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To: marginmike who wrote (68352)	2/16/2001 9:30:12 AM
From: pater tenebrarum	Respond to of 436258

it causes deflation because it puts pressure on demand...e.g. every smoker has now less money to spend on other things, as cigarette prices have risen. the problem generally is that inflation in raw materials can't be passed on - all that happens on the corporate level is a margin squeeze, which further impacts demand for higher order capital goods as belts are tightened. demand for technology is especially hard hit because of what happened to the telcos....check the debt levels of staid firms like BT, Deutsche Telekom, T, they're all drowning in debt after having paid way too much for acquisitions and G3 licenses....no money left for the fabled 'infrastructure build-out'...