The Finite World – Krugman at the NY Times talking about the resurgence in global commodity prices over the last year. Economic recovery in developing economies driving the markets, with the US, and indeed the entire West, largely irrelevant. Not only are we a smaller than ever slice of the pie, we’re not the ones building cities for hundreds of millions of people from scratch. I’m not sure I really understand his conception of inflation though. If rising commodity prices don’t constitute the most basic, raw form of inflation (you get less physical stuff in exchange for the same amount of labor performed), then I’m not sure what does. Historically we’ve made the economic approximation that natural resources are infinite, and all you have to do is pay the cost of going out and getting them. If that changes, then things will get weird. Maybe even weird to the point of sensible!