Quote:
Originally Posted by aklim
Well, I am going off a layperson's idea here since I am not too well versed in this stuff. The way I see it, if the price of gas goes up, since most of us are on gas, it costs us more money to do anything. So, we might have to cut down some of the stuff we do. Also, it costs me more money to go to work. Again, now I have the same money but it buys less.
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Yes, I do understand the short term concern. However, the extra money you spend on fuel does go back into the overall economy, just like you spent it at starbucks on a $5 coffee. I'm not an economist either, but I think the general idea is to have all the economic sectors growing at a similar rate. We don't want energy prices to be too far ahead or behind the overall growth rate. In theory, all of our incomes will also grow at a similar rate (regardless of what sector we work in). If the entire U.S. economy grows at a couple/few percent per year without excessive inflation, all will be well. We do not want to let the overall economy (prices or wages) stagnate, remember the rest of the world's economies are also growing (china is growing at well over 10% per year at the moment), and we also want to keep the dollar (reasonably) strong compared to other currency.
09-21-2007, 10:44 AM
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