Originally Posted by Roody
And, as in most speeches, you've over-simplified the issue. If the cost of oil keeps rising and we have to "pay a bit more" for the stuff we buy, one (or both) of two things will happen. The economic possibilities are:
- We have the same amount of money but it doesn't buy as much stuff, because stuff is more expensive. So we buy a bit less. Then the people who make the stuff produce a bit less stuff. They lay off a lot of their workers. Then eveybody has even less money to buy even more expensive stuff. There is a RECESSION.
- We have to pay more for stuff so we ask our employers for more money. They agree, and we keep buying stuff even though it costs more. Then stuff gets even more expensive so we ask for even bigger raises. We go into a period of runaway INFLATION.
But you forgot to tell us those inconvenient facts in your speech! Maybe you need to review that college Econ text that's all dusty in your attic. This is pretty basic information.
But the most important thing for a socialist to remember is that big companies and rich people will suffer some in either a recession or inflation, but it will be poor people and even middle class people who won't be able to feed their kids at the end of the month.
You also are oversimplifying to some degree. Because there are global factors, the economy is far more complex than you or your college textbook imply, and any of us can sort out fully. Even Greenspan is puzzled. We may well suffer a recession once China stops buying our treasury notes and holding down long-term interest rates which haven't risen in spite of 7 successive increases on the part of the Fed. Once they rise, the housing boom is going to come grinding to a halt and a lot of people are going to find themselves upside down on their interest-only mortgages, and possibly out of work, due to stagnating business investment. However, oil prices are just a small part of the equation.