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To: Lucky Lady who wrote (14998)	7/29/1998 1:10:00 AM
