Washington Post, Jan.11, 2008 page D1,D3: William Nordhaus, a Yale University economic professor said:"By paying more for oil,Americans have less left to save or spend. It is clearly contractionary." I agree with this statement in toto. Kenneth Rogoff, a Harvard University econ.prof. and former chief economist at the IMF made a similar estimate: The price of oil rising even from $80 to $100 a barrel is like adding $150 billion in taxes. It is quite a wallop. Americans say the economy is poor as published on page A9 re economic jitters demand candidates' attention. The stock market is down again as of Jan.11, 2008.
Soaring oil prices act as a double-edged sword: Higher oil prices not only slow growth but also add to inflation,raising the specter of stagflation like that of the 1870s. My comment: I sent my blogs to the past with the same thought. "The price increases and consumer spending are both recessionary and inflationary" said Allen Sinai,chief global economist at Decision Economics. My comment: There are gaps due to the shifting of aggregate demand and aggregate supply curves. Sinai blames policymakers for not reducing energy consumption and we have not had the sense of urgency we should have had. My comment: The lifestyle of the Americans are different from custom and tradition of the Chinese in many ways. Such differences have caused credit problems. The decision makers in China are facing similar problems as American policy makers in the name of inflation. Francis Shieh. Jan. 11, 2008
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