Working Papers

Commodity Prices and the Australian Economy: Trends versus Cycles

I have an article in the latest issue of Policy examining trends and cycles in commodity prices.  In the article, I highlight the difficulty of isolating longer-run trends from the pronounced multi-year cycles in commodity prices.  I also argue that commodities are not nearly as important to the Australian economy as commonly assumed.

posted on 07 January 2009 by skirchner in Commodity Prices, Economics

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Delusional nonsense.

This long-run trend implies that commodities are becoming less scarce even as consumption of them increases.

Which just goes to prove that “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist”.

So commodities are not important to the Australian economy.  What exactly do we do here then?

Borrow money from foreigners to buy houses from each other?
Borrow money from foreigners to provide (largely financial) services to each other?
Borrow money from foreigners to buy products made by the same foreigners?

During the 1998-1999 period Australia still had a viable non-resource export sector that could take advantage of the low dollar.  Five years of a >70c dollar has decimated that sector.  There’s nothing left, nothing to fill the void except a splurge from Kev.

When commodity prices collapse the underpinnings of the Australian economy vanish, and the whole debt-fueled house-of-cards collapses ... as we’re about to find out.

Posted by .(JavaScript must be enabled to view this email address)  on  01/09  at  09:54 AM

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