Global Economy Down?

Following up on Free Trade Warning?...

We had Nattered about regarding the drop in oil prices (a 35% pullback from 76.90 to 50.15) reflecting economic reality...

A sign of economic conditions being ro-BUST? Emphasis on the latter. With the MSM narrative based in institutionalized econometric falsity, better row faster now?

Said comment led to a discussion of Noam Chomsky and Sir James Goldsmith. Upon which we posed a question to Salmo Trutta...

Proximo, 
Since 10/03 we have seen a 25% pullback in the price of WTI. Call it $19 or $19K per contract. Reminds me of the inception of the flash crash June 2014 - Jan 2015 which saw a 60% decline. This led to an eventual 75% decline between June 2014 - Feb 2016. Do you see any similarities or dissimilarities?
Spaniard - Nov 13, 2018. 10:37 AM 

Which led to a cogent and prescient response from Salmo....

On June 18th I posted: Technically and paradoxically, there is no such thing as the "wage-price spiral"; the "price-wage spiral"; or the "cost-push spiral", in the sense that increases in wages, prices, or costs are causes of inflation.

Unless effective demands (money times its velocity) are adequate to prevent a cutback in sales, or a diversion of purchasing power to the price raisers, any administered increase in prices will result in less sales, smaller outputs, less employment, lower payrolls and less demand for products—in other words, depression and deflation in due course. It’s about consumer’s market basket substitution, the elasticity of demand.

The current *administered* price increase by oil producing countries have not been *validated* by any of the world's Central Bankers (which is just the opposite of the reaction by the Fed during the 1973-1974 OPEC cartel price increase, which back then, *more* than validated OPEC’s administrated price hike).

Therefore these current attempts to permanently increase prices will be transitory –will be deflationary, not inflationary. An administrative price hike is just the opposite of price control restrictions, like the one President Gerald Ford urged to curb / outlaw inflation : “Whip Inflation Now (WIN) in 1974, or also rent controls, Seattle’s minimum wage hikes, etc.

That is why there was an unusual reverse divergence in the marketplace between gold and copper as opposed to oil. 13 Nov 2018, 11:03 AM

On numerous occasion Salmo has commented on the above, with the gist being Salmo's warning contained in the 2nd paragraph above.  Much like Chomsky and Goldsmith's prescient warnings, Trutta's does not fall on deaf ears, at least in these parts.

More succinctly... current corporate, government, monetary and economic policy will more than likely result in an unhappy ending for many.  Could this be the theme song?




Happy New Year! 

More to come in Wear Sunscreen? Stay tuned, no flippin.

Recommended reading:
Timing Is Everything?
Know Your Limitations?
Parting The Red Sea?
A Little Shop Of Horrors? 
Where's Your Messiah?
Rapture?
Ro-BUST?
Beware The Ides Of Winter?
Meddling With Powers?
The Perfect Storm?
Begin The Benign?
A Case of Tape-r Worm?
Beware The Ides of Winter Early?
A Disturbing Lack of Faith?
Canary In A Coal Mine?
FreeTrade Warning?