I would have to agree that inflation is neutral at best. With all that liquidity going into the markets there is alot of competition for investment dollars. Companies will layoff workers just to get better than expected earnings reports. Who in their right minds is going to ask for big pay raises, or for that matter, what company is going to raise prices at this stage of the game.
Food is a big cost factor in the inflation numbers? Hey, all they have to do is just talk about letting every country over the borders come in to sell their cheap food items and prices will remain stable.
Although, believe it or not! A rise in unemployment is a sign of a growing economy. I don't happen to agree with it, but, I understand the dynamics. Most people think that when people get laid off that the economy is bad. Quite the opposite! In a free market place, it is an efficient and prospering economy that no longer needs those workers or industries because they are able to eliminate those "cost items." They (the workers) or companies are replaced by technology or new systems.
Example, there are ten (10) people who live on this one island. All six (6) of the people spend most of their day working real hard trying to fish enough food (using fishing rods) to feed each other. The other four (4) provide other services such as building, education, and physical labor or repairs. Now, I come along and I introduce the concept of a net to the fisherman. I sell them a net and leave. The initial reaction is," whooooo, we can catch twice as much fish in half the time it use to take us." Well, you now have a more productive means to deliver food. And, you now don't need six (6) people fishing because you can do it with half as many people. The question is, what do the 3 people displaced do for that island's needs? Are they retrainable? Do they want to learn something else? Do the 3 persons that purchased the net want to get more of the wealth on that island? This is a simplistic example. But, you can imagine the impact on the others. Are they 5 married couples? What happens if the husband that loss their functions or jobs?
Greenspan has one heck of a job trying to sort things out using raw numbers as a basis for decisions. I say, he won't raise rates next week! |
