Friday, August 26, 2005

Fuel for Thought

The charts below come from Chart of the Day. Ignore the rather strained effort to correlate spikes in the indices with recessions; focus on the fact that things have been "worse" and the world hasn't come to an end.

Then ask yourself if there's any reason believe that market forces will allow the real price of a particular item to rise indefinitely. The correct answer: of course not. Substitutes will become available at attractive prices, without government subsidiization of those substitutes. And people will buy the substitutes.