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Non-Tech : Deflation -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (97)	2/24/2002 5:15:57 PM
From: Maurice Winn	Respond to of 621

Disinflation according to that article was not so much low inflation but the process of going from high inflation to lower inflation. The worry about disinflation [which we had in a big way in the late 1980s and into the 1990s] seems a bit like worrying about the greenhouse effect; big and scary but never actually seems to happen and really, other stuff, like wars, comets, AIDS and economic mayhem are much more problematic. Disinflation is what we can worry about when we don't actually have the big scary bogeyman deflation. That's how it seems to me anyway. I just can't work up any enthusiasm for worrying about deflation right now, since it has been a big threat for 6 years now - in my mind anyway - but can't quite seem to get its act together despite the best opportunity its likely to get. Now that the greatest human the planet has ever known, Uncle Al, has saved the world yet again from the scourge of economic collapse, deflation and misdirected capital, deflation is going to have to go on the back-burner until someone else takes over who doesn't understand what makes a dollar tick. Thanks for the links! Mqurice newsday.com <...Federal Reserve chairman Alan Greenspan gives his semi-annual state of the economy report to Congress Wednesday morning. When he speaks, markets around the world listen. His message this week will largely affirm the chorus of analysts who uniformly agree that the recession is over and a recovery is starting, if not already well under way. He bids farewell to the shortest, mildest recession since economic score-keeping began at the end of World War II. That begs the question of why the recession wasn't worse. The entire economy virtually shut down in the days following the Sept. 11 terrorist attacks. The nation's manufacturing sector has been depressed, and U.S. industry has had no overseas help: Europe's economy is not growing, and Japan has been in a deep recession for a decade. And the ever-stronger dollar has stymied whatever trade opportunities American business might have had. Against that backdrop, Greenspan and his colleagues at the Federal Reserve's Open Market Committee took a swing. "The No. 1 factor is the Fed's aggressive rate-cutting," said Martin Regalia, chief economist for the U.S. Chamber of Commerce. The National Bureau of Economic Research, the designated arbiter of recessions has concluded that the 2001 recession started in March. At that point unemployment was at 4.5 percent and manufacturers were just beginning to shutter plants and lay off workers by the tens of thousands. But by March 20, the Fed had already made three half-point cuts in the federal funds rate, reducing it from 6.5 percent to 5 percent. "Even the Fed might say they were a little slow off the mark. But then, right off the bat, boom, boom, boom," Regalia said, referring to the historically aggressive string of 11 rate cuts voted last year. By December, the Federal funds rate had been sliced to 1.75 percent. But now with unemployment hovering around 6 percent, retail sales rebounding and companies beginning to restock depleted inventories, the only outstanding question is how robust the recovery is.... >