Tulipomania Blowoff Contest: Why and When will it end? Message Board

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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end?

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Jun 26 5:00 PM EST

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To: KyrosL who wrote (2246)	12/26/1999 7:29:00 PM
From: yard_man	of 3543

inflation -- rampant growth of the money supply far beyond the pace in the growth of the real economy -- has already happened longer term I think you are right that the risks are of a prolonged deflationary period. Do you think there are natural limits to the growth of the relative portion of the services component of the economy versus the "real goods?" You mention banking, insurance, travel -- but all that is different is the medium through which the transaction takes place. There has been no revolution in flight travel -- the way insurance is structured or the fundamental way in which banking is done. Access to more information may mean keener competition, but I don't see it guaranteed by the internet. Before the internet I had the option of going to yellow pages to shop for a competitive rate for a loan, a savings account or my insurance. For these financial services that you mention the larger impact I see is the regulation imposed or not imposed. As far as the transmission of e-mail and associated content -- of course it is not free. Telcos have grossly overcharged for years for POTS and other services, honestly they owe us free e-mail forever in my book. But back to your idea that the internet is a powerful deflationary force -- I think the internet is simply the culmination of several computing and communication technologies which have seen rapidly declining prices per unit of service provided. This ability to move information at lower and lower per-unit cost was there before the internet and will probably continue after the internet is gone ... this is the source -- not the internet. Transacting certain kinds of business over the internet is a novelty right now. I know it is boring to say so, but most of these e-tailers will not survive -- the ones that do will not exist in their present form. They will simply be a combination. Don't be surprised if the winner in e-tail is a Walmart or a Costco or someone else. The electronic flea market will survive and the internet will be a place to compare prices for a long time, but these aren't going to tranform our economy ... I go back to my original question: Do you think there are natural limits to the growth of the relative portion of the services component of the economy versus the "real goods?"

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