A Quick Reminder That Higher Oil Prices Are DEFLATIONARY

View this email online | Add newsletter@businessinsider.com to your address book
		Tech Entertainment Wall Street Markets Strategy Sports Lifestyle Politics Europe Video Latest Tuesday, March 13, 2012 A Quick Reminder That Higher Oil Prices Are DEFLATIONARY The Fed will make an interest rate decision today, and the general expectation is that they will do nothing. Some might wonder whether the tone will be a tad more hawkish, given the improvement in the labor market and the impact of oil on inflation readings. It's possible, but it's worth keeping this in mind: Higher oil prices are deflationary. Sure, higher gas prices put upward force on the CPI, but they have the effect of sucking money out of the US economy, depressing spending on everything else, and that causes price compression. Above is a chart from SocGen looking at commodities since the beginning of the year. Other than oil, pretty much everything else is flat. And lately the trend is downish for base metals, livestock, agriculture, and other commodities. That's not to say that oil prices don't bite, but rather that if you think the response to higher oil is to make money tighter, then you're missing the point. Read » Also On Money Game Today: Intel's Plan To Become A Cable Company Is One Of The Dumbest Ideas Ever Why JPMorgan's Buyback Announcement Just Sent The Entire Stock Market Soaring JIM GRANT: Warren Buffett And Coca-Cola Investors Have Been Humiliated By Gold The Iran War Clock Is At 10 Minutes To Midnight Advertisement CHART OF THE DAY: How To Spend A Night In A Private Prison CHART OF THE DAY: The One Industry That Never Stops Adding Jobs CHART OF THE DAY: A Solar Storm Is A Bad Omen For Stocks Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: dwyld.kwu.jobhuntportal11@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

If you believe this has been sent to you in error, please safely unsubscribe.