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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: UncleBigs who wrote (47771)	12/20/2005 1:26:48 PM
From: GST	Read Replies (1) of 110194

Dear Uncle: <Higher productivity is deflationary. There is no question about that.> This is one for lala land economics. Do we have good measures for productivity? Most certainly not. But does increasing productivity cause people to be unable to pay their debts due to some connection to deflation as Mish asserts? Earth to Uncle -- productivity means making better use of resources and is the only way to consistently improve living standards. That is neither deflationary nor inflationary -- it is simply a measure that allows us to begin to discuss how well we are doing at creating real wealth. Everything else is just redistribution. The economy we have now does little more than redistribute "wealth" and has the potential to destroy wealth as it corrodes the productivity of our workforce and diverts us into activities that produce no new wealth. But it is NOT because improved productivity makes it so. This is pretty basic stuff. Higher productivity is deflationary. There is no question about that. Mish made some kookoo points in his Blog on this point -- and that is where my comment is directed.

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