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To: Fred Fahmy who wrote (86612)	8/4/1999 9:54:00 PM
From: Robert Douglas	Respond to of 186894

This is a key point that many, if not most, people overlook. Our economy is becoming more and more "electronics"/technology oriented. The technology companies of today are driving a huge chunk of the economy and this will grow with time. As you have correctly pointed out, the products generated by this ever growing segment of the economy are under deflationary NOT inflationary pressures. This is true if you are talking only about the manufacturing segment of the economy. Where this is misleading is that manufacturing is becoming a small part of the overall economy. Service industries make up more than two-thirds of the national output. It is these areas where inflation may become a concern. Technology deflation will influence these only indirectly through productivity gains. -RD

To: Fred Fahmy who wrote (86612)	8/5/1999 10:00:00 AM
From: John F. Dowd	Read Replies (2) \| Respond to of 186894

FF: In addition the farmer (notwithstanding the drought) has done an outstanding job of improving their productivity such that we have a surplus of food commodities and hence lower prices. Even AG admitted to that. He even said that the present proposed legislation to support crop prices was counter intuitive to these production gains and was a waste of taxpayers money. The minimills in the steel industry have become so efficient that many of these steel hardship cases we hear about are because the mills that are being shut down are inefficient and not competitive. It does mean dislocations but if there is one area where the gov't. can be of help it is in the area of retraining and redirecting up and coming industries to those areas where there is slack employment. I would not push this as I believe the market place will do just as good a job. The invisible hand is working just fine. All of retail is feeling both the pressure and the economies wrought by electronic commerce and this efficiency is only going to improve. Our biggest concern is deflation as more and more efficiencies are reached and more manual component jobs in the manufacturing sector are lost. The real vision is how to cope with our super efficiency and not with yesterday's concerns over wage/cost push inflation of yesteryear.JFD