Since the OPEC oil embargo of the early 70s, Gas has generally been about the price of a gallon of milk. Both have been roughly half of minimum wage (plus or minus - since gas changes much faster than milk and milk faster than minimum wage).

In any case, if gas stays low for an extended period, will milk prices ever drop?

Will minimum wage drop? (We all know the answer is, no). Therefore, everyone has more free cash to spend, and the stock market will go up. Invest baby, invest.

 

Since the OPEC oil embargo of the early 70s, Gas has generally been about the price of a gallon of milk. Both have been roughly half of minimum wage (plus or minus - since gas changes much faster than milk and milk faster than minimum wage).

In any case, if gas stays low for an extended period, will milk prices ever drop?

Will minimum wage drop? (We all know the answer is, no). Therefore, everyone has more free cash to spend, and the stock market will go up. Invest baby, invest.

Were but it that simple. If it were, then the solution to all of our problems (well, most) would be to make the minimum wage $50/hr. It must be kept in mind that wages and prices are merely proxies for a medium of exchange used to facilitate communication between producers and consumers of goods and services. Its the production and consumption of the goods and services that define the economy. In your example, let's say that everyone has more free cash to spend -- what's the consequence? Inflation. Hence the low prices that created the situation you suggest will not stay that way and now people won't have as much free cash to spend.

 

Once can hardly make a valid statement connecting inflation to advancement in minimum wages. Inflation proceeds in the absence of advancement of minimum wages.

 

Were but it that simple. If it were, then the solution to all of our problems (well, most) would be to make the minimum wage $50/hr.

I don't understand how a $50/hr minium wage could solve anything I posted. I did not suggest a cause-and-effect, I described a correlation and even stated that it is a broad generalization - minimum wage only goes up, and never decreased in the US so, at any given time in history, exact accuracy cannot expected.

It must be kept in mind that wages and prices are merely proxies for a medium of exchange used to facilitate communication between producers and consumers of goods and services.

Excellent description of the obvious.

Its the production and consumption of the goods and services that define the economy.

I completely disagree. The economy is defined by selling and buying of goods and service (assuming all labor considered a 'service' to an employer). Simple converting raw material inventory to finished goods inventory does nothing to the economy. Likewise, consuming goods from a stockpile does nothing for an economy.

In your example, let's say that everyone has more free cash to spend -- what's the consequence? Inflation. Hence the low prices that created the situation you suggest will not stay that way and now people won't have as much free cash to spend.

This my last disagreement with you and I assume you have been in a coma for the past 20 years of consumerism gone crazy. More free cash simply means more consumption. Inflation only occurs in a closed system when consumers have no alternatives and few competitors to supply their goods (as in the case of fuel). So, yes, fuel prices will rebound and I said that earlier in this thread. However, any market that can be supplied by any Tom, Dick or Harry who can undercut the current competitors or import the good from half way around the world, higher wages are not going to cause inflation! Therefore, until fuel prices go up again (or some other essential with a limited number of suppliers surges in price), the economy will surge because people have more free cash. Nobody is going to lower the minimum wage to reduce that free cash. Now, look at the stock market. It exactly reflects what I am saying. Even the correction in Q3 2014. There was old thinking for a short time when stock traders decided the economy must be slowing down because fuel prices are dropping rapidly (they assumed fuel prices were dropping because of slowing demand). Once they realized that fuel prices were decreasing because of excess production, the market immediately rebounded and surged to record levels because they know what I said earlier, people have more free cash burning holes in their pockets!

 

http://www.nytimes.com/2014/12/01/world/russian-money-suspected-behind-fracking-protests.html?_r=1

This belief that Russia is fueling the protests, shared by officials in Lithuania, where Chevron also ran into a wave of unusually fervent protests and then decided to pull out, has not yet been backed up by any clear proof. And Gazprom has denied accusations that it has bankrolled anti-fracking protests. But circumstantial evidence, plus large dollops of Cold War-style suspicion, have added to mounting alarm over covert Russian meddling to block threats to its energy stranglehold on Europe.

I wouldn't be a bit surprised if true. The economic interests of Russia are the economic interests of the elites in charge there.

 

That was in Romania.

 

That was in Romania.

