To: shades who wrote (62291 ) 5/31/2006 9:49:24 AM From: suanny Respond to Wars in general are inflationary,however I believe the ability of j6p to pay the price for mass produced goods is necessary for demand to continue to push prices.The average wage paid to j6p in the 70s was much higher in real terms than today,which can be shown by one wage being sufficient to support a household as opposed two salaries and a house ATM today.J6P received a larger portion of defense spending through union contract awards,which would then force the price of defense good up do to cost factors,also J6P had the money to pay for the higher prices he had to pay for goods produced by his brother union workers producing the goods he consumed.This process seemed to spiral out of control in the seventies,I remember receiving 9%9%10% in raises on a three year contract in the late seventies.I believe the short circuiting of this process and the demise of labor unions had more influence on the so called dis-inflation than Cental Bank tightening.Today a similar process seems to be occuring with J6P having the ability to pay higher prices through increasing value of items he either owns or is able to borrow on and corporations no longer have to share such a large portion of the profits with labor, which increases profits and the asset prices (the stocks).J6P meanwhile has relied on this asset appreciating asset prices to pay for any increases in prices he may have to pay.The removal of this ability of J6p to pay increases would seem much easier than the unwinding of unionized labor,any slowing of asset price rises could damage J6Ps ability to pay.If J6P can't pay who will,laborers in Chindia,and where will they derive their income to pay increasing prices.Corporations need to share more of the profits with the workers whether they be Chinese,Indian,Mexican or American or nobody will be in line to purchase their products.This was the point of bringing up the seventies.
