I don't think there will ever be enough deflation for US prices to actually fall. No matter what happens in the stock market or elsewhere.
As always, I expect price inflation and some asset deflation. The opposite of what we've seen in the 90's.
Re: the Internet, I think some people--myself included--may have underestimated the problems with e-commerce and soem of the more ambituious Internet applications.
E.g., even though I may have access on the net to producers in california, it still may make most sense buy locally on the east coast, because of delivery charges. And is it really easier to search on the net than to open the telephone book?
Often, theoretical advantages don't play themselves out in the practical business world. Have you ever heard of the French "Minitel" system? Essentially, it is a country-wide electronic directory using "Videotex" technology that the french govt implemented in 1980--that's 19 years ago! Videotex--which was also the basis for the early compuserve and podigy systems in America--provided a service similar in many respects to the Internet, just slower, less resolution etc.
Nevertheless, if you are familiar with the Videotex industry of the 80's, you know it was by and large a flop, even though many of the claims we hear about the Internet were at that time made about Videotex.
I do beleive the Internet will replace some personal retail business. But I can't quantify how much.
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