now?
Inflation, oil, etc???
Answers
107 points
billddrummer answered one year ago …
I believe it's the disconnect people feel between what the government tells them is happening and how they notice that seemingly everything that's for sale is more costly than it was a year ago. Not only food and fuel, but insurance, utility bills, cable service, bank fees--everything seems to be going up except salaries. And the government says inflation is "moderate." Let's face it--if you have a finite amount of money entering your life each month, but every week it seems that your gas tank uses more and more of that money, it stands to reason that you'll change purchasing patterns to compensate. Add to that the rhetoric that comes out of the government's economic machine that inflation is "muted" based on their figures, and people are beginning to believe that government figures are just random noise. What's really happening in people's day-to-day lives is financial stress bordering on panic.
And with housing prices flat or falling depending on where you live, rising delinquencies on car loans, credit cards and mortgages, and tighter credit standards across the board, it's no wonder consumer confidence is at a 16-year low.
546 points
warren answered one year ago …
Inflation. It is casuing all other prices to rise which puts preassure on the economy.
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127 points
Wantitbad answered one year ago …
billddrummer,
I think you are right, it is a little bit of everything. Even the roll that I eat in the morning has gone up more than 12% and everywhere you go things are going up, ie. cable, gas oil food diapers etc. When the average raises where I work were 3% you just can't keep up. My wife got her RN and I was waiting for a windfall that never came. Hopefully the government will realize that they are biting the hand that feeds them and just lay off the middle class. I think that oil is having the most detrimental effect on the economy right now.
ps: Can't wait to fill up my 275 gal oil tank this year. haha
Lawrence
2082 points
alanj answered one year ago …
Inflation. What's causing inflation? Crude oil prices are going up, up, up. How is that causing inflation? One key component in bringing products to market to the consumer to purchase are transportation costs. When fuel cost rises the transportation cost also rises. Most of the fuel used for transporting goods comes from crude oil. Why is crude oil prices up? There are a number of reasons. But, mostly it's SUPPLY and DEMAND. Worldwide the demand is up because of such place like China and India where they are becoming more industrialized and growing. However, the supply side has not kept up with the demand. This in turn causes speculators to bid the price up. Why hasn't the supply kept up with the demand? The oil companies that pump the oil out of the ground have no reason to increase the supply. They're making more per barrel than they've ever made. If they increase the supply they're profits go down. That's the worldwide reason for higher fuel cost. But what about here in the US? Because Congress won't allow any new oil fields to be developed here in the US the US based oil refineries have to purchase crude oil on the open market. So, instead of pumping the oil out of the ground for a few dollars per barrel they're paying about $130 per barrel. Where did I get the few dollars per barrel? Back when oil was just $30 per barrel (not that long ago) they where making a profit. So, that means it cost less than $30 per barrel to get it out of the ground. Another reason is the value of the US dollar has been going down for quite a while. When the dollar goes down everything goes down in value. In order for companies to get back the same value for their products is raise prices. Which is easy to do, or sell more product without substantially raising costs (not so easy). Why is the dollar down? One reason is when the interest is cut this devalues the dollar. Which is also another reason for higher oil prices. Crude oil is traded in US dollars. Bottom line, the US Federal government is most likely the reason for inflation. Of course there is the natural occurence of cycles. Just like the temperature of the planet goes up and goes down naturally. Prices also go up and down. When prices are to low they will eventually will go up. When they're too high they will go down. As to how much no one knows, but history shows probably not where they once where before the price increases. One thing that this inflation is not being caused by is ethanol. For a number of reasons, but that's another subject.
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warren answered one year ago …
The defenition of inflation is an increase in the money supply, which exceeds growth.
If the economy grows at 2% then so can money supply without causing inflation. Rising prices are an EFFECT of inflation.f tehre was no infaltion prices would be stable as tehre would be the same amount of dollars in circulation relative to growth.
