That is why the developed countries take care of their reserves of oil. It might also be a reason for invading countries. What will a government do when it has to choose between lowering it's people life standards with a high possibility of being discarded or acting on a maquiavelic way?
What percentage of food prices are transportation? If it's negligible (eg less than 5%), then this theory doesn't hold (ie fish prices on the coastline should remain stable). Generally, labor costs are the largest factor in most production. Regardless, people will shift their demand such that there shouldn't be widespread increases in prices. There is the possibility of monetary debasement causing a general rise in prices.
@siggyboss If crude oil went to $100 in 1973, that's like going to $450 in today's money. Crude oil at $450 would push all fuels so much higher, that everything would be too costly to move around. Particularly truck based transportation would suffer most. Fertilizers become expensive, diesel for the farmers becomes too expensive, and all this has to be passed to the end food consumer, thiscan be as much as 30-40%
@VERGIS92 You haven't addressed the problem. For example, assume Intel has 1% of a microprocessor's price in transportation. You could quadruple the price of oil, a 300% increase, and that's a 4% price increase assuming Intel even bothers to actually raise the price. Where's your proof that transportation represents a certain percentage of the cost of food that it would necessitate a 30-40% increase in price? Why would prices rise in general (ie beyond food to microprocessors)? Just a theory.
@NotTheLaw Transportation is big cost, much bigger than it seems. All farmers' tractors need diesel, and they run them several times over their fields to make the final product, then many trucks are involved in transportation. The more organized a farmer or a producing company is, the more it can save. But it's big cost. Small companies on the other hand exploit oil price increases, and hike their prices even more than they should.
@siggyboss If a product, say a frozen pizza costs $10 at the supermarket shelf, and it has $0.50 costs associated with energy to make / transport / keep frozen, and this goes to $1.50, that is 15% on the final product right away, but if soon after the materials also go up, it can end up costing $13-$14. On the other hand, services such as airline tickets can stay where they were, if the airlines have insured against jet fuel rises through Futures / Options traded at the stockmarke
Can you do a video on PPP? You seem really good at all this economics stuff. Maybe you should do global economics after that. I think it would help tons of people.
That is why the developed countries take care of their reserves of oil. It might also be a reason for invading countries. What will a government do when it has to choose between lowering it's people life standards with a high possibility of being discarded or acting on a maquiavelic way?
WorldAdviser 7 months ago
What percentage of food prices are transportation? If it's negligible (eg less than 5%), then this theory doesn't hold (ie fish prices on the coastline should remain stable). Generally, labor costs are the largest factor in most production. Regardless, people will shift their demand such that there shouldn't be widespread increases in prices. There is the possibility of monetary debasement causing a general rise in prices.
siggyboss 7 months ago
@siggyboss If crude oil went to $100 in 1973, that's like going to $450 in today's money. Crude oil at $450 would push all fuels so much higher, that everything would be too costly to move around. Particularly truck based transportation would suffer most. Fertilizers become expensive, diesel for the farmers becomes too expensive, and all this has to be passed to the end food consumer, thiscan be as much as 30-40%
VERGIS92 7 months ago
@VERGIS92 You haven't addressed the problem. For example, assume Intel has 1% of a microprocessor's price in transportation. You could quadruple the price of oil, a 300% increase, and that's a 4% price increase assuming Intel even bothers to actually raise the price. Where's your proof that transportation represents a certain percentage of the cost of food that it would necessitate a 30-40% increase in price? Why would prices rise in general (ie beyond food to microprocessors)? Just a theory.
siggyboss 7 months ago
@siggyboss It's not only transportation costs that would increase. For example, mining the materials for the processors also becomes more expensive.
NotTheLaw 7 months ago
@NotTheLaw Transportation is big cost, much bigger than it seems. All farmers' tractors need diesel, and they run them several times over their fields to make the final product, then many trucks are involved in transportation. The more organized a farmer or a producing company is, the more it can save. But it's big cost. Small companies on the other hand exploit oil price increases, and hike their prices even more than they should.
VERGIS92 7 months ago
@siggyboss If a product, say a frozen pizza costs $10 at the supermarket shelf, and it has $0.50 costs associated with energy to make / transport / keep frozen, and this goes to $1.50, that is 15% on the final product right away, but if soon after the materials also go up, it can end up costing $13-$14. On the other hand, services such as airline tickets can stay where they were, if the airlines have insured against jet fuel rises through Futures / Options traded at the stockmarke
VERGIS92 7 months ago
@VERGIS92 Have you researched the average percentage cost of transportation in food? Or clothing? Without that data this is an unproven theory.
siggyboss 7 months ago
Comment removed
siggyboss 7 months ago
Can you do a video on PPP? You seem really good at all this economics stuff. Maybe you should do global economics after that. I think it would help tons of people.
KingPtolemyIII 7 months ago
ok now what about hyperinflation like what happened to Zimbabwe?
ethanhines 7 months ago
I never really understood it before thanks! So how do you get out of stagflation?
jonvssocrates 7 months ago 10
@jonvssocrates i hope we find out pretty soon... : - /
JAROSLAVAGINA 7 months ago 5