To: Scumbria who wrote (123255 ) 8/29/2000 3:58:42 PM From: tejek Read Replies (2) | Respond to Scumbria, The truth is that there probably hasn't been any inflation all along. This year's Fed shock therapy on the economy and the stock market has been based on an illusion -- like the Emulex hoax carried out on a vast, market-wide scale. Too bad, because the economy's future performance has surely been compromised somewhat by the Fed's gratuitous rate hikes. But the patient is healthy -- it can probably survive a little unnecessary treatment for a disease it never had. But I'd rather listen to the market. It's telling us something entirely different -- that there is no inflation, and that even the Fed might start getting it right this time. Gitlitz argues that "...robust growth [has] not heralded a rising price level. Mounting evidence strongly suggests that zero inflation is now a practical reality. What is currently registering as inflation in the official data is in fact a statistical illusion, to a significant degree reflecting the statisticians' inability to accurately measure those New Economy forces that have been key to the growth pickup in recent years." Here's how Gitlitz figures it. It's complex, but it's well worth trying to follow. If Gitlitz is right, then all eyes should be on the Fed now to see how they respond. The last time the specter of deflation raised its ugly head, in the fall of 1998 following the Asian currency crisis and the Russian bond default, the Fed responded appropriately by swiftly lowering rates.
