A Price Spiral Ahead?
"Bracing for Inflation," a Web-only opinion piece (Aug. 16), provoked a slew of comments. The essay, by John K. Castle, chief executive of private equity firm Castle Harlan (which owns a range of businesses), warned of double-digit U.S. inflation as early as next year—despite oil's softening prices. Castle cited two big reasons: more fallout from still-high commodity costs and rising inflation in China, our go-to low-cost producer. Some readers echoed Castle's call for policymakers to recognize this threat. Others argued that productivity and flagging demand will work to lower prices. And a few pointed fingers, blaming consumers or the Fed for creating the problem.
Interest rates that were held too low for too long created a glut of money now chasing commodities and other goods. A bitter pill will need to be swallowed if we expect this problem to go away anytime soon.
Screen name: Ludwig
As owners of an electronic parts distributor, we've witnessed huge increases in the cost of products across the board: jumps of 30% to 35%. I've seen nothing like this in 22 years. China has figured this out. Consumers have no idea of the firestorm heading their way.
Screen name: Glen
The article is based on two fallacies: that the current situation will continue and that the economy is not interactive. Higher prices bring lower demand, which lowers prices.
Screen name: Holly Garfield
There's no reason to assume that our productivity gains won't continue. The trend will be that things will become cheaper, not more expensive.
Screen name: Justin Time
You know the quickest way to stop inflation? Stop using your credit cards! Quit borrowing money! Tell politicians to stop spending money we don't have!
Screen name: Mad Dollar
An Import Duty, Not a Consumption Tax
As stated in "The Real Question: Should Oil be Cheap?" (In Depth, Aug. 4), we need to put a floor under the cost of oil to encourage alternative sources of supply and prevent OPEC from opening the taps and driving down prices when we do so. But a tax on consumption is not the answer. It would prevent new investment in domestic alternatives. Similarly, a carbon tax would inhibit innovation in the name of an unproven climatic threat.
Instead, we should impose an import duty that kicks in at $80 to $90 per barrel and rises as the cost of oil dips. This would protect U.S. development of alternatives and allow consumers and businesses to benefit from lower energy costs.
EMI Won't Get No Satisfaction
"The Stones Roll" (News You Need to Know, Aug. 11) suggests the Rolling Stones did EMI a "favor" by leaving for Universal Music Group. But the opposite is true. The Stones are taking their back catalog, meaning EMI will lose recurring revenue on finished goods.
New ways to repackage old music—digital downloads, preloaded USB drives, and video game placements—can add up. Just ask The Who, which has its own edition of the Rock Band game.
The Stones are among the top 0.0001% of commercially successful artists and hold a permanent place in international culture. EMI has lost Paul McCartney, Radiohead, and others in the past two years. Keeping one of rock's last surviving pioneers could have helped it maintain credibility.