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

To: TGPTNDR who wrote (112552)	5/24/2000 10:53:00 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 1570635

RE:"It REALLY pissed me off when AG said he wanted 'slow steady inflation'. Inflation, in any amount, IMO, causes damage. Low inflation causes little damage. big inflation causes big damage." This is correct in theory but in reality a little inflation has a positive effect on the economy. It's primarily psycological as people like to think they are getting ahead when they can sell their house for a profit etc. Big inflation causes big damage, this is why I'm totally shocked at those who blame AG for fighting inflation. As a matter of fact, I think he's behind the inflation curve if anything and his rate hikes are not pre-emptive...they are playing catch up. If there wasn't an oversupply of gold the POG would be cruising to $500/oz right now. Jim

To: TGPTNDR who wrote (112552)	5/24/2000 11:22:00 PM
From: Joe NYC	Respond to of 1570635

tgptndr, OT This is the 'raw material cost of finished goods', including heating, transportation, and what would normally be considered 'raw material, such as feedstocks to chemicals. I could agree with this, because this is a much broader definition, of which direct cost of Oil is still probably lot less than 30% (30% of lot less than 30% = lot less than 11%) 0.02596.../1.33 = 0.019518... or about 1.9% Note, this is w/o energy, not without Oil/Gas, as 'feedstocks' are not energy. Did I make any errors? It looks correct to me. I would only point out that inflation has a number of components, some are increasing, some are decreasing, some are growin in line with overall inflation. It's obvious that anytime you take out the component that's rowing the fastest, the remaining portion will grow slower. You may have a drought in one part of the country, rainfall in another, too much or too little snow, earthquake in Taiwan, fire in Japanese They all seem like good reasons to tolerate higher "temporarily", but they are not, because when it starts to rain where it is supposed to and stops somewhere else, those prices should drop, and offset other "temporary" increases in costs. The CPI level is not an issue. the delta in the CPI is the issue. Currently under 3%/year with massive energy increases included. Then I guess AG's policy is working. The inflation for 12 months ending in March 2000 was 3.7%. We are still a long way from price stability. The last time we had a decline in price to compensate for all the temporary increases was in 1955. I am not sure if I explained what I meant by level. I did not mean the level of the index itself, but the level of the inflation or change in the indes (first derivative), and feds action to lower inflation could be considered second derivative. I far favor, as opposed to jacking interest rates up and down for a year or so a sudden shock. A 'sudden shock' of 1/2% would have stopped the Naz. bubble last Aug., IMO, without the collateral damage that I fear the feds actions in the near future will precipitate. I also think the last 1/2 point was too much, way too late. On this, I agree. I don't know when they started the wimpy .25% increases. Fewer larger increases over a shorter period of time would be much better. It REALLY pissed me off when AG said he wanted 'slow steady inflation'. Inflation, in any amount, IMO, causes damage. Low inflation causes little damage. big inflation causes big damage. Deflation can cause big damage. I am more afraid of Deflation right now than inflation(but I could certainly be wrong in that point). Agreed. I don't know what AG meant, but to me, the ideal situation would be 0 to 1% inflation. There are some rigidities in prices, and some are tough to actually cut. I never understood this fear of deflation, since it is such an academic issue. We have not had deflation in a generation. Being forced to cut prices is to me natural, not dangerous. Some somponents of our existing spending have to be cut in price, so that we have money left to buy new types of goods and services. People used to spend majority of their income on food, and did not have much left to buy anything else. Now food is cheap, and we can buy things like Athlon processors, flash memory etc. Joe