Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Olson who wrote (30680)	10/19/1999 9:35:00 PM
From: KM	Read Replies (2) \| Respond to of 99985

Tuesday October 19, 9:16 pm Eastern Time US to enjoy low inflation, no deflation -economist WOODSTOCK, Vt. (Reuters) Oct 19 - The United States is poised to enjoy low inflation for some time without the dangers sometimes associated with falling prices, an economist said at a conference. ''Anyone forecasting the future from today has to be willing to give long odds that the low levels of inflation America has experienced since the early 1980s will continue,'' Bradford DeLong, an economist at the University of California at Berkeley, said in a paper presented at a conference sponsored by several Federal Reserve banks and the Board of Governors. Low inflation is a driving force for politicians because they sense the population's anxiety about rising prices and realize to come out ''against low inflation is electoral death.'' And while it is difficult to prove a ''significant macro causal link running from low inflation to faster growth,'' DeLong said ''Economists' belief that low inflation is good for growth continues to rest on our common theoretical (axioms).'' On the other hand, he said fears that low inflation may spiral into deflation or even depression are often overdramatized. ''A low level of trend inflation does make a downward spiral in the goods-and-services price index slightly more likely. But such risks are lower than one might think,'' he said, noting ''starting a deflationary spiral in today's economic environment would be very difficult.'' In fact, DeLong said there is probably more to fear from asset price ''deflations'' which are effectively unlinked to the trend of overall consumer or producer prices. DeLong spoke as the government released its September consumer price data, showing a rise of 0.4 percent and largely matching market expectations. This follows on the heels of a much higher than expected 1.1 percent jump in producer prices released last week which had sparked new fears the Federal Reserve may soon need to tighten interest rates again to prevent an overheating of the strong U.S. economy.