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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: the truth who wrote (902)	1/29/2001 3:51:59 PM
From: ahhaha	Respond to of 24758

I appreciate the regard, but it isn't the case that borrowing per se is a problem, especially not consumer borrowing for whatever reason. It's a self-correcting mechanism. You never need to worry about that like so many erroneously do. I won't go into the details why, but if you'd like a long winded explanation, I'll give it. My comments address a far different arena. I do not think we have felt the full effects of the soaring energy prices on all industry. This is another non-issue. It's just a factor cost and it varies up and down. OPEC seems to want to maintain current price levels, so all aspects of economy which use oil have to adjust to the factor price increase. They do. So what? The net is a push unless some entity can't pass its incremental cost to its customers. The oil price change hasn't been sufficiently great where this is the case like it was during 1973. Even then it just took several more years for the economy to adjust to the new circumstances. Oil price increase isn't a source of structural inflation just like it wasn't during the '70s. Structural inflation depends on how the central bank handles factor price changes. If they attempt to monetize them, then they lay the ground work for structural inflation. That's why the FED has to take a vacation, at least with respect to direct injection. Nor have they been faced with decisions that their parents had to make. I understand what you say, but I hope I'm not encouraging some kind of retreat to Calvanism. The world's wealth has grown throughout human history. Things are always only relative. It isn't necessary and it's highly unlikely that we will go back to any inflation of the past, if only because automatic adjustments have been created like indexed bonds, indexed employment, indexed social security. The question is, maybe not, if monetary inflation can get going, but how long can it last? The point is that such inflation would result in an even greater rate of deflation that is already structurally in place. It's in place because the cost of creating goods is asymptotically approaching zero from mechanization. We don't realistically threaten structural inflation, but the result of even trying to go there would be chaotic deflation. This is always what is threatened by any inflation and why the FED takes the actions that it does in order to prevent what they fear against what must naturally occur. Greenspan, no more manipulation, we all need a good dose of reality. Hear, here.