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Strategies & Market Trends : LastShadow's Position Trading

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To: Jeff Jordan who wrote (34884)	5/8/2000 7:46:00 AM
From: Kelvin Taylor	Read Replies (1) of 43080

FED believes full employment is 4%. And as the pool of available workers shrinks wages will rise to attract more workers thus, as the theory goes, will lead to higher prices for the manufactured products. Higher wages = inflation? What the FED hasn't realized throughout the '90 is technological advances (despite government regulations) have increased productivity rates to help compensate for the higher wages paid to workers. And since when does giving a worker a pay increase automatically cause inflation? Congress votes itself a pay increase. Does that constitute a higher cost for a loaf of bread or a gallon of gas? NO! The recent spike in oil prices demonstrates what real inflation is. OPEC cut production and the demand for oil remained high. Thus prices rose. When the demand slipped and production output rose prices came down. Had nothing to do with workers get a pay raise. And if the ?wealth effect? caused by a rising stock market caused inflation then were was inflation through the 1990?s as the market more than tripled, hummm?

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