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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (69316)	9/23/2007 10:11:14 AM
From: sea_biscuit	Read Replies (1) \| Respond to of 116555

I think prices of essentials (food, medicines, education etc.) can rise beyond what people are paying for them now. Since they are essential, people have to cut other expenses. e.g. if grocery prices rise, then people can virtually stop going to the movies, so they can pay for their groceries. Prices can rise without rise in incomes. It is called "poverty". Your mistake is in assuming that Americans' standard of living has to remain the same as we go through all this mess.

To: mishedlo who wrote (69316)	9/23/2007 2:01:15 PM
From: Elroy Jetson	Respond to of 116555

Your observation explains why I've always suggested we are headed for a situation which most closely resembles the BBC program "Are You Being Served?" which portrays England during the 1960s and early 1970s when the value of the Pound was plunging. Prices cannot rise (long term) above peoples ability to pay for them, regardless of what inputs costs are. Housing is the perfect example. Real estate can't be exported. In "Are You Being Served?" the value of real estate an rents declined as people lived with their parents, rented rooms in homes and doubled-up in flats. The price of items which can be exported are not constrained by reduced incomes, unless the deleveraging is global. In "Are You Being Served?" quality goods were not on offer as no one could afford them. Ill fitting clothes with too long sleeves were promised to ride-up with wear. Shop clerks often walked to work at the end of the month as they could no longer afford the bus fare when petrol prices rose sharply. America was experiencing great prosperity during this period of great hardship for England, so well-made luxury goods continued to find a market. If you want to know what life in America will be like, tune in to PBS and watch some episodes of "Are You Being Served?". .