The price of something is a ratio of the availability of the thing relative to availability of money.
In July 2008, the availability of oil was dropping relative to the availability of money, and oil price shot up. Today the economy has learned better of this relationship, that oil is scarce. Now if the availability of oil decreases then we contract first and settle money accounts later.
I get my ratio mixed up in this all the time. When money variances rise, we spend less and build up money reserves. Prices drop.
My objection to Brad's argument is that this is not 2008 anymore, we have bumped against the constraint twice since the crash. Money is keeping up with oil at $75-$80/barrel. But we now bump up against the top of the range at $81.60, the economy will see-saw a bit as we settle in the range.
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