russwinter,
I appreciate all your posts and have often started to respond to your train wreck theory, but not being a fast writer, I kept getting interrupted.
Anyway, I probably shouldn't pick this up now since I would be leaving for 3 weeks.
So here is a quick 2 cents.
I think you are concentrating too much on a cost driven inflation, and ignoring the power of a lack of demand recession.
e.g. let us use steel as an example and make a wild assumption it the raw material for only one product. As the price of the material increase, the price of the product should also increase if profits remain constant.
We have inflation, if demand for this product is willing to absorb this increase. If not, then demand for the product will come down.
It appears that for most products, there is simply no pricing power. So added material costs are absorbed by lower profits, low labor costs and other means. If demand cannot be sustained, not only would we not have inflation, we may have deflation.
I opine that may be a bigger train wreck than inflation, if I understand you correctly. Right now, we (US, Japan mainly) have used up every text book econ 101 stimulus. The race is on for developing countries such as China and India to fill a gap that the US economy is opening. I am not optimistic. |
