Demand for luxury sport-utility vehicles is booming world-wide, defying concerns that rising fuel prices and environmental concerns would inevitably crimp demand in a lucrative segment for top manufacturers.But with the Fed printing and and a war economy going on, this shouldn't come as a surprise.
However, rapid growth is attracting new entrants to a once-niche market, suggesting high profit margins might not hold up indefinitely. For now, Germany's luxury-car specialists can't quite believe their own good fortune as strong SUV demand helped them notch record sales in 2011.
Art also sends along a quote from The Theory of Money and Credit by Ludwig von Mises, who understand this phenomena decades ago. He wrote in Money and Credit in 1912:
When the increase of money proceeds by way of issue of currency notes or inconvertible banknotes, at first only certain economic agents benefit and the additional quantity of money only spreads gradually through the whole community. If, for example, there is an issue of paper money in time of war, the new notes will first go into the pockets of the war contractors. As a result, these persons’ demands for certain articles will increase and so also the price and the sale of these articles, but especially in so far as they are luxury articles.