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To: NOW who wrote (109958)	6/22/2001 7:08:03 PM
From: Haim R. Branisteanu	Respond to of 436258

davidd, the writer is partially correct. One of the factors missing in his analysis is the "just in time" exchange of goods. This increased substantial the velocity of money and also set aside substantial amounts of money outside of goods that previously were tight up in inventory. Further the issue of velocity of inventory turn increased the return on investment which in turn lowered prices or in other words lowered relative inflation. If one invested $1 million and leveraged the equity in his business 1 to 4 a inventory turnover of 4 times a year at 5% profit generated 4 x 5% x 4 or 80% gross. In the same situation if inventory turn is 12 times a year which is common today for same profitability he can lower prices or on the other hand employ less capital e.g. 0.5 million which will result in 2 x 5% x 12 or 120% gross. Lowering his profitability to 3.3% will result in 2 x 3.3%x12 or 79% gross which means lower prices less inflation. It is a simplistic way to demonstrate that paper money is not a simple feat. The net result of this sceme is wild supply demand swings as the tech industry is facing now and the FED failed to adapt to............. on the way up and on the way down. BWDIK Haim