As per oil nominally they are making a tonne but look t the purchasing power of the dollar and you will quickly see it's an illlusion. Also peak oil was reached in 2005, output is declining tehre are 4 and soon to be three oilfields producing 1 million barells per day now, 10 years ago there were 10 fields like that.
When the dollar goes down everything goes UP in prices.
You really must revisit the basics with all due respect, and I recommend the Austrian side rather than the Keynsian theories alanj.
If you understand inflation is increasing money supply, rising prices are the EFFECT, you'll be better off.
Take care,
Warren
www.preciousmetalstockreview.com
3943 points
MNSL answered one year ago …
Oil, Inflation, credit bubble and recession are putting more pressure on the economy in some countries now.
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jester112358 answered one year ago …
There's too much bad debt out there masquerading as "assets". Until all these phony paper assets, CDSs, CDOs, SIVs, SIEs are written down and acknowledged and inflated housing prices underlying a lot of it decreases in value by about 20-30% more, we cannot start a recovery. The recovery will have to be based upon low taxes, high savings and investing and real productivity increases.
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BoxCar answered one year ago …
Root cause of ALL of mankinds problems is overpopulation for limited resourses.
As long as we continue to reproduce like lemmings, every 4th generation you have
the aged and newborn consuming but neither is producing. THIS is what puts the
enormous pressure on the economy and trips runaway inflation. When does this
happen? In 1993 cancer researchers and solar scientists discovered a correlation
between the human race and the 22.2 year solar cycle. Solar Mortality Theory says
"If your mom was born during a 22.2yr solar reversal you will probably die of cancer."
This sets up Modern History starting in 1796 with discovery of Cowpox & Vitamins.
It began Overpopulation of the planet for those who should've died of smallpox and
malnutrition didn't. Since 1796 every 3 generations when the 4th arrives, we have
had major calamitys on a global basis. Add 3 x 22.2 = 66.6 to 1796.* to get 1862
civil wars in US & China (slavery won in China) then 1929 Great Depression and
1996 civil wars in Rwanda and Bosnia. Death records of Bosnia show peak births
in 1930 & 1963 which means a Phase Shift occured in WWII, not many kids born.
Result is to add a solar reversal to 66.6 + 11.1 = 77.7 yrs since 1929.8 stk mkt crash
Add 77.7 + 1929.8 = 2007.5 when the 1st subprime investment bank failed. Bear
Stearns failed later but was subprime disaster was initiated in mid 2007 marking
the start of 2nd Great Depression. Wish none of this was true but history repeats.
We didn't know The Great War was WWI until WWII came along. We still call GDI
"The Great Depression" don't we? We'll know it was GDI when GDII comes along.
Purpose of Civil War was to Mechanize Agriculture. Pick up any dictionary and read
Land Grant College Act of 1862 to establish A&M colleges in western states. His
advisors told him it would take 1 billion slaves to do the Great Plains. In China over
20million were killed in 1862 land reform civil war but slavery won out. Today we have
over 1 billion slaves in China. Presto Co made electric skillets in Alamogordo, NM
In 2000 they boxed up the plant and one in Mexico and shipped them both to China.
A worker made $14 per hour in US. His counterpart in China makes $14 a WEEK!
Solution is Human Rights. China already has the solution. A citizen has the god-given
right to reproduce him/her self ONCE and ONLY once, 2 kids per family, boy & girl.
Anymore means our traditional Final Solution of genocide will occur downstream in
time as it has historically. Makes more sense to limit birth rate than up the death rate
but that takes commen sense. Sorta' turns family values upside down when you start
to realize Gays ain't the problem- they ain't the ones having all the changos are they?
Real EVIL in the world is those who promote multiple births (read Catholic Church)
So I'd include right wing conservative christians right along with pornographic filth as
the root cause of evil in the world and degradation of our global economy, not to
mention the root cause of Global Warming = Too many people, too many kids.
Like pogo the possum said in 1957, "We have met the enemy & he is US!"
Sorry about that- boxcar
112 points
Pelley89 answered one year ago …
Should I dare mention stagflation? It's not dark yet, but it's getting there.
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