Heinz Blasnik- Views You Can Use Message Board

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Strategies & Market Trends : Heinz Blasnik- Views You Can Use

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To: ild who wrote (1651)	5/21/2003 2:19:47 PM
From: MulhollandDrive	Read Replies (1) of 4905

that is an excellent read by stephen roach. " cyclical downturn opens up a gap between aggregate supply and demand that alleviates pressure in labor and product markets. In a subpar recovery — defined as growth in aggregate demand that falls short of the potential gains on the supply side of the equation — that gap remains wide. Basic economics tells us that a cyclical overhang of aggregate supply reduces pricing leverage. " i've been writing for months on end that the deflationary imbalance lies in the fact that we continue to have excess capacity and stagnant demand. and have never gotten the monetarist argument.....as though increased money supply will somehow magically spur aggregate demand for goods and services. as our largest consumer base ages, and continues to pull in the horns on spending....doing what is going to always be human nature....start hoarding cash for retirement....the only mechanism i can see to wring out the deflationary pressure is that capacity gets reduced.... meaning more mergers at best, business failures at worst, either way, more bad news for employment, thus consumer spending... a vicious cycle

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