> Again, if you have $10, and the price of X goes from $5 to $7, now you only have $3 to spend on other things, which reduces the price of those other things.
Only in the bizarre world where prices are set by demand alone, and quantity traded is held fixed by the Hand of God. Real supply curves aren't horizontal lines except in very bizarre circumstances.
In a real economy, a restriction in supply of a widely used input with no significant change in money supply, velocity, or relative spending vs. saving desire causes the price per unit of consumer goods to go up and the quantity traded to go down.
> Demand push and supply pull explanations do not account for this
No, they don't “account for” your fantasy that consumer goods behave such that a price change for one good has the results expected only if all other goods had perfectly inelastic supply, because perfectly inelastic supply isn't normal.
> It's useless trying to deny supply&demand setting prices
And yet you keep positing a model which entirely ignores the effect of supply, by pretending that quantity of consumer goods traded is fixed constant and prices are set only by demand (i.e., assuming no changes in preference, supply of money among buyers), so that with a given supply of money being spent, increase in price of one good must be offset by decreases in other goods rather than decreases in aggregate quantity traded.
> The law holds whether it's a personal fantasy of mine or not.
Yes, despite their basis is known-false rational choice theory, the so-called laws (which aren't at all laws) of supply and demand are a reasonable approximation of real behavior of markets in aggregate.
But they don't predict the behavior you describe unless you assume perfect supply inelasticity of all goods other than the one whose price is assumed to increase.
> If you can explain how increasing the price of oil causes money to appear in my pocket to pay for it
It doesn't, decreasing the quantiry of oil traded at any price (increasing the price at any quantity traded) also has the same effect on all goods and services oil is used to produce or deliver. As a result, if the unit price of oil increases (and there are no changes in money supply, pre-purchase distribution, consumer preferences, etc.) so does the unit price of most consumer goods and services, with the quantity of goods traded likewise dropping.
What does not happen is the same basket of goods being traded, with those impacted by oil getting more expensive but that being offset by other goods getting cheaper, leaving overall nominal price levels the same as before despite shifts in per-sector prices. That would be expected if all non-oil goods had perfectly inelastic supply, but not otherwise.
> Nowhere did I say that supply was inelastic
No, you just described an effect that is total nonsense unless you assume perfectly inelastic supply.
Only in the bizarre world where prices are set by demand alone, and quantity traded is held fixed by the Hand of God. Real supply curves aren't horizontal lines except in very bizarre circumstances.
In a real economy, a restriction in supply of a widely used input with no significant change in money supply, velocity, or relative spending vs. saving desire causes the price per unit of consumer goods to go up and the quantity traded to go down.
> Demand push and supply pull explanations do not account for this
No, they don't “account for” your fantasy that consumer goods behave such that a price change for one good has the results expected only if all other goods had perfectly inelastic supply, because perfectly inelastic supply isn't normal.