U.S. inflation to hit 6% (within six months)

[Doctor Cynic]

Source: Globe and Mail

Heavily subsidized energy in the Middle East will help drive the inflation rate in the United States to 6 per cent within six months, and prompt the U.S. Federal Reserve Board to go on a rate-hiking frenzy, CIBC chief economist Jeff Rubin predicts.

Despite the recent fall in oil prices, U.S. gasoline prices will resume their rise because of unabated demand for energy in OPEC countries, Mr. Rubin argues.

“As more and more of OPEC's oil is diverted to meet soaring power demands throughout the Middle East, American pump prices will continue to rise,” he says in his most recent paper that examines the consequences of his forecast for rising oil prices.

“From the world's largest indoor ski hill in Dubai, to the world's largest desalination plants in Saudi Arabia, dirt cheap energy makes anything possible in the Middle East today.”

Read more: http://www.reportonbusiness.com/servlet/story/RTGAM.20080730.wcibcrubin0730/BNStory/Business/home

---

There's one thing he didn't mention: those countries cannot keep pumping more of the black stuff.

Get ready for a rocky ride.

[Hydra]

1. We're exporting record quantities of petrol during our "shortage"

Expect the market manipulation to continue on all fronts.

[AndyA]

4. And wouldn't it be nice if our "media" asked him how that's possible,

when so much that's pumped or refined here is sent overseas anyway?

What we really need is a Congress who will put its foot down and state that what's drilled here, STAYS HERE.

With oil companies making almost 10 billion in profits every three months, it's pretty obvious to me we're being gouged. Why Congress can't see that is a mystery, although I suspect they're complicit in the gouging. :(

[Sivafae]

12. Can you back that claim up with evidence?

I'm not trying to be smart, I'm genuinely interested.

[Hydra]

13. Ya, it was posted here a week or two ago

And luckily, it was easy to find or I probably would have told you to do it yourself :P

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3618662

[Virginia Dare]

2. But Johnny McSame said all we have to do is drill for more oil..

right here in the U.S. That solves all our problems, right?..:eyes:

[phantom power]

3. I assume that's the inflation rate that ignores food and fuel costs...

since the inflation rate most people are already experiencing out here in the real world is more like 10%.

[lonestarnot]

10. 20

[Grinchie]

5. More like 6% per Quarter for and annual Inflation Rate of 24%

If the government reported the real inflation rate, Social Security checks would rise to $2,500 a month, and Soldiers would get a pay raise.

Inconceivable to think that group needs more money!

Quick, plunk your money into a High Yielding 1 Year CD for 3.25% for a return of -21%! Yeah! That is if the institution is still around after a year of bloodletting.

[Tempest]

6. Don't worry, it's only a mental recession

No one is being affected by the inflation rate according to Phil Gramm.

[CanonRay]

7. We're way the hell past 6%

[whistle]

8. I'm sure that the true inflation rate is much higher, perhaps 12% to 15%

[Warpy]

9. Triple it

and you'll be able to estimate the inflation subsistence spenders will see.

Those of us who survived the 70s as adults have been on this rocky ride before. It requires learning new skills and making a lot of very uncomfortable choices.

[Hestia]

24. Yes, we saw it in the 70s but things are different now -

we didn't have cell phone bills, cable bills, nor credit card bills. Back then we actually got a return on the savings rate - 8-12%. The savings rate of return hasn't climbed since 1980s. If the gov't were actually serious about us savings, throw us a bone. 3.25% shouldn't be a good deal.

[Warpy]

26. People had land line phone bills and they certainly did have

credit card bills and were starting to have student loan bills. Yes, they were getting 8% on a money market account (savings restricted to 4 3/4% by law), but that meant they had to have the money to put into a money market account instead of a straight checking account. Don't forget what interest rates were like for borrowing back then, and that people could no longer afford to buy a used car without taking one of those loans out.

You're correct that Wrong Way Bernancke needed to raise interest rates this spring instead of lowering them, but that might have cut into the looting capabilities of the GOPs on their way out of office. They need to unload those Fairfax McMansions onto Democrats next year, you know.

However, with people being squeezed to death between debt service and skyrocketing prices while wages are held down is an exact copy of what happened in the 70s. Let's watch them blame wages being too high on the inflation again. We'll see if people buy that a second time.

[Hestia]

27. Yes, the borrowing the rates were high but they were do-able.

When my ex and I were married we made collectively $7.50 per hour. We had a two car payments, rent, stereo payment (JVC's were the best), went camping every weekend, took vacations and still had money in the bank, all with 8.8-10% financing. But the costs of the actual item were not exhorbitant. We were able to pay everything down within a year. FHA released 8% mortgage money back in what, 1979 1980? I went into to apply, took a list of our accounts and how much the initial loans were. The lady was shocked that I had made that list, that usually no one came in prepared that way. How much was our house payment - $196. How much is this same house today listed at - $125k. Please. The rates may have been high, the actual cost of goods were low. Nothing broke us, you know? Now, no way in hell (at this moment in time) that we could do all what we did then, today.

[Texano78704]

11. They are are talking about the CPI

The Consumer Price Index is not exactly representative of inflation. The Wholesale Price Index is what most countries use as a gauge for inflation. Last time I checked, the WPI was running about 1% per month, spiking at one point to almost 2%. Real inflation is easily double the 6% they are claiming we will reach in six months.

[David__77]

14. The Middle East needs nuclear power.

If I ruled Saudi Arabia (in addition to abolishing the veil and corporal punishment) I'd start building nuclear power capacity to desalinate sea water and to power the whole country. Then the oil could just be a means of surplus revenue that could be distributed in the form of a national citizens' stipend every month.

[sutz12]

16. I've been wondering for two years now...

why Iran is really enriching uranium. I suspect they are preparing for the oil to dry up.

Solar would seem to be a better option, of course. But you can't build bombs from sunlight.

[daleo]

18. Give the military industrial complex time

Eventually they will get around to building bombs from sunlight.

[NickB79]

21. I've always been partial to Jedi lightsabers myself

[David__77]

19. Solar would be good as well.

But it's not as feasible for large-scale energy production yet. I do not believe that Iran is too interested in nuclear weapons, but seriously who could blame them? I mean, if there's any lesson to be drawn from the world events since 1989 or so, it's that HAVING "weapons of mass destruction" is the surest way to stave off invasion and war.

[sutz12]

15. Well, I'm glad to see it is finally going back down....

:sarcasm:

[NickB79]

17. As the ME economy booms, they need more oil for domestic use. Thus, exports dry up

The same thing is happening in Mexico and Russia as well.

Otherwise known as the Export Land Model: http://www.theoildrum.com/node/2767

[dysfunctional press]

23. and china's needs just keep on growing- and they've got the cash.

nt

[David__77]

20. I better get a good raise!

Here's hoping. This is the first time in my working life that inflation really factors into my consideration of compensation. I know 3% isn't nothing either, but only in the last year or so have price increases become "noticeable" to me.

[roamer65]

22. Here's what they're doing to the dollar.

A 12.6% inflation rate by the old, 1980 measurement. This inflation is a direct result of the massive M3 money supply growth, which is near record proportions.

[Dreamer Tatum]

25. One little problem: increasing interest rates tends to strengthen the dollar

Unfortunately, it also decreases investment, which could keep the economy stalled...

[Texano78704]

29. Do you have a link?

To these charts? Thanks

[AlphaCentauri]

28. Don't blame gas prices

there are many other factors for this mess