A nice primer on Inflation and who it hurts and who it helps...Yes, inflation can be your friend...

Inflation-talk is the rage right now, domestically and internationally. It is still open to debate whether we are  in the midst of the classic definition of inflation---a general rise in the average price level---or do we just have increasing prices in a limited, but vital, number of commodities (gas and food, primarily). This blog post from "Supply and Demand--In that order" is a nice primer on the topic of the effects of inflation on all the interested parties...

""Normally, inflation is one of the most harmful taxes, but these days inflation may do less harm than good.

During most of our lifetimes, the prices of things we buy have generally increased over time. We can name some exceptions, but most items (even houses) have prices that are higher now than they were 10, 20 or 30 years ago. This general increase in consumer prices is called inflation.

The Federal Reserve is charged with limiting the rate of inflation, which it can do over the long run by limiting the supply of money and similar assets in the hands of the public.
Inflation is widely disliked. A number of economists think that inflation’s bad reputation is undeserved, and that, while people complain that inflation makes things more expensive, they fail to recognize that inflation also raises their wages.

The net result of inflation could be to increase wages and prices in the same proportion, without harming consumer’s purchasing power.

A person on a fixed income, such as a pensioner receiving a specific number of dollars a month – a so-called “defined benefit” pension – does have less purchasing power when prices rise. However, Social Security benefits automatically increase with wages in the economy, and thereby automatically increase with inflation in the long run.

Why a commission to investigate speculation in the oil/gasoline markets will not be productive---We are missing the REAL story---See why in one easy to read graph...

We can appoint 100 commissions to investigate the role of speculators (read that Hedge Funds investing in oil futures) in the rising price of oil, but I would prefer to look at one underlying fundamental that will remain long after these commissions issue their reports (with vague findings, after spending lots of money to do so---mark my words). 

The graphic below speaks volumes and starkly illustrates what I don't think most Americans are aware of, or want to be aware of---there are major emerging economy's with large populations and they are consuming more oil based energy every day. 

Speculation in the oil markets happens (see, I said it!). No reasonable person denies that.  However, it will not be the long term cause of higher oil prices, hence gas prices.  THIS WILL:

Source: WSJ

""The U.S. Energy Department on Wednesday reported a 1.6% decline in a closely watched gauge of gasoline consumption, compared with a year ago. In the past, when U.S. drivers cut back, that has dented global demand for oil and depressed prices. After a lag, the lower prices would help the economy regain its footing—or at least remove a substantial headwind.


But many oil experts believe that scenario won't play out this time, because U.S. drivers are no longer calling the shots. The rapidly industrializing economies of China, India, Brazil and even Saudi Arabia are. A possible result: an extended period of sluggish U.S. growth amid high oil prices.


"It's a new world," said oil economist James D. Hamilton, a professor at the University of California, San Diego. "The growth in newly industrialized countries is the key factor driving oil prices."""

Donald Trump will get tough with China on Trade...Hmmm...then who is going to make his signature shirts and ties?

Donald Trump has said he will get tough with the Chinese on trade. He believes they take advantage of the US and plays us for chumps. Is he going to get tough BEFORE or AFTER they make the shirts with his name on them...just askin'...

Source: HT Carpe Diem

Another United Nations "Fail"---How do you become a member of the UN Human Rights Council? If you are Syria you murder protesters in the streets. This is the upside down world of the UN...

Despite Reports of Brutality Toward Civilians, Syria to Join U.N.'s Human Rights Council

The brutal crackdown by Syrian President Bashar Assad may finally be getting the attention of world leaders -- but apparently not enough to stop Syria from becoming the newest member of the U.N. Human Rights Council.


And despite calling for an independent investigation into the crackdown, which has left hundreds dead, U.N. Secretary-General Ban Ki-moon apparently won’t do much about blocking Syria’s path to the human rights group.

"That's not really for the secretary general to suggest to a member state," said Martin Nesirky, a spokesman for the secretary-general, when asked if the U.N. chief would ask Syria to drop out of the running for the post. When asked if Ban had brought up the point during his telephone conversation April 9 with Assad, Nesirsky told Fox News, "that's not really something the secretary general would raise specifically, because it's for other member states to decide on the membership of the Human Rights Council."

If you like beer, don't make over $22,000 per year--Apparently you become too sophisticated and responsible at that income level...

Perhaps the MOST interesting thing about the study quoted below is that it came from an organization called "The American Association of Wine Economists"--Yes, you read that right. Who says economists are boring...But I digress...

This blog entry at Economix is about the increase in consumption of beer by the Chinese, but I was intrigued by this nugget of information:

...That story can be repeated for any number of consumer goods, of course. But what’s interesting about beer is that the trend is not likely to last. A paper by two economists at the University of Leuven, in beer-loving Belgium, finds that people drink more beer as their incomes rise, until they make about $22,000 a year.

Then they start drinking less beer.
The paper, brought to my attention by the Reuters blogger Felix Salmon, doesn’t offer much in the way of explanations, but perhaps the most obvious one is something many Americans personally experience in their 20s. As you start making more money, and assuming more responsibility, there is less opportunity to drink -– and the potential consequences become more costly.

An income of $22,000 seems to be the breaking point where beer crosses over from a normal good to an inferior good.  If income increases and the demand for a good increases then it is considered a normal good. If income increases and the demand for a good decreases then it is considered an inferior good--people substitute away from the inferior good to a normal good as income increases.  In this case, the study finds wine becomes the normal good as income goes over $22,000.   

This type of information is important to marketers of all products, not just alcohol.  A nice example of how research at a Microeconomics level is useful to businesses...It also can be an example of potential "research bias"--I wonder who funds the "American Association of Wine Economists". Well, maybe the wine industry does not fund it, but I am guessing "the drinks are on the house" at the minimum...

I especially liked the comment in the last line (underlined)---as with most things economically related it starts (and ends) with OPPORTUNITY COSTS... :)