Posts
Click to enlarge.
The moving average is sitting right on the long-term median. The current price is well below the long-term median. If I could hoard natural gas at the wellhead, I'd certainly be tempted to do it now. If history is any indicator, natural gas at the wellhead is currently priced for the bargain bin.
Click to enlarge.
Once again, the moving average is sitting right on the long-term median. The current price, accounting for obvious seasonal effects, also appears to be sitting right on the long-term median.
And lastly, why does anyone believe the inflation data and/or inflation predictions coming out of shadowstats? Where is the hyperinflation?
See Also:
Credit Bubble Stocks: "Exxon CEO says low US natgas prices not sustainable"
Source Data:
EIA: Natural Gas Prices
St. Louis Fed: CPI
6 comments:
Natty is looking attractive for several reasons, but making an investment that tracks the natty price is not so easy.
You've got fracing, which may not be sustainable. Then, you've got the friction of investment expenses.
Fracing + Friction = Fraction
As in, you get a fraction of your money back.
Fracking + Friction + Fireworks
It's a 4th of July blowout! ;)
I don't buy the extreme Shadowstat claims either , though possible attempts by gov't to understate CPI shouldn't be ruled out , given the incentives for them to do so , especially now.
I've often wondered if the Shadowstats graphs are showing us something else , if purely by accident. Consider a global warming analogy : CO2 emissions can be measured by looking at CO2 in the atmosphere. You can relate those levels directly to warming impacts because they represent the gases that will cause the greenhouse effect. However , CO2 emissions are also absorbed by the oceans , where they don't exhibit greenhouse effects , but may cause other problems of their own , like acidification.
Shadowstats might be plotting the emissions ( money ) as only being in the atmosphere ( CPI ) and disregarding the oceans ( asset values ).
The spread between CPI and the Shadowstat alternative widened greatly in the mid-90s , preceeding first the stockmarket , and then housing , bubbles , and the corresponding jump in HH net worth from a 3.5 multiple of gdp to a 5 multiple +/-. Since the spread never seems to close , I guess that means we should be looking out for the next bubble!
Shadowstats is nonsense.
But - as to why people believe it.
Even moderate inflation over, say a decade, causes a significant increase in prices. At only 2%, prices go up about 22% in a decade.
Meanwhile, earnings have been stagnant, at best, and unemployment is still high.
That is a hell of a painful bite out of people's purchasing power.
So - yeah - they think it's about inflation, 'cuz math is hard.
Cheers!
JzB
Anonymous,
Since the spread never seems to close , I guess that means we should be looking out for the next bubble!
I find it interesting that the spread didn't close even as housing prices fell dramatically.
I think it could be argued by a rational person that the CPI was understated when housing prices were rising dramatically. The government doesn't include housing prices directly in the CPI (only the rental prices).
However, if one uses that argument then one must also be willing to say that the CPI was being overstated when housing prices crashed.
And this line of reasoning is not consistent with your observation (and mine too) that the "spread never seems to close". Had it closed, I would not heckle the site's inflation theories to the degree that I do.
Shadowstats might be plotting the emissions ( money ) as only being in the atmosphere ( CPI ) and disregarding the oceans ( asset values ).
Hills of Money vs. Mountains of Debt
Jazzbumpa,
I am completely with you on this.
We don't need to show that inflation is 6% or more to know that pain is being dished out.
There's not much difference between earning 0% in a savings account with 2% inflation and earning 4% in a savings account with 6% inflation (the big difference is that the taxes on the latter hurt more). The same can also be said of 0% raises with 2% inflation vs. 4% raises with 6% inflation.
Purchasing power is being lost either way and in my opinion will continue well into the distant future.
It is what we would expect to see if we were to mix a few hundred million Americans with billions who will work for peanuts. The trade deficit scares the heck out of me long-term.
Post a Comment