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

To: Mark Adams who wrote (2745)	7/22/2001 3:57:27 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

Demanding higher compensation encourages capital substitution for labor. Money does no action. Only humans do action. If the labor can increase value delivered in conjunction with higher compensation, it isn't a problem. This hasn't been the case over the last 50 years. Labor always demands compensation slightly higher than its worth. The marginal cost of labor is greater than the average cost. This is possible because monetary authority creates synthetic prosperity which prevents labor's cost and worth to come into equilibrium. Any opinions on the Future Inflation Gauge data published by www.businesscycle.com? It's a useless contrivance which is built on the claim that inflation is indicated by increasing prices of non-labor factor inputs or by other macroeconomic variables like vendor deliveries all of which took place in the past. It would seem to suggest the recent inflation blip (on the back of the 97-01 energy price swings) is short term in nature, IMO. The recent blip extends back 70 years. Since the early '60s the growth track has been solid only slowing to an instantaneous growth rate of 1% during the early '90s when FED pursued monetary aggregate targeting. When the AG FED abandoned that in early '95 inflation steadily increased and has been independent of non-labor factor inputs. Oil price change does not cause inflation. According to AG business doesn't have pricing power. When non-discretionary factor input costs like oil rise discretionary spending must fall, since without pricing power the added costs can't be forwarded. According to the school of demand management a fall in demand reduces inflation. ECRI is a firm believer in the school of demand management. Thus, ECRI can't decide whether rising oil price is inflationary or deflationary. Meanwhile prices continue to rise even though according to ECRI we are entering recession. What will inflation do when we come out of recession? The FED pumps in money to pull us out of recession because it thinks the people could never do it by themselves. M3 is growing at a solid 11% and M2 is in a strong non-fluctuating uptrend of 22%. This maintains the synthetic pseudo prosperity that enables labor to strike and get higher wages in excess of output which is falling. This is called stagflation. ECRI and the school of demand management can't explain it because its occurrence refutes what they say out of hand. People aren't demanding more in compensation only because they seek to catch up, but more because they think they're worth it.