Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: russwinter who wrote (2064)	3/15/2004 10:12:32 AM
From: Wyätt Gwyön	Read Replies (1) of 116555

commodity rises, especially shortage panics, without service wage power are deflationary--they just reduce discretionary income which depresses the overall economy. the thing you need to understand is that the very thing ultimately feeding the commodity push (rising Asian standard of living) is also the thing pushing down real income growth in the industrialized world (offshoring and "productivity" gains). i expect the entire decade will be one of commodity push coupled with real and nominal wage deflationary drag. a battle between "Things" and "Doings", if you will. since Doings are such a huge part of our economy, incremental income encroachment on the part of Things will do bad stuff to those who rely on Doings--i.e., most of the US labor force. especially when so many of those Doings can be Done at a tenth of the price in Chindia. thus imo income will be highly valued and scarce in the first world. trying to draw an entire economic theory out of a simplistic commodity spike makes about as much sense as the extreme bearishness held by certain parties on USTs right in front of the GREATEST THREE-DAY BOND RALLY IN TWO YEARS, ha ha ha.

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