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To: BigBull who wrote (71424)	2/24/2001 11:36:42 AM
From: Joan Osland Graffius	Read Replies (2) \| Respond to of 436258

BigBull, In order to evaluate stagflation, inflation, and deflation one has to look at the cost of producing products and services. At the current time our utilities, communication providers and food producers have pricing power. At least where I live they do. Another issue is that no one is going to sell products for less than cost for very long. My scenario is stagflation for a while. As long as people have capital that they are willing to spend on goods that are outside their basic needs we will continue to have stagflation. There is going to be one heck of a shock with food prices this year because of the large increase in the cost to produce basic farm commodities. If you think ADM is going to sell products for less than their costs you are living on another planet. Once people start shutting down spending, we will just have the unavailability of goods, because of producers not able to charge for the costs of producing those goods. If you call this deflation, ok. Joan

To: BigBull who wrote (71424)	2/24/2001 3:57:57 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

Big Bull, I'm more in the deflationary/stagflationary camp myself. The prospects for gold don't necessarily rely on inflation (though the prospects for oil certainly do). For one thing, gold maintains its value well even in deflationary environments (not necessarily its price, but its value). For another gold was among the best performing investments in the last prolonged deflationary cycle, the 1930's (untill FDR basically outlawed private ownership in 1933). It's important to keep in mind that the most valuable property of gold as a form of money during times of economic upheaval is that it's not dependant on anyone's obligation to pay (government, business or private citizen) to maintain its function as a store of value. To be honest, I'm not a real goldbug, but the arguments (for some gold bullion/share ownership) are compelling given the current status of our economy and the likely reactions of our political and financial leadership. All said, the collapse of the debt Ponzi pyramid will lead to numerous dysfunctional adjustments by government (witness the B of J's zero interest rate policy, and Greenspan's chopping of rates from 600 to 500 bp's already, with more to come and no sign of recovery forthcoming). The wild card in the deflation vs inflation battle will be to what extent will the Fed and the federal government allow the currency to be debased in their quest to reliquify. The hyperinflationary road is still possible, I only hope its not the one chosen as it tends to be politically more destabilizing. Have a great weekend! Regards Patron