are diving ……commodities are flying high?

 

  • Dr Jim 9:01 pm on February 9, 2010 Permalink

    The following two problems is what is driving commodity prices through the roof:

    NAFTA is Problem #1. When US companies create and move jobs overseas, they create a larger middle class globally. Now that there is a larger middle class globally, we are all competing for the same commodities.

    BioFuels is Problem #2. Our farmers are now putting less food on our tables so that we can be more energy independent. This is causing SOARING food prices.

    Because of the FED and the WAR, that has exacerbated #1 and #2. When the Fed lowers interest rates, the dollar drops and all those middle class people that we’ve created overseas can buy our commodities much cheaper. The war has increased our deficits so much that other countries no longer want US dollars.

  • Zeltar 9:01 pm on February 9, 2010 Permalink

    I am buying "these" commodities. Specifically, Gold. The prices are not being driven up. The US Dollar is falling. You can blame the Government and the Federal Reserve.

    Government: For waging war by unlimited, uncontrolled, borrowing. As long as you keep spending more money than you bring in, you’re causing the value of money to fall. This, by far, is worse than the tax one could of used to keep the dollar stable.

    Fed: For lowering interest rates instead of raising them. When this situation happen during the Carter years, the Fed’s reaction was to raise interest rates to RESTRICT the money supply. This is the correct action as it causes foreigners to INVEST heavily in the USA to get those great interest rates on bonds. And, it forces people to live within their means or it’ll cost them an arm and a leg. By lowering interest rates, they have caused the sell off of dollars by foreign investors, and made money more available which means it’s worth MUCH less.

    Commodities do not suffer from the whims of politics as does a particular countries currency.