Friday, December 24, 2010

Crude Passes $91, As $100 Billion In US GDP Is Wiped Out In Minutes

I've read every $1 price increase in a barrel of oil causes a 0.3% reduction in trade.  With the US economy hovering around $14 trillion, GDP is reduced $84 billion with every $1 increase in a barrel of oil, which is in the ball park of $100 billion, as stated in this article.

The take-away message is that quantitative easing (or printing money out of thin air) induces price inflation, which is counterproductive for economic stimulation.

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