Rare-earth metals are the global economy's equivalent of folkloric pixies -- tiny, elusive and vaguely considered to have all manner of miraculous powers. In fact, many rare earths are not all that rare: neodymium, which among other things is used in audio amplifiers, electric motors and wind turbines, is as common and widely spread around the globe as nickel and copper.

Enter the threat: China, with half the world's deposits of rare earths, is now responsible for 95 percent of global output. The accompanying chart, based on data released by Morgan Stanley Research on July 26, shows how production quotas and export limits instituted by Beijing in recent years have distorted markets in so-called rare-earths oxides. (Hat tip to Joe Weisenthal of Business Insider for blogging it first.)

The data show that prices on cerium, a fuel additive, and lanthanum, used in fluorescent lamps, are about 500 percent higher in global markets than inside China. Neodymium and praseodymium, which can be alloyed with magnesium to make high-strength metals used in aircraft engines, sell globally at a more reasonable 40 percent premium.  Nonetheless, a spokesman for China's industry ministry, Zhu Hongren, said on July 21 that it is a “misunderstanding” to believe that prices of rare earths are manipulated by China’s government.

As rare earths become increasing vital to the high-tech and defense industries, are we at risk of an "element gap" with China? Unlikely. First, while China has been quick to exploit the vast resources of Inner Mongolia, there are plenty of other suppliers. These include vast reserves of niobium in Brazil and Canada, of gallium in France, and our old friend neodymium at the newly reopened Mountain Pass mine in California. Geologists agree that almost all rare earths are spread widely around the globe.

Here is some wisdom from an exhaustive study released in May by the Center for a New American Security:

Recent tensions with China concerning the supply of rare earth elements, for instance, should challenge U.S. policymakers not because the United States’ import dependence is inherently problematic (which it is not) or because rare earth minerals are scarce (which they are not) …. The loss of a single major supplier such as China may therefore increase the costs of rare earth minerals, but may not affect their long-term availability. The issue, then, is more appropriately understood in terms of managing short-term risks such as disruptions and ensuring that the U.S. government’s most important defense and energy needs can be met.

Well, given Washington's abject failure to deal with far-reaching problems like the national debt, it's comforting to face a short-term predicament that, over the long term, is sure to take care of itself.