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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (15518)	2/23/2002 6:12:50 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 74559

Don, I remember as a youngster in the mid 1960s, when I had no idea what made the big world's clock tick, some media article was saying how inflation was rising and if it got above 5%, then woe to us!! I don't recall any prescription of doom other than an amorphous scary monster. I was a bit scared because inflation did go over 5% and zoomed way beyond that. But surprise surprise, the world did NOT come to an end or even get significantly disrupted. The disruptions which came, such as Vietnam, Israel/Arab wars, MAD and OPEC production cuts were nothing to do with money printing and resulting inflation. So, I stifle a yawn when I read: <For those of a strict monetarist bent -- inflation being always and everywhere a monetary phenomenon -- banana republic-style money growth continues unabated: In the 12 months ended January, money as measured by M2 jumped 9.6%, while that even better measure called MZM leaped 19.1%...." "...As the chart shows, while mean inflation has been decelerating over the past several months, median inflation has been accelerating, from 3.6% in April to 4.0% by November, before ticking down to 3.9% in December and January. The current gap between the mean and median is the widest ever recorded. That gap could narrow to nothing within a year or so, and chances are the rise in the one will be far greater than any decline in the other. While it may be too alarmist to talk of 4% inflation, 3% sounds too conservative...."> With 6 billion people surging into a global economy and needing dollars to keep score, I expect that there will be continuing demand for more and more of those dollars. Therefore, there will need to be more and more printed if there isn't to be a vast deflationary trend. Which is great for the USA since they own the printing press. They can export dollars like crazy by simply spending them on imported goods. Because deflation seems to be a concern, I think that Uncle Al will print like crazy to avoid deflation. So far, so good. Because printing involves easy strokes of a pen on a $1 billion cheque, he'll be able to keep up the $$ production rate without overloading the wheelbarrows. Heck, he can send them whistling around the world through cyberspace. Optical fibre can carry a LOT of $$ in a very short time at the speed of light. The outcome will be no deflation, minor to significant inflation, a burgeoning global economy, increasing share prices for those companies leading globalisation with a strong, if transient, monopoly on products in strong demand [such as CDMA, Windows 2000, Rituxan, Zevalin and other biotech products, genetically engineered crops, cloning, cyberspace]. MZM = +19%? Yawn! Aztecs will clutch their gold crosses held aloft against the scary inflation monsters, but earning no return on their 'investment' unless they can out-trade others in a zero-sum game [brokers taking their cut first of course]. Mq