I am fairly concerned about the recent drop in oil prices – dropping below zero on the futures market.

I am fairly concerned about the recent drop in oil prices – dropping below zero on the futures market. ⛽

Why? I think these extremely low oil prices are leading to producers to not only cut off new wells but shut off existing wells. Once wells are shut off they often do not recover fully when they are turned back in.

When the economy recovers, there is quite likely to be a shortage of oil with new developments of oil stopped and restarted wells producing less than when they were shut in. High oil prices along with inflation generated by the extremely low interest rates and money expansion required to implement such rates sets us up for inflation.

To combat such inflation, the federal reserve will have to cut the money supply, which will drive up interest rates and make it a lot harder for everybody from those buying a car or house to a government building a bridge to get the money they need affordably.

That’s called stagflation! 📈