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Strategies & Market Trends : New US Economy Policy -- Ignore unavailable to you. Want to Upgrade?

To: Arthur Tang who wrote (89)	12/7/1997 8:49:00 PM
From: Arthur Tang	Read Replies (1) \| Respond to of 435

The silicon economy and the future trends, what is happening? Everyone knows modem is a peripharel; but is a fighter plane or an automobile a peripharel of a computer? The answer is a resounding yes. The future trends now is totally different in the normal view points. Processors are parallel data driven. Software replaces steel/modular small size, because every thing is a peripharel of the computer. Complete software line compatibility arrives; motors, hydralics, every thing is driven by computers coupled with proper software. Slow secondary processes becomes niche, standard process is highly automated. Throughput, yield, and cost guarentees total solutions in real time domain. Knowledge management is king. PC board line width goes from 6 mils to 3 mils or less. Semiconductor line width goes from 0.35 micron to 0.25 micron or less. Passives are embedded in integrated circuits. The silicon economy is here to stay.

To: Arthur Tang who wrote (89)	12/11/1997 2:20:00 PM
From: mc	Read Replies (1) \| Respond to of 435

Arthur, I don't know where you're living, but, here in southern CA all the grocery stores who were offering sales on turkeys got lambasted for not having enough in stock. So, I don't see how excess consumer demand is going to be any cause of inflation based strictly on the turkey-meter. I think we have many other things to concern ourselves with as far as causes of inflation. If you buy these then you'd have to agree that the next move for Greenspan would be raising interest rates and tightening the money supply or simply to stand pat as he has been doing. First, inflation has been kept somewhat in check by the strong dollar. I really should say weak foreign currencies. But, how far can the economies of east Asia continue to decline. I would bet that many will be more willing to do as Mexico did and take their knocks and move on, having learned an important lesson. It would seem to me that we are very near (within a few months) of a top in the US dollar, thus, implying that the prices of imported goods are at a low and their positive impact on holding inflation down has reached its limit. Second, as foreign goods become more expensive, domestic items become more appealing. As you know, we seeing lows in the unemployment rate that we haven't seen in years. Where will this additional labor come from to produce the additional goods demanded? Certainly technological improvements will make us more productive, but, enough so to contain inflation? Probably not. With a lack of workers, real wages will continue to increase adding more to the problem. The only way to improve the supply curve is to pay the higher price of foreign goods because the domestic supply curve will become more and more inelastic as capacity (constrained by labor) reaches it's limits. Obviously, if we're paying higher prices for labor, domestic goods, and foreign goods, we're going to have inflation problems. Now, will the Fed raise rates because of all this to try and slow down the economy and avoid inflation? Probably. However, I think you come off a bit hard on the Fed. Greenspan is a fairly conservative Fed Chairman and I think it's in his character to involve himself as little as possible in the intricate workings of the economy. He knows the impact his actions have and wields his power as effectively and responsibly as anyone. He is certainly a bit more mainstream than he used to be, but, his leanings are still on the conservative side. Please note, when I say conservative, I don't intend the inference to be that of "conservative" as the Republican party has come to portray it. When I use conservative, I intend it to imply the ideology that less governement involvement is better, free trade is better than regulated trade, etc. This certainly is not what the Republicans would have you believe conservatism is. The Republicans have become middle of the road chumps on the economic front without an ideological foot to stand on. On a side note, you might enjoy taking a look at "Capitalism: The Unknown Ideal" by Ayn Rand. While sold as a book by Ayn Rand it is more a collection of contiguous essays including a couple by Alan Greenspan himself. He is ultra-conservative in his earlier days back in the 60s when this was written and even has a few barbs for the Fed itself. While Ayn Rand's writing is difficult and annoying at best, some of the articles are worth trudging through and the Greenspan stuff is very interesting. Thanks for sharing your opinions. I just found this thread and enjoyed reading through it. Good luck to you, Gary