The Russian Petro mob is suspected of blocking fracking in Romania and just about everywhere else in eastern Europe. Don't ever call a Romania Russian. I learned that the hard way a long time ago.

 

The Russian Petro mob is suspected of blocking fracking in Romania and just about everywhere else in eastern Europe. Don't ever call a Romania Russian. I learned that the hard way a long time ago.

If it is a suspicion and not proven, then how do we know there is such a thing as "The Russian Petro Mob?"

 

If it is a suspicion and not proven, then how do we know there is such a thing as "The Russian Petro Mob?"

http://www.foreign.senate.gov/imo/media/doc/KupchinskyTestimony080612p.pdf
http://www.themoscowtimes.com/opinion/article/why-gazprom-resembles-a-crime-syndicate/453762.html

I mean, we all know, "There is no Mafia".

 

Since the OPEC oil embargo of the early 70s, Gas has generally been about the price of a gallon of milk. Both have been roughly half of minimum wage (plus or minus - since gas changes much faster than milk and milk faster than minimum wage).

In any case, if gas stays low for an extended period, will milk prices ever drop?

Will minimum wage drop? (We all know the answer is, no). Therefore, everyone has more free cash to spend, and the stock market will go up. Invest baby, invest.

Interesting!

And, if gas prices were depressed because the largest oil exporters in the world were being pressured by large foreign nation number one to "flood" the market with cheap crude, in order to drive down the price of crude in order to put economic pressure on large foreign nation number two, which was highly dependent on revenue from oil exports, what would happen to the stock market when foreign nation number one changed its "mind?" All hypothetical, of course.

 

Interesting!

And, if gas prices were depressed because the largest oil exporters in the world were being pressured by large foreign nation number one to "flood" the market with cheap crude, in order to drive down the price of crude in order to put economic pressure on large foreign nation number two, which was highly dependent on revenue from oil exports, what would happen to the stock market when foreign nation number one changed its "mind?" All hypothetical, of course.

That theory is highly likely and, as you suggest, the price of oil will definitely go up in that case and, from my estimates, the stock market will see a SURGE as the price of oil starts to go up. Most basic raw materials track with the price of energy and increases are quickly passed on to customers, showing increased revenue. See the surges in the market as fuel prices surged from 2004 to 2007 as the example. We all know how the whole thing ends but, I'm going to invest for now.

 

With a huge dollop of nostalgia for the mythical "good ol' days". It's all we old men have left -- heavy sigh.
'66 Pontiac, '73 TransAm, '78 Corolla, 87 Civic, '91 LeBaron, '08 Civic, '10 Ranger
I drive 'em till they drop.

I agree completely.

Man, this thread took on a life of it's own. I just purchased a 93 Buick Lesabre $1000 123k miles on the car and sold my 92 Buick Century 200+k miles for $400. These motors get better gas mileage than my burned up 94 Camery; it gave up the Ghost on the second hottest day of summer this year.

I won't go down and spend 20+k for a car just to get better Mileage when I can purchase a big old beater and drive it till it drops. How many Gallons of Gas can I buy with 19k left over my recent purchase?

Spending the additional 19k in savings is something on the order of 9,500 Gallons of gas at $2.00 a Gal and 3,166 Gallons at $6.00 a Gal. Even getting 15 mpg at $6.00 a Gal that amounts to 47,500 miles on the road and purchasing at $2.00 a Gal I will get 142,500 miles. After 50k on the Odometer I just get another beater and sell the old one.

Buying new cars to justify saving money on fuel is something I don't get?

Since I'm three minutes from work; whats the point? If the air quality were better I would walk.

Edit: I did convince my wife that purchasing a Motor Cycle for $1500 this year was just plain fun. I forgot how much fun it is to ride.

 

That theory is highly likely and, as you suggest, the price of oil will definitely go up in that case and, from my estimates, the stock market will see a SURGE as the price of oil starts to go up. Most basic raw materials track with the price of energy and increases are quickly passed on to customers, showing increased revenue. See the surges in the market as fuel prices surged from 2004 to 2007 as the example. We all know how the whole thing ends but, I'm going to invest for now.

