DEFLATION? Who Are They Kidding? Commodities Prices Are Going Through The Roof

Henry Blodget
Business Insider
Sep. 18, 2010

A few weeks ago, everyone began to agree that the US was headed for a decade of Japan-style deflation. The banks weren't lending, consumers weren't borrowing, the Fed's desperate attempts to create inflation weren't working, the country was awash in excess manufacturing and labor capacity, and so on.

And most of those things are true. In the United States.

But the world's not just about the United States anymore.

Several billion people in China and India and elsewhere have recently discovered the joys of capitalism, and, as a result, they're getting richer by the day. They're also not up to their eyeballs in debt, the way Americans are. And their economies are humming along, so there are plenty of jobs. And the jobs are making them richer. And as they get richer, they buy more stuff. And as they buy stuff, the price of that stuff--and the raw materials used to make it--goes up.

In other words, now that the global economy isn't collapsing anymore, the rest of the world is buying more stuff.

And that demand is driving the price of raw materials sky-high.

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