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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (47800)	12/20/2005 2:06:04 PM
From: UncleBigs	Read Replies (2) \| Respond to of 110194

When more is accomplished with less it fuels growth Not exactly. It fuels slack resources unless you can stimulate growth with debt. The fuel for our current "growth" is debt not productivity. Cut out the exponential debt increase and your "growth" turns to a bust.

To: GST who wrote (47800)	12/20/2005 3:19:50 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

GST you ignore where one is in the cycle. Rising productivity is normally a good thing as it leads to falling prices. We need 1/100th or whatever farmers to produce the same amount of grain. Instead those people did other things. That is good. However you ignore what happens at the end of a cycle. Take 1929 for example with more cars rolling off the assembly lines than people could buy. Result layoffs. Same thing going on in auto industry today. It is also compounded by global wage arbitrage. As long as there is demand for the goods being produced everything is fine. Turn off that demand spiggot then jobs are lost all along the pipeline: cars, trucking the cars, car dealerships, can loans, etc etc etc. Now imagine on top of that there is a sudden increase because of productivity to produce even more cars. What happens? You act as if I am arguing against productivity. I am not. I am merely pointing that at this point in the cycle it is likely to cost jobs. When Ford first put up the assembly line it created jobs, and all kinds of them while at the same time reducing the price of cars so more people could afford them. You are attempting to read too much into a couple blog lines and you act as if I think rising productivity is a bad thing. I don't. It is a good thing and has contributed to a rising standard of living overall. At the top of the cycle you end up with massive overcapacity as everyone in 1929 already had a car that was going to buy one, and I think we are in nearly the same situation with cars and all kinds of other goods today, especially houses. Mish