Isreal and global inflation

Diaspora

I find the latest bout of Middle Eastern shennanigans just too much forgetting about human rights and all that jazz what is this costing us financially?

Oil $78.50 a barrell and rising why should this state dictate global economics?

sceptre

You're making a number of assumptions here.

• Firstly that the price of oil is causing world inflation. I'll hand you that one as a gimme as it at least has a reasonable effect.
  
• That world inflation is significantly higher as a result of the risen price of a barrel of crude. You'll need to demonstrate that this is so for your case to be possibly valid.
  
• That actions taken in the middle east by the US and others have been taken as a result of their interest in Israel. In particular that actions taken in Iraq have been taken as a result of their interest in Israel and frankly this is where your case might have issues
  
• That US interest in Israel is such that should the previous bullet point be valid that they would take such action on their behalf. This is a half-gimme, US interest is such but whether they'd take these particular actions where that level of interest exists as opposed to not taking such particular action. There's a subtle difference between this and the precious point so to demonstrate that it's Israel's fault it might be easier to take the two together
  
• If I'm misunderstanding what "the latest bout of Middle Eastern shennanigans" is and what you mean is specifically the stuff going on in Israel and the Palestinian territories as opposed to the US Army tramping through the big bad sandpit out there, you'll need to show that there's any connection at all with the recent movements in oil prices

Totally aside, I paid a silly €1.21 a litre for petrol today for not having the time to shop around. I don't blame the Americans, Israelis, any particular group of Arabs or OPEC but rather the last 100 years of dependence on oil in the first palce.

silverharp

sceptre wrote:

You're making a number of assumptions here.

• Firstly that the price of oil is causing world inflation. I'll hand you that one as a gimme as it at least has a reasonable effect.
  
• That world inflation is significantly higher as a result of the risen price of a barrel of crude. You'll need to demonstrate that this is so for your case to be possibly valid.

Well said, look at any dictionary and you will see that inflation is caused by printing money, rising prices is the effect. Most central banks are expanding the money supply by 10% a year, the money has to go somewhere

Akula

The causes of inflation are a little bit more complicated than issues of money supply.

There is absolutely no doubt (read any number of economic opinions) that ONE of the major drivers of global inflation is the price of oil. Sorry I'm not going to quote the specific articles or research, but there are tonnes of it. So in fairness sceptre, I don't think its unreasonable for this statement to be made since its so commonly accepted.

I don't think he was blaming any particular incident in the middle east... The way the markets work with oil is largely based on the irrational... its not about "well we blew up an oil well thus the price goes up"... oil is generally purchased as futures, so fear and uncertainty and the mere phrase middle east shenanigans is enough to demonstrate that it could have a pretty big effect.

So to be fair his assumptions are fair ones, broadly accepted and very true. Remember, all economic analysis is going to be based on certain assumptions.

Since you seem to be in the minority on this opinion do you want to demonstrate some evidence to the contrary?

Diaspora

Diaspora wrote:

I find the latest bout of Middle Eastern shennanigans just too much forgetting about human rights and all that jazz what is this costing us financially?

Oil $78.50 a barrell and rising why should this state dictate global economics?

Maybe the global economy is to be blame for being so sensitive to the actions of small middle eastern country. Israel's recent actions were not based around trying to alter the global economy, even if that is a by-product of them.

bonkey

Akula wrote:

There is absolutely no doubt (read any number of economic opinions) that ONE of the major drivers of global inflation is the price of oil.
Sorry I'm not going to quote the specific articles or research, but there are tonnes of it. So in fairness sceptre, I don't think its unreasonable for this statement to be made since its so commonly accepted.

I'd be interested in seeing how much of this reasearch has been carried out since oil went over (say) $40 a barrel.

I remember when oil as speeding towards that doom-and-gloom big figure. I remember reading in some "End of Oil" books that this (or $50) was some sort of watershed, after which global inflation would be so hammered that everything would go to pot really quickly.

We passed that mark and have continued with oil-prices rising steadily...and the world hasn't fallen apart.

So I'm just wondering how much of that established wisdom was from before the current (say since $40 a barrel) rises, and/or how much of it still holds, given what it should have predicted from the huge rises that have occurred.

Its definitely a factor, sure...but consider this. Between 1999 and 2001, I flew from Ireland to Switzerland quite a bit. Prices for this route today, even allowing for the "fuel surcharge" I get slapped for, are almost half what I used to pay....but this "major factor" has (roughly) doubled in price in the interim.

