The article deals specifically with the supply and demand of the goods. Once you take into account the rapid expansion of money supply (without expansion of money, there is no economic growth ). The oil price can only go one way ..... UP
To add insult to injury, we now have a situation whereby the excess of money supply can't find a value added avenue in bond, equity & housing market. So, the money has to concentrate on the commodities for the time being. Eventually, when the Fed and central banks all over the world decide to inflate the money supply further to prevent another round of banks collapse. The money will find their way in every aspect of our life.
German Weimar Republic in the early 1920s and the U.S. Quote:
German Weimar
1919-1921
1. Bank interest rate - still 5%
2. German stock market at 97 in January 1919, 166 in January 1920, 278 in January 1921 and 731 in December 1921.
3. The general price level has doubled since 1914.
4. Most of the rest of the world allows their money supplies to contract as a "war withdrawal" effect, and goes into recession or depression (general prices fell 16% in the U.S. in 1921). Germany keeps creating or printing money, and the government deficits continue to increase.
5. Newspapers and many financial folk are very confused by the continual price increases. Its blamed somewhat on the Versailles Treaty and France but mostly on speculators and "foreigners" inside Germany (an ominous sign and similarity to what's ahead with Hitler and the Holocaust, etc.).
1923
1. Bank interest rate rises to 19% in January, 30% in April, 90% in September.
2. German stock market at 21,400 in January and rose to 26,890,000 in November at the peak.
3. Crime, malnutrition, suicides etc. have reached unusually high levels.
4. Money velocity - 5-12
5. Many foreign companies have large foreign currency gains, due to the falling value of the mark.
November 14, 1923
1. German mark worthless (4 Trillion marks per dollar)
2. Bank interest rate over 900%
3. German stock market at 26,890,000 at the peak
4. The value of the Daimler company was about $980 million and a car cost $3 million - the whole company was only worth 327 of its cars.
November 15, 1923 & beyond
1. German Central Bank issues the Rentenmark, a new currency, backed by various property in Germany.
2. Old marks are converted to Rentenmarks at a ratio of one billion marks = 1 Rentenmark.
3. Many governments have enacted extremely stiff wage and price controls in the wake of hyperinflation, which is a form of forced savings: goods become unavailable, and hence people hoard cash.
4. No episode of hyperinflation in history has been ended by the use of wage and price controls alone, though they have sometimes been part of the mix of policies used to halt hyperinflation.
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