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To: Bobby Yellin who wrote (42607)	10/10/1999 2:24:00 PM
From: Bobby Yellin	Respond to of 116786

o/t Henry just blew away my stagnation thoughts To: Bobby Yellin (67650 ) From: Henry Volquardsen Sunday, Oct 10 1999 2:08PM ET Reply # of 67667 Hi Bobby, I see where you are going. In the context of the question you are asking I would have to say asset inflation is different from ordinary inflation. In fact for traditional economic analysis asset inflation is not 'inflation' and has a different impact. Traditional inflation impacts the economy on an operational level while asset inflation (stocks, real estate etc) has more of an impact on a capital level. The term stagflation as it developed in the 70s was more focused on the operational level, a recessionary economy with rising prices for goods and services. I may be wrong on this but I don't think asset inflation would fit the definition of stagflation. Also if we were to actually get a recession I think asset inflation would quickly be a memory. one comment on part of what you posted and potentially much higher costs in defense spending and in heathcare spending. What may be more likely in these areas is higher expenditures. This is in and of itself not inflationary. It merely diverts expenditure from other areas. It only becomes inflationary in concert with other factors. Henry