Yes, I know that isolated examples are terrible oversimplifications, but

I don't think he was blaming any particular incident in the middle east...

Whereas when I read it, I associated the post with teh widely-reported (over here at least) fact that the Israeli situation had pushed oil to a record new high.

So to be fair his assumptions are fair ones, broadly accepted and very true.

ASsumptions, virtually by definition, cannot be said to be very true. That would make them facts, not assumptions.

Regardless...it still depends what the OPs assumptions are, rather than what we decide they are. I read a post basically sugegsting that Israel shouldn't be allowed rampage around because its costing the rest of the world a fortune. You read the same post, but took a different meaning. I, unlike you, would rather the OP clarify what it is they were actually saying in preference to deciding what that was.

jc

joebhoy1916

Diaspora wrote:

Oil $78.50 a barrell and rising why should this state dictate global economics?

Was watching sky news this morning Moscow is the most expensive city in the world not surprised though there's only like 13 or 14 billionaires living in that city alone. If you ask me the war has nothing to do with it well maybe abit its just greedy ****ers who want more and more money!

silverharp

Akula wrote:

The causes of inflation are a little bit more complicated than issues of money supply.

There is absolutely no doubt (read any number of economic opinions) that ONE of the major drivers of global inflation is the price of oil. Sorry I'm not going to quote the specific articles or research, but there are tonnes of it. So in fairness sceptre, I don't think its unreasonable for this statement to be made since its so commonly accepted.

The price of a commodity can go up for all sorts of reasons, oil because of geopolitical reasons, approaching peak oil, weather. The overwhelming reason why we have inflation is the printing of excess money, why did gold go up from $35 oz in 1970 to over $600 today, is it 15 times more difficult to mine gold today then in 1970, I don't think so.
Oil is going up today because of inflation (of money) AND because it has become reletively scarce. Although oil is at record highs this is meaningless because oil is not measured in constant purchasing power. To affect our standard of living in the way it affected people in the 70's oil would probably have to go to $150-$200

purple'n'gold

The reason is very simple, these murderous Jews can kill and pillage with impunity because the US will back them up no matter what they do. The Arabs should put oil up to about $150 a barrel, that is the only way to hurt the USA, hit them in the pocket. We will all suffer, but if it stops the US from unconditionally supporting murderous Jews it will be worth it.

bonkey

purplengold wrote:

The reason is very simple, these murderous Jews
<snip>

Opinions as clearly lacking in objectivity as these last three words indicate always yield simple reasoning. Wrong, but simple.

jc

sceptre

Akula wrote:

There is absolutely no doubt (read any number of economic opinions) that ONE of the major drivers of global inflation is the price of oil. Sorry I'm not going to quote the specific articles or research, but there are tonnes of it. So in fairness sceptre, I don't think its unreasonable for this statement to be made since its so commonly accepted.

I don't think it's unreasonable either, that's why I gave that one as a gimme.

Essey

purplengold wrote:

The reason is very simple, these murderous Jews can kill and pillage with impunity because the US will back them up no matter what they do. The Arabs should put oil up to about $150 a barrel, that is the only way to hurt the USA, hit them in the pocket. We will all suffer, but if it stops the US from unconditionally supporting murderous Jews it will be worth it.

And what do you call Arabs who wrap themselves up in TNT and light them selves up light Xmas trees in the middle of crowded markets? the Sugar Plum Fairies? It that type of unimaginative thought processing that has gotten the world into the mess its in. Its ALWAYS someone else - and they are ALWAYS wrong. And its ALWAYS boring to have to listen to it.

Diaspora

There is a large difference between terrorists and governments:

I am Irish and have always been pround of my nationality but at times I have been ashamed of things that were done in my name by particular elements who felt it was ok to bomb thier way into power. I could however always explain that any attrocity was the work of a very small minority and did not have the general backing of either the population or any government of this state.

In contrast an the government of Isreal is sending troops into other territories and has no problem with large amounts of collateral casualties. The fact is that these actions are breeding the type of conditions in many Arab countries where seditious sub-cultures are flourishing and the results are only to clear in Iraq, Saudi and other Arab states. The resulting risks to global oil supply are priced in by hedge funds who all to happy to play on the fears of large consumers such as airlines and distribution companies and feed into the prices paid in the pumps.

