Oil prices are soaring right now.
The Straits of Hormuz are shut.
The Suez Canal might be.
These actions have consequences.
One will be inflation. Keep the conflict going, and that inflation will have a serious impact.
So, let me just make it clear to the Bank of England:
Raising interest rates in response to this situation will not increase oil supplies.
There is that joy of the idea that BoE hangs upon The Sage’s every utterance.
But rather more important, as everyone but Spud knows the policy relevant inflation rate is “core” inflation. That is, without food and fuel, given that we know both of those are volatile in their pricing. Thus the warning is baked into the very system already – something Spud, The Sage telling BoE what to do, is apparently ignorant of.
Didn’t Trump say something like ‘Frack baby, frack’??
Of course the idiot Greens oppose drilling for gas in NSW and Victoria here in Oz. So I can’t really pretend that we have more sense than you.
Gross speculation.
Not a chance. That’s not how Trump operates; he hates war. He loves killing murderous tyrants.
The Straits of Hormuz are shut.
It’s a bank holiday over there?
Trump doesn’t want to go to Congress under the War Powers Act. He has about a week to raise hell. I don’t expect Iran to have much military assets left on the gulfs by then. And Israel won’t be constrained from further action after US drops out. And the Arabs are mad.
So I don’t think the straits will be closed for long.
The Islamic state of Iran is in deep doo.
INT. THREADNEEDLE STREET BASEMENT, LONDON – DAY
We see a man dressed in overalls tending a furnace. He is shovelling piles of letters into it at a frantic pace. The camera pulls back to show an absolutely massive pile of similar letters waiting to be burnt.
He stops for a moment, wipes away sweat from his forehead, and starts shovelling again. As the shovel enters the furnace we see a close up of one of the letters on it. Before it catches fire we can briefly see the green-inked words “So let me just make it clear ..”
“ The policy relevant inflation rate is “core” inflation. That is, without food and fuel, given that we know both of those are volatile in their pricing.”
How very helpful to all those people who live on fresh air and don’t use any energy at all.
At this rate BoE will be claiming that ‘inflation is under control’ because the price of tea towels is rising by less than 2%.
Inflation is devaluation of the currency. Fuel pricing doesn’t tell you the value of the currency.
Does it really matter, Jim? Fuel & food prices are costs. And in the end they get folded in with all the other costs that produce prices & thus the value of money. There’s just a lag whilst they work through.
Which is precisely why they BoE need to act faster, because we know that higher energy costs (particularly) will end up in the prices of everything if they do nothing. Ignoring the effects of (say) a doubling in the oil price because its ‘volatile’ then ignores the effects that will have in 6 months to a years time.