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Pastimes : Alan Greenspan MUST GO:
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To: chojiro who wrote (235)1/1/2001 1:20:36 PM
From: BWAC   of 494
 
<Do you really need a cell phone the size of a pack of matches?>

Of course not. But if I had a huge old clunker, and it simplified my daily tasks to downsize, and it offered features that could help me be more productive, then I would switch to the newer and smaller and better. Especially if the price was right. And the price has been right given the competition that exists in the cell phone market. Take away the access to capital for this infrastructure buildout, competition is reduced, innovation is reduced, price competition is reduced, the informed consumer has fewer choices, and you NOW have a situation where inflation can exist and persist.

In a bigger macro example. Take the whole retail sector. Did inflation exist there for the informed value seeking consumer? Of course not. There is too much competition between reatil chains to have the lowest and best price. Add a healthy mix of online retailers. And you have brisk competition. Inflation cannot exist. Bankrupt a few retail chains, bankrupt a few online chains, get down to one or two dominant category players and you will have all the ingedients necessary for inflation.

Another example. Grocery Stores. Look at the competition there. New car rebates galore. Computers cheap compared to what they were a few years ago.

Where was the inflation that Greenspan targeted? And please don't say oil or natural gas, as those are not free competition markets.
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