The Real versus the Paper Economy
The Real Economy vs The Paper Economy To know the state of the economy, look beyond stock market performance as measured by stock market Indices. The stock market is more a reflection of short term expectations and paper gains. It may go up and up, even in times of fundamentally weak economic activity. But demand for commodities that are required in economic activity, are a better indicator of the state of the economy. In the charts below, you can see the prices of Coal, Copper and Oil dropping over the past year. Why are crude oil prices dropping despite the turmoil in the Middle East? It is because the U.S. new fracking technology is now able to extract oil and Gas from its extensive Shale rock formations and the U.S. now imports less oil, leaving a larger supply from Middle East producers to compete on the world market. Copper is a good indicator of modern economic activity as it is being used in the electronic and automotive industries, there is no public ...