Once I built a railroad, I made it run
Made it race against time
Once I built a railroad, now it’s done
Brother, can you spare a dime?
-Yip Yarbug, 1930
Song describing the ready availability of unsecured zero-interest loans during America’s last middle class economic boom
Gail Tverberg has put forth her attempt at explaining why low oil prices aren’t actually a good thing. This is a weirdly difficult argument right now, because so many people, from the New York Times to CBS News to Janet Yellen to the Glob have made the argument over the past year that unless you’re in the fracking industry, low oil prices mean, and this is almost a cliche by now, “more money in your pocket.” Why is oil so low? Well, maybe there are Chinese issues but to read these sources, we American consumers are the accidental beneficiaries of a price war between Saudi Arabia, the US, Russia and oh who knows, maybe Iran, who are taking big financial hits driving down the price of oil to bankrupt each other.
That makes no damn sense. If you look at the markets, commodities overall are tanking. Wheat, corn, soy, gold, silver, copper, platinum, palladium, lumber, sugar, and iron ore are all way down over the past year. Are we to believe that Americans are also the accidental beneficiaries of a price war between Australia, Brazil, Canada, Chile, China, the EU, Guyana, India, Mexico, Russia, South Africa, and the US, who are also taking big financial hits driving down the price of everything to bankrupt each other? And they just now decided to start doing this?
The thing is, lower prices can be caused by trade wars, but they can also be a symptom of weakening demand and a stronger dollar, which in a global currency-market world can mean that other countries are seeking a haven currency because their domestic economies aren’t doing so well. There hasn’t been good news from the Chinese manufacturing sector in a while, and stock markets- which aren’t the economy, but kind of reflect parts of it- are struggling globally. Describing this as “more money in your pocket” is the worst kind of spin. In light of this, I hereby present a (sarcastic) photo essay on how low prices can benefit American consumers, as evidenced by this one time way back when…
With apples so cheap, working families had a lot more extra cash at the end of the day to spend on other things
Low cost “tiny houses” made urban living affordable for a new generation of ambitious young people.
A “maker movement” allowed anyone to work from home…
…and new disruptive transportation technology brought these artisanal goods to the world market.
A rapidly-changing job market enabled many people to choose self-employment on the “gig” economy.
Economic migrants were a political issue…
…but only crazy liberals linked them to environmental disasters and drought…
…because obviously it was much more about overpopulation. These people, they just had too many children.
New financial instruments, like the “tommy gun,” allowed the general public greater access to capital that had previous been locked into illiquid assets, like other people’s payrolls.
Many families made the move “off the grid.”
And even an unemployed guy like Charles Darrow could get fabulously wealthy with one great idea that had been thought up by someone else.