I found this American Politics Journal - Be Ready for $400-a-barrel Oil... And Worse! provoking article today. This more and more reminds me of a classic financial bubble.

May be a speculative article. Here are

Some facts:

1. Yesterday DJIA fell below 11 000 for the first time in some years and it has now moved into bear territory,
2. The US (still the worlds largest) economy may be in a recession and there are some fundmental long term imbalances according to a Cnn interview with Larry Summers (Treasury Secretary for Bill Clinton) Jeff Sachs (Director of UN Millennium Project), and Paul Krugman (op-ed columnist on economy for The New York Times). Personally, I agreed most with Jeff Sachs in that very interesting Cnn interview.
3. Some releated links:
   
   Recessions and Depressions: News & Videos about Recessions and Depressions - CNN.com
   
   National Economy: News & Videos about National Economy - CNN.com
   
   RealClearMarkets - Topics - Economy

So the market combined with acellerated research, investment in and use of alternative energy resources may fix the bubble itself.

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Kjell Gunnar Bleivik:: Financial information at your fingertips
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It would be difficult to justify $400 per barrel oil, at $400.00, it simply will not be used in many circumstances where it is currently used.

Check out the GDP/bbl stats. You can see that there is quite a bit of economic production occuring below the $400 GDP/bbl mark which by definition will be quashed.

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Just imagine how much increase in price for other commodities will happen if ever we reach a $400 per barrel price in oil. More people will become incapable of sustaining the cost of living expense.

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My bolding.

Economics is not always about rationality. There is nothing new under the sun in financial markets. Here are some classic book recommendations.

1. Reminicenses of a Stock Operator (1923) Edwin Lefevre.
2. Extraordinary popular delusions and the madness of crowds by Charles Mackay (1841) and Confusion de Confusion by Joseph de la Vega ( 1688 ). Martin S. Friedson, Editor.
3. The interpretation of Financial Statements (1937) by Benjamin Graham and Spencer B. Meredith. New introduction by Michael F. Price.

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According to Cnn news:
90 billions of barrels of oil in the Arctic according to Arctic Circle (if that is the correct one).

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Kjell Gunnar Bleivik:: Financial information at your fingertips
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The oil companies and the conspirators they hired in the White House are responsible for US bank failures, hyper inflation, GM, Ford and Chrysler going broke, record consumer debt, record government debt, record trade deficits and record budget deficits.

Yet Americans still will vote for the criminals represented by John McCain while they lose their homes and retirements !!!

America is being taken for a ride and it's citizens are sitting back while con men steal everything they have while their congress does nothing to stop the Houston Oil Criminals.

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Where?

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Kjell Gunnar Bleivik:: Financial information at your fingertips
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Everywhere

You are an economist who does not know about food production ???

Did you miss the fact that fertilizer is made from natural gas and that the entire world is dependent upon "modern agricultural farming technology" due to flawed methods taught to farmers ??

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One of the most elementary errors in economice is confusing absolute and relative prices. Inflation is an increase in the general price level. Hyper inflation is what Zimbabwe now experiences.

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Its inflation, I think its fair to say that the economy is experiencing 'stagflation'

Hyperinflation - Wikipedia, the free encyclopedia

On that article there is a picture of a German woman burning Marks since the marks burned longer than the firewood it could purchase.

You can even see past inflations in some former currencies, ie. at one point in time there was a 1,000 lira note in Italy (which was worth less than a dollar), but they treated it like you would a dollar bill. Same thing with the Turkish lira which had million dollar denominations until they just recently chopped off some zeroes.

Bush & Cheney do not control the money supply. If you want to stop inflation, the Federal Reserve can simply raise interest rates and keep raising them until it stops. They obviously have not been doing that....

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Quoted from your Wikipedia article:

In economics, hyperinflation is inflation that is "out of control," a condition in which prices increase rapidly as a currency loses its value. Formal definitions vary from a cumulative inflation rate over three years approaching 100%.

Some prices have gone up much more than 100% in the last 3 years.

What was a barrel of oil when Bush took office?

It topped out near 150 per barrel.

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Its based on a basket of goods, not just one or two.

Rates on 30-year mortgages jump sharply - Real estate - MSNBC.com

Its a chart of the 30-year mortgage rates over time. By definition, inflation must be below that rate because no bank would lend money at say 10% over thirty years if the inflation rate were, in actuality, 20%.

Inflation has its concerns, but there are winner and there are losers in inflation. Those with incomes not keeping up with the inflation rate obviously see their real incomes decline (the data indicate that indeed this is the case in the US since about 2001 or 2002)

Those in 'fixed' debt situations do better as the debt begins to shrink in real dollars.

Some people are in both camps, inflation helps them and hurts them. Take for instance a salaried worker with a large 30 year mortgage whose wages are not keeping up with inflation (this hurts him); but the inflation helps him because it reduces the real impact of the debt and the debt payments in real dollars over time.

Inflation also tends to hurt investors and discourages investment inasmuch as the projected cash flows are inherently more difficult to predict and the value of those future predicted cash flows is less than in an economy with less inflation.

Yes, the US is experiencing inflation. We are in the midst of a 'stagflation' recession. But it is NOT hyperinflation (at least not yet). The US went through a very similar economic episode in the late 70s, double digit inflation, double digit unemployment, double digit interest rates....

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Over 95% of the people in the US with home loans are making those payments each and every month.

The people who are going to be bailed out are;

* People who knew they were buying more house than they could afford.

* People who got home loans in spite of bad credit ratings.

* People who bought the house, took out the loan, and moved on in knowing full well that they wouldn't be able to make the payments when the interest rates went up.

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Janeth, major banks and Wall Street firms are failing due to the mortgage crisis, Ford and GM are closing plants and have lost billions.

So the situation is getting worse, not better and foreclosures are still moving up at a very fast clip.

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Ford and GM have been closing plants and loosing money since I was old enough to understand what everyone was talking about.

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Look up the following measures of the general price level.

1. The GDP deflator.
2. The consumer price index.

Inflation is defined by an increase in the first or sometimes the second.

The FED has another much used concept, core inflation.

Hyper inflations is experienced when the real forces in the economy are decoupled and there is a direct link between the increase in the money supply and the price level like that Zimbabwe experiences now. Hyperinflation is a monetary phenomena.

Enjoy chapter 9 of this

Nonstationary Time Series Analysis ... - Google Book Search

book.

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Kjell Gunnar Bleivik:: Financial information at your fingertips
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Don't worry KGun, inflation will become deflation as we go into depression, when no one has cash prices drop drastically, the main thing fueling inflation is fraud and commodity market speculation in energy sectors, but this will crash soon, bet on it.

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