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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Tommaso who wrote (120110)9/8/2001 4:11:51 PM
From: KyrosL  Read Replies (1) of 436258
 
I can't see a rise in inflation. The reasons:

Rampant overcapacity that will get worse as the recession intensifies. In particular, deflation in technology products and services will continue unabated. But the old economy is also plagued by overcapacity almost everywhere one looks.

A lot of our imports come from countries whose currencies are tied to the dollar or are even weaker than the dollar (China, Japan, most other Asian countries, Latin America).

Energy prices are dollar denominated, and in a recession, OPEC will be hard pressed to hold current prices, let alone raise them.

Although dot.coms have crashed, the Internet is alive and well and is exerting increasing deflationary pressures to a widening range of services from insurance to travel to financial services, as well as retailing.

House prices appear to have peaked and may even start deflating. Office vacancies are already skyrocketing and office rents are falling nationwide.

Food prices will not rise and will probably fall. Growing seasons are increasing around the world (a side effect of global warming.) Food technologies that increase yields are spreading fast. World population is rising much less rapidly than the past few decades.

If anything, it seems to me that the more credible scenario is deflation rather than inflation.
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