Barry, re: "Today, I was surprised to hear Al Gore admit to Ron Insana today that it is actually beginning to look like the rate of productivity increase is itself increasing."
In fact Mr. Greenspan said the same thing this week in his confirmation testimony. He said the growth rate of the increase in productivity was ACCELERATING. He even made a hand gesture imitating a chart with accelerating growth, Of course, he said it was uncertain when this trend would end.
I do believe there are a few signs of inflation, just beginning. Even PC ASP's are starting to go up. If global demand continues to increase, and capacity is limited, we may see more inflation in the near term.
I wonder how effective the fed can be in slowing the economy. Capital used to come primarily from banks, now with the VC's and IPO's, and so much wealth in the hands of the middle class to invest, I think the Fed may have lost some of it's influence. Higher interest rates are not going to stop a company like Intel, with $12B in cash (?) and an $8B capital venture fund (well, maybe less than that now <g>), from building a new Fab.
So the Fed may be on a mission that it can't accomplish. What happens if they keep raising rates, and nothing happens?
John
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