I consistently made money in the stock market up until 2004 doing what the experts say to never do, i.e., time the market. But from 2004 until 2007, I gradually realized that I no longer understood what drove the market, and in early 2008, I sold out. Later that year, I was patting myself on the back, and I never got back in the market. Now, I don't feel so smart, but I still don't understand why the market is at record highs, especially given the level of personal, corporate, and national debt. The word "bubble" keeps coming into my head, and I keep hoping for interest rates to get back to normal.

 

I consistently made money in the stock market up until 2004 doing what the experts say to never do, i.e., time the market. But from 2004 until 2007, I gradually realized that I no longer understood what drove the market, and in early 2008, I sold out. Later that year, I was patting myself on the back, and I never got back in the market. Now, I don't feel so smart, but I still don't understand why the market is at record highs, especially given the level of personal, corporate, and national debt. The word "bubble" keeps coming into my head, and I keep hoping for interest rates to get back to normal.

I think that a lot of government policies, fed easing being high on the list, have distorted the market severely. Lots of people understand that the situation is unstable in the long run, but the market is not driven by long-term considerations to any great degree -- it's driven by the very near-term situation since everyone in the market is convinced that they can always get out of the market just before the bad chickens finally come home to roost.

 

A

I consistently made money in the stock market up until 2004 doing what the experts say to never do, i.e., time the market. But from 2004 until 2007, I gradually realized that I no longer understood what drove the market, and in early 2008, I sold out. Later that year, I was patting myself on the back, and I never got back in the market. Now, I don't feel so smart, but I still don't understand why the market is at record highs, especially given the level of personal, corporate, and national debt. The word "bubble" keeps coming into my head, and I keep hoping for interest rates to get back to normal.

Since 2004, there has been more and more "calculated" or computer trades and none of it makes sense on the short term ups and downs.

On the longer term, I completely agree about the bubble, the trick is how to monitor the "feel" of the economy. I say that like I'm a sage or soothsayer. I am not. I just keep my pulse on the greater economy and home to get something more than the one- or half-percent at a bank account.

I feel a bit evil playing the stock game. That is all it really is right now. The greater economy has little to do with the value of stocks and the big players are so big that they can puff up, cause the market to rise, then step out and watch prices collapse, then buy back in at a lower price, repeat. Just like a boa constrictor squeezing the life out of an animal, constricting with each exhale of the victim. I feel a bit evil playing this game because I had to play it like anyone else. Wait for everyone to get in and then jump off before everyone else and hope something bad happens when you do jump off... Then be ready to jump on again.

Don't play with cash that you cannot afford to loose. Also, inflation is not so bad that keeping it in a safe place is not so bad either.

 

Unfortunately, countries that have what we call a "petrolized" economy (like mine) have been economically hit because of all this speculation... and now our currency has slipped a few percentage points because of this... and the stupid thing is that down here, local gas prices have actually gone UP, because the government is trying to make up for some of that lost revenue

 

Ooops... Conoco Philips announces a 20% cut in capex spending for next year. Is the boom in shale coming to an end for a while?

http://www.marketwatch.com/story/conocophillips-cuts-2015-drilling-budget-by-20-2014-12-09

 

I agree completely.

Edit: I did convince my wife that purchasing a Motor Cycle for $1500 this year was just plain fun. I forgot how much fun it is to ride.

Ok, now for the reveal...
I'll show you my $1350 return to motorcycling fun if you show me your $1500 "return to fun".

 

Deal...

She's a Direct Drive 1982 Yamah 750cc Virago "Bobber" My sons Bike is just behind it.

I want to put a star on the tank with stripes each side. Then white sidewalls and stretch handle bars; not ape hangers. The stretch handle bars are so I can drop the seat down toward the rear fender.

It replaced my Cruiser a 1992 Yamaha 1300cc Royal Ventura it also has no chain; still got her in the back yard.

 

I love the wrapped pipes and flat black on yours.

This got me back into motorcycling.
1993 Suzuki vx800. V-twin.
Mine is identical to this but I only have poorly lit versions and it's cold out tonight (I met this guy who has the same bike and takes better pictures.

Mine had been sitting in a garage with a bent fork since summer 1994. All the rubber parts have been replaced and carbs cleaned. Fork straightened. Perfect. 2600 miles when I bought it. More than 6000 now.





After I was reminded how much I enjoyed it, I bought a newer one.
A honda V4 interceptor. And then I bought a third (GS500 for my kids)



Cheers!
Keep the sunny side up!