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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (14701)	3/5/1998 8:36:00 PM
From: Lazarus_Long	Read Replies (1) \| Respond to of 94695

<< From your earlier post it would seem that you suggest demand side inflation? >> Hmmm... The scenario goes: 1. US jobless rate is at record lows and employers are screaming for workers. They are so desperate they are now even willing to train! 2. SEA gets well soon. (I consider this unlikely; they've got a lot more pain to go through.) 3. And here's the shaky part: Deflation from SEA is what has been holding US prices down; corporations can't raise prices in the face of it. 4. Because deflation stops and competition from SEA eases (step 3), US inflation starts moving again. I think step 3 is shaky because 1. Only a small number of US industries are directly affected by SEA competition. While a lot are indirectly affected, they do have some maneuvering room. They haven't been able (or wanted to) use it to increase prices. 2. US inflation was low before SEA blow up. Maybe they were keeping it down, but that then suggests that if SEA gets well, it may still not increase! AG seems to think SEA is responsible for low US inflation; I think the case is murky. He gives SEA credit because he can't find anything else. The Feds productivity measures say productivity has not risen enough to account for the low inflation. I think their measure is faulty and does not properly account for the enormous effects of the computer and communications revolution. For example, there are far fewer management and administrative types in corporations now. Where before a manage had a secretary to type documents to copy for distribution to his organization, now he has a computer and email and does it himself- -and at less cost. When I want to communicate with my nephew in Japan, I don't pick up the phone and call; I use email. And if I did call, it is cheaper because it goes through a communications satellite rather than a oceanfloor cable.