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To: phatbstrd who wrote (71564)	5/5/2000 8:07:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 152472

phatbstrd, there is a big difference between a 1% to 2% productivity gain and a 3.5% to 5% gain each quarter. Aside your examples are misleading cooking eggs takes the same time ... or may be the water is boiling now faster <GG> and poring cement is about the same. But from were you buy clothing? your car has parts from were? your TV or stereo system is made were,? your computer parts are manufactured were? your snickers are manufactured were? your children toys are assembled were? most of your energy needs come from were? and with all those wonderful new era toys and internet how come trade deficit is over $25 billion month after month??? Yes milk and chicken are mostly from the US What else? Haim

To: phatbstrd who wrote (71564)	5/5/2000 8:19:00 PM
From: Don Edgerton	Read Replies (1) \| Respond to of 152472

As I recall around the last time Greeenspan testified, he said too much productivity leads to inflation because incomes go up before production can be increased. Never did understand the logic. However, using that approach, the slowdown in productivity should be a positive, not a negative as the jerks on CNBC parleyed it. Quote from Feb Humphrey Hawkins: " Yet those profoundly beneficial forces driving the American economy to competitive excellence are also engendering a set of imbalances that, unless contained, threaten our continuing prosperity. Accelerating productivity entails a matching acceleration in the potential output of goods and services and a corresponding rise in real incomes available to purchase the new output. The problem is that the pickup in productivity tends to create even greater increases in aggregate demand than in potential aggregate supply. This occurs principally because a rise in structural productivity growth has its counterpart in higher expectations for long-term corporate earnings. This, in turn, not only spurs business investment but also increases stock prices and the market value of assets held by households, creating additional purchasing power for which no additional goods or services have yet been produced. Historical evidence suggests that perhaps three to four cents out of every additional dollar of stock market wealth eventually is reflected in increased consumer purchases. The sharp rise in the amount of consumer outlays relative to disposable incomes in recent years, and the corresponding fall in the saving rate, has been consistent with this so-called wealth effect on household purchases. Moreover, higher stock prices, by lowering the cost of equity capital, have helped to support the boom in capital spending. Outlays prompted by capital gains in excess of increases in income, as best we can judge, have added about 1 percentage point to annual growth of gross domestic purchases, on average, over the past five years. The additional growth in spending of recent years that has accompanied these wealth gains as well as other supporting influences on the economy appears to have been met in about equal measure from increased net imports and from goods and services produced by the net increase in newly hired workers over and above the normal growth of the work force, including a substantial net inflow of workers from abroad. " So the slowdown in productivity should by AG analysis been good since our expeectations have been lowered Based on my portfolio decline my expenditures will decline $40,000 over the next year - which will be interesting. That means according to Greenspan's theory, it will cost me nothing to live over the next year - because $40K is about as much as I spend a year on my routine needs. My landlord is going to be really p.o.ed, when I tell him that under the AG theory, I don't have to pay rent this year because of the negative wealth effect.