Comments on Aplia Econ Blog: News for Economics Students: A Tale of Two Dragons: China's Trade Surplus and I...

Oil prices ease ahead of U.S. Federal Reserve rate...

2008-04-30T23:34:00.000-07:00

Oil prices ease ahead of U.S. Federal Reserve rate decision

BY D SHEPPARD
LONDON,ENGLAND

The most debatable topic from last few years is the rising oil prices. since 9/11
and war on Iraq world oil prices rose tremendously. the rising inflation and the
weakening of dollar is causing the prices of commodities to go up. this article is
taken from thomson financial on April 30 2008.

Oil fell on Wednesday, extending crude's sharp sell-off as the dollar strengthens
ahead of the Federal Reserve interest rate decision later today .The Fed is widely
expected to cut rates by 25 basis points to 2.0 percent , which would typically
weaken the dollar and boost commodities. However, rate setters in the world's
largest economy are expected to signal a desire to hold rates there for the time
being. That anticipation is lending the dollar support and reducing the appeal of
commodities priced in the greenback.' A dollar rally could likely derail the short
dollar/long commodities play that has been working so well for much of the
year,' said MF Global analyst Ed Meir. New York-traded West Texas Intermediate
crude for June delivery dropped to an intraday low of $114.86 before firming to
$115.40 by 12:20 p.m., a 23-cent decline from T uesday's close. Meanwhile,
London Brent crude for June delivery fell 18 cents to $113.25. Supply concerns,
which boosted oil prices to within a few cents of $120 a barrel earlier this

week, have also eased. Falling demand in the United States has dealt a further
blow to prices, with revised figures released by the Energy Information
Administration (EIA) yesterday showing gasoline demand in February was 7
percent lower than the year before.

Some of the drop in demand may have been due to the weather, some may be
due to the price level, and some may be due to the slowing economy. Analysts
polled by Thomson Financial News expect to see a rise in crude inventories of
1.1 million barrels, while distillate stocks are expected to be up by 830,000
barrels. While this could further weigh on prices, expectations for a 625,000-barrel
drop in gasoline inventories could lend support. according to my reading the oil
prices will come down to $80 a barrel and thats what we all want it to be.

An alternative approach that explains China's incr...

2006-08-21T23:53:00.000-07:00

An alternative approach that explains China's increasing inflation rate is the quantity theory of money.

Money Supply x Velocity of Money = Price Level x Potential Output

MV = PY

Or, in percent change form,

% change in M + % change in V = % change in P + % change in Y

m + v = inflation + y

inflation = m + v - y

Hence there are two sources of inflation--money growth and velocity growth. And there is one source of deflation--output growth.

If the change in (m + v) exceeds the change in y, then the inflation rate will increase.

China's economics are too complex to be analyzed t...

2006-08-02T02:27:00.000-07:00

China's economics are too complex to be analyzed through some simple graphs based on static economic analysis. The fact of the matter is that despite super-fast growth, there are no signs of inflation; rather sign of deflation being readily found. Anyone interested may browse my weblog http://chinastreeteconomist.squarespace.com - for fun and casual browsing.

Thanks. Corrected.

2006-07-31T09:25:00.000-07:00

Thanks. Corrected.

A minor correction. The central bank of china is p...

2006-07-31T07:03:00.000-07:00

A minor correction. The central bank of china is people's bank of china, not bank of china, which is a state-owned commercial bank... don't want this tiny error ruin the great blog..