"whenever I hear inflation these days or productivity..."
I would take it a step farther. I don't think the govt numbers are worth paying attention to.
Greenspan's talk about productivity is just an attempt to support the govt's inflation numbers, avoid any hint of a slowdown, avoid any calls for a rise in interest rates and generally maintain the bubble at any cost.
The numbers don't determine the policy. The policy, which is pre-determined, drives the numbers.
B, ask yourself, if we're so productive, then why can't we make sneakers for $2 a day like the Indonesian? Or, like Korea, Brazil, et al., with their recent currency devaluations, sell our goods at half price in dollar terms? It's the producivity of FOREIGNERS we rely on to keep inflation low (though certainly not as low as the CPI would suggest).
This enables us to focus on things like entertainment, sports, high tech etc., and, most lucrative of all, finance (which means moving money from one place to another, often unproductively and inefficiently).
It all comes down to what many gold bugs have been focusing on for some time: the dollar's reserve currency status. Without it, wealth creation would require export to other countries. When that happens, I suspect our productivity will be sorely tested. |
