Thursday, 23 April 2009

Bad…? How bad?

Production and wholesale prices: some food for thought.

It does not make sense to compare the Great Depression with what is happening today; there are just too many antipodal differences that are misleading anyone who thinks he can take shortcuts in order to understand and/or – forbid – to explain coherences.

The (IMF) graphs below open the horizon for getting used to big numbers: industrial production down >40% in the US, wholesale prices down 30 to 45% over a span of three to six years. If anything, today’s global setup will play with the time scales of the down and up but then it will also influence the spread/spans.

Oil price has come down from >$150 per barrel to now around <$50; that is 70% off a price level caused by the casino-hype fuelled from speculation multiplied by an abundance of monetary liquidity divided by greed. As much as the finance was available to fill this balloon, as such both have now vanished. We are now in for deflation, lots of that; then we will be in for inflation; even more of that, as it will be the only way out to compensate the numerical values plus interest of the debts printed during the fall; then we will be in for new money: why not take a shortcut?

There are solutions!

Carpe diem!


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