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To: Maurice Winn who wrote (83368)	10/12/2000 7:15:18 PM
From: Jordan Levitt	Read Replies (1) \| Respond to of 152472

Good points Maurice, although I think that there is one thing missing from your thesis. If the rate of productivity is increasing at a greater rate than the rate of decrease of unemployment, then you can continue for some time (no one knows how long)without inflation. The internet is the single most deflationary force in history. GE saves on order of 15%-18% when they purchase from suppliers via internet reverse auction. The almost bizarre lack of pricing power in this marketplace shows that something is different.Economists previously believed that you could not go down below 6% unemployment without triggering massive inflation...not so this time around. Further, in previous cycles when there was an increased need for output, the required input was labour and lots of it ! Wages are upwardly sticky, as companies tend to hire quickly and lay off slowly. Now a lot of increased output is due increased productivity. Simply put, one can turn down the super efficient machinery and systems much more easily, or cut down on R&D spending much more easily than they can deal with the human factor. This does not mean that there is no point where inflation can rear its' ugly head, just that there is currently no evidence of it (look at Home Depots statement today about falling prices for lumber or the CRB). Outside of energy , which not a free market, we have had nirvana for inflation. A record length of expansion, record low unemployment numbers, record economic growth rates, and yet, extremely low rates of inflation. It seems to me that productivity, the internet and gobalization have served us well, and it aint over yet !!!