I assert that the actions of Isreal have a direct effect on energy prices and that this is feeding into Global inflation which at 3.9% in Ireland is a problem. There is a lot of truth in the assertion that Ian Paisley unwittingly acted as head of recruitment for many terrorist groups who defiled the reputation of Ireland for almost three decades.

indiewindy

inflation in Ireland is double the EU average anyway, and all the other countries are importers of oil too. Its a part of the inflation problem here but only a small part. You can't really blame Israel and their crazy actions against their neighbours for the current high prices. Countries like Iran havent cut their supply yet. If this were to happen it would be a different story

sceptre

Diaspora wrote:

I assert that the actions of Isreal have a direct effect on energy prices and that this is feeding into Global inflation which at 3.9% in Ireland is a problem.

To be honest, asserting is sod all good to someone who wanted to know if you could actually demonstrate your assertions. I'm not even saying whether you're right or wrong, just that such a discussion isn't of much use without something to back it up.

For anyone who feels like turning this thread into a general discussion on whether the Israelis are bold boys or evil bigots or whatever, there's a recent popular thread on the front page of the politics forum entitled "Is Israel Right?" which is a better place for such discussion.

While we are on the subject,a certain hurricane last year in the southern U.S put petrol prices up way higher than they are now.

Iirc they were up to €1.30 a gallon. So this is nothing really in comparison.

You see, you should always blame the weather and never take it with you,unless its the weather we are having at the moment of course.

Inflation was lower here in Ireland last year too despite the higher petrol prices.
Theres so much more to Irish inflation than oil and its but one factor threatening our economy.

Diaspora

Never been higher in the market which takes time to filter down to the forecourts

http://mwprices.ft.com/custom/ft2-com/html-quotechartnews.asp?countrycode=US&symb=cl06u&sid=1677403

http://mwprices.ft.com/custom/ft2-com/html-quotechartnews.asp?countrycode=US&symb=jd06z&sid=1863690

Resurface the thread in 3 weeks and see what prices are like at the pumps

ivuernis

silverharp wrote:

why did gold go up from $35 oz in 1970 to over $600 today, is it 15 times more difficult to mine gold today then in 1970, I don't think so.

My head is a bit frazzled at the moment due to work overload so don't have the energy to explain it fully but it's basically to do with the US dollar and its pegging to the gold standard until 1975, after which the US dollar decoupled from the gold standard and became a fully fiat currecy. Previously, gold was valued at $35 per oz but the dollar left the gold standard in 1975 gold was free to determine its own value. Oil induced inflation in the late 70's saw gold rise to over $600 per oz in the early 80's.

ivuernis

bonkey wrote:

We passed that mark and have continued with oil-prices rising steadily...and the world hasn't fallen apart.

In real terms oil is still short of the highs of the late 70's and global liquidity has probably allowed us to live with current high oil prices so far but this will change as central banks around the world start to reign in excess liquidity by raising interest rates to tackle inflation.

ivuernis

Diaspora wrote:

Oil $78.50 a barrell and rising why should this state dictate global economics?

'Cos the black gold makes the world go round. Higher oil prices leads to higher inflation. Demand is rising but production can't keep up (peak arriving?).

Victor

So how does it help Israel to put lots of money into Arab hands?

silverharp wrote:

Well said, look at any dictionary and you will see that inflation is caused by printing money,

97% of euro transactions by value are cashless. Printing money has nothing to do with inflation.

silverharp

ivuernis wrote:

My head is a bit frazzled at the moment due to work overload so don't have the energy to explain it fully but it's basically to do with the US dollar and its pegging to the gold standard until 1975, after which the US dollar decoupled from the gold standard and became a fully fiat currecy. Previously, gold was valued at $35 per oz but the dollar left the gold standard in 1975 gold was free to determine its own value. Oil induced inflation in the late 70's saw gold rise to over $600 per oz in the early 80's.

don't worry I know the history, The US couldn't afford the Vietnam war under the gold standard, so as you say they went Fiat with the currency. Since then they have inflated the currency in an effort to wipe out past debts and reduce claims by savers. Anyone in the US who received a pension payment fixed in 1970 dollars would have seen their standard of living drop thoughout the following years.
the mean value of gold should be it's full cycle mining cost, today that is in excess of 300-400 dollars, that means in broad terms that the unit of measure (the dollar) has had an extra 0 added, that's inflation

Victor wrote:

97% of euro transactions by value are cashless. Printing money has nothing to do with inflation.

you are being pedantic but switch printing money for inceases in M0-M3 money supplies in the past 30 in excess of real econimic growth. If you look at the back of the economist you will see that euro money growth is around 10%, given that the real economy is only growing by about 2-3% then the rest is inflation, be it property prices or lattes