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.

Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Joe NYC who wrote (112273)	5/24/2000 6:29:00 PM
From: TGPTNDR	Read Replies (1) \| Respond to of 1570177

Joe, OT AG Re: None. Maybe the question should be asked: How much growth would have been lost if AG let the inflation rise to 5% or 6%? How much growth has been lost because AG did not fight more persistently to bring the inflation rate to 0 to 1% range? > I just don't see any signs of increasing inflation that isn't PUSHED by the oil price increases. Those price increases act more like a tax increase(Which should slow the economy, as happened in the 70s,) stats.bls.gov 1 11. Is the CPI the best measure of inflation? Inflation has been defined as a process of continuously rising prices, or equivalently, of a continuously falling value of money. YEAR JAN. FEB. MAR. APR. MAY JUNE JULY AUG. SEP. OCT. NOV. DEC. HALF HALF AVG. DEC-DEC AVG-AVG 1999 164.3 164.5 165.0 166.2 166.2 166.2 166.7 167.1 167.9 168.2 168.3 168.3 165.4 167.8 166.6 2.7 2.2 2000 168.7 169.7 171.1 171.2 =================================== These numbers show a rather horrid rate of inflation, (171.2 / 164.3)= 4.3% over the last 1.3 years. ~3.3%/year. When you look at the components of the CPI it turns out that about 30% of the total CPI is raw material cost of Oil and Gas. That 30% has more than doubled in the last 1.3 years. From another point of view, is the economy running out steam from wage push inflation? Major Sector Productivity and Costs Index 146.142.4.24 All Persons Sector : Manufacturing Measure : Output Per Hour Duration : "% change quarter ago, at annual rate" Year Qtr1 Qtr2 Qtr3 Qtr4 Ann 1999 7.1 5.3 4.3 10.8 6.4 2000 5.9 VS. Sector : Manufacturing Measure : Real Hourly Compensation Duration : "% change quarter ago, at annual rate" Year Qtr1 Qtr2 Qtr3 Qtr4 Ann 1999 2.5 2.4 3.2 1.3 2.8 2000 -0.1 Given these factors it is my opinion that the Fed. is pouring water into a boat with a leaky bottom as they consistently have since AG took over in August '87 -- From Paul volker -- and promptly jacked the interest rates up for 3 months 'to fight inflation', then put them back lower than Volker had them 'because of the crash' in November. We already have an interest rate inversion. It is widely recognized that it takes about 6 months for minor interest rate hikes to start slowing the economy. We are about 8 months into the process, and were seeing the economy slowing in March and April, then he jacks in 1/2 point. Sorry, I think the same of him now, as when he was filling in for Art. Laffer(The laffer curves guy) on Nightly business news in the 80s. He's a bright, educated dope. Or should we slow an information/process economy by jacking up the interest rates artificially 'till we use so little oil that the inflation rate falls? -- remember,now, it's already cheaper to borrow long term money than short term. To answer ted's question, what should he have done, I would say he should not have jacked the rates the last couple of times in '98(before the Asian problems), he should not have jacked it the last 1/2 % last month, and he shouldn't have jacked it 1.5% in '87 from August to October. Sorry about the fixed font, but with tables it's hard without it. tgptndr