Scrap metal and other raw material prices top my list of resource costs that may raise the spectre of inflation. But much the same argument used to argue for a real estate bubble can be used to argue for commodity price bubbles, no? If so, then the risk of disinflation still outweighs the risk of inflation, in the sense that it's unclear that the economy can sustain positive real short-term interest rates. It's the free money, in real terms, that feeds the "carry trade" underlying the run-up in commodity prices.
>I'm not as sure as you about the certainty of closeting inflation. If
>you mean manufacturing costs, there certainly declining. If you include
>resource costs, then the uncertainty creeps in. Water -- most of the
>West is suffering from drought -- petroleum, some agricultural
>commodities. Petroleum is the only part that has the potential to spike
>in the very near future, but Prince Bandar may see that nothing occurs
>until after the election.
