The Psychology of Economics
Our post the other day mentioned how lifting the offshore oil drilling ban could drop oil prices purely from the psychological effect on speculators. Recently McCain even said that the gas tax holiday and lifting the drilling ban would have mainly “psychological benefits”. So just how far can these psychological effects go?
This is a ridiculously hard question to answer. To start off, most people are focused on the literal effect of decisions on stocks, however the recent drop in oil shows that psychology does play a role. How big of a role is played would depend upon how well the candidates sell an idea. McCain did well selling his gas tax holiday and oil drilling ideasl, resulting in the drop that we’ve seen in oil.
Undoubtedly there are urgent issues that need to be taken care of, but this drop in oil prices makes us wonder how much can really be accomplished with a simple change in mindset.
~Invest this!
Posted: July 17th, 2008 under McCain, Oil.
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