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To: Thomas M. who wrote (100842)	5/9/2001 10:03:34 AM
From: Perspective	Respond to of 436258

I stated a while back that the Fed's focus needs to shift away from low inflation to price stability. There is a subtle difference. I think the CPI has permitted the whole planet to deceive itself about the state of the US economy. We have, simultaneously, inflation and scarcity in the basic raw materials and basic goods (gasoline, oil, natural gas, electricity) coupled with deflation in many finished goods, particularly electronics. Contrary to Easy Al's opinion, they DO NOT cancel each other out. They each have at their core the same root cause: too much easy money. What is needed is a measure of price stability. What I would propose is a price stability index where price changes are represented in percentages of a base value, and added in RMS fashion. A change of 10% in the price of gasoline, either way, is bad. A change in 10%, either way, in the price of the representative PC, is bad. Only stability in pricing indicates balance in the economic forces. The Fed believes that the antidote for deflation is inflation. I disagree. We'll see who is right, and hopefully future Feds will learn something. BC

To: Thomas M. who wrote (100842)	5/9/2001 11:31:03 AM
From: Mark Adams	Respond to of 436258

The uptick of inflation late 99 early 00 appears to be the rebound from the prior deflationary impact of lower oil prices resulting from the 97-98 SE asia event. If you graph the future inflation gauge data found at businesscycle.com, you'll see support for inflation leveling out and dropping in the near future. I believe we have seen a surge in various food prices as a result of the compounded impact of higher energy costs. Food may have more pricing power than durable goods, hence more likely to show passing on of increased costs early. This concerns me, yet I don't think you can project the trend illustrated in this chart without considering the macro circumstances. With Respect to the chart grantsinvestor.com