Trade argument moved from the presidential poll thread

[Kidlicious]

Let me try to make this more simple for some people. The Law of Supply means that the producers will not produce more product at a lower price. That's why I told KH to forget about any demand for the product. That's confusing him. The Law of Supply is a parameter to this problem. You can not have higher quantity with a lower price because of the Law of Supply. Forget about demand.

[Naked Gents Rut]

KH is in the right here. It needs to be done.

[KrazyHorse]

Originally posted by Kidicious
Let me try to make this more simple for some people. The Law of Supply means that the producers will not produce more product at a lower price. That's why I told KH to forget about any demand for the product. That's confusing him. The Law of Supply is a parameter to this problem. You can not have higher quantity with a lower price because of the Law of Supply. Forget about demand.

[snoopy369]

You can have higher quantity with lower price, if there are other factors involved. Which there are ... demand, scarcity, economic factors, the futures market ... particularly the latter.

If the futures market is starting to tank, it's quite logical for the oil suppliers to release more oil into the system, because they want to take advantage of the higher futures price right now compared to the predicted lower price in the future.

Scarcity - it's quite possible that, because of the higher prices, production was ramped up in the recent past, and some of that oil is starting to become available now; because the oil suppliers couldn't just sell more oil that they didn't produce.

etc. ...

[Boris Godunov]

Originally posted by KrazyHorse
Real economists don't have to point out to other economists that the sky is blue and licking a hot curling iron is a bad idea. If they did then their arguments would resemble this a lot more than you think.

True, but for those of us who are admittedly pretty unknowledgeable about economics, it's both informative and extremely entertaining.

[Darius871]

Originally posted by KrazyHorse
Exactly, I'm just going to quote something I don't understand and claim it supports my point of view?

Kid would never do that.

Just OOC, what is your explanation for the inverse relationship that first graph supposedly suggests? I can probably guess, but I was hoping you'd humor him anyway...

[Kidlicious]

Originally posted by snoopy369
You can have higher quantity with lower price, if there are other factors involved. Which there are ... demand, scarcity, economic factors, the futures market ... particularly the latter.

You can not have a (p,q) outside of the supply curve.

[Kidlicious]

Did anyone else read the book Paper Money? It's about the devaluation of the dollar and the oil crisis. According to that book OPEC cut back production because of the falling value of the dollar.

During the recent boom oil production increased even though the value of the dollar fell, but that's because the economy was growing. Indeed, if the dollar were stronger more oil would have been produced, because the price that producers get for their oil would have increased. That makes sense, doesn't it?

Anyway, here we're talking about a hypothetical situation where the world is in a depression and China is selling their dollar reserves off. It's in this situation that oil producers would most certainly cut back on oil production despite a minor increase in sales in Europe and elsewhere.

That's what the argument is really about. KH doesn't want to do there. He's just trying to avoid it.

[Kidlicious]

As a matter of fact KH hasn't recovered from being pwned in the other thread...

KH: If those dollars never come back to the US then there's no crisis. If they all come flooding back at once there will be a crisis. Which I've said over and over again in this thread. However, you haven't noticed it because you've been struggling to grasp even the simplest concepts. Like what currency is. Or how the Fed sets interest rates.

Kid: No. The less that comes back the worse off we will be. Oil is demominated in USD. As the value of the dollar falls oil production will slow. Eventually the price of oil will skyrocket.

So really it doesn't matter if oil production decreases or not. I only said it has to slow to hurt the US. That is oil prices will increase in the US.

So to recover KH has to show that oil prices won't increase in the US, which he hasn't done for ****.

[KrazyHorse]

Originally posted by Darius871


Just OOC, what is your explanation for the inverse relationship that first graph supposedly suggests? I can probably guess, but I was hoping you'd humor him anyway...

If the movement of the US dollar is wholly uncorrelated with the state of the global economy (and thus with demand for oil) then any decrease in the value of USD relative to other currencies makes oil more expensive to residents of the US relative to residents of other countries. Movements of the USD will therefore be negatively correlated with movements of oil as priced in USD.

Note that the above statement does not provide any special pride of place for the USD. It is customary to quote oil in USD, but I could quote it in any other currency I wished. GBP, AUD, EUR etc. In each case, if the currency movements of that region are uncorrelated to global oil demand then any downward movement of the currency would suggest an upward movement of oil as priced in that currency.

The idea that global oil demand is uncorrelated with movements of the USD is of course patent nonsense, but until Kiddy realized that his denomination fetishism is retarded, I choose not to discuss such a complex issue.

[Kidlicious]

Bull****. I'm trying to keep on topic here. You're bringing up a bunch of **** that is irrelevent, which I'm not responding to.

[KrazyHorse]

Originally posted by Kidicious
That is oil prices will increase in the US.

You are illiterate. This is what I have been saying to you for the last day.

As the USD drops in value relative to other currencies the price of oil in USD will increase and the price of oil in all other currencies will decrease. The quantity of oil produced may increase or decrease. It depends on the relative elasticities of demand in different countries. This will be a second order effect.

Quote is taken from Kiddy quoting me in the OP of this thread.

This is just sad.

[KrazyHorse]

Originally posted by Kidicious
Bull****. I'm trying to keep on topic here. You're bringing up a bunch of **** that is irrelevent, which I'm not responding to.

What's irrelevant? Your demonstrated inability to read?

[Kidlicious]

You should start arguing that if the dollars don't return to the US there will be no effect in the US before you lose all credibility.

[KrazyHorse]

Production does not have to change one iota in order for prices of oil in USD to increase.

Production = consumption. As the price of oil in USD increases the quantity of oil consumed in the US. At the same time, the price of oil in other currencies will decrease, meaning that the quantity of oil consumed in other places will increase. The quantity of oil produced is the sum of these two quantities. The net effect on oil production of a change in the value of USD relative to other currencies is therefore unclear. It will depend on relative elasticities and market shares in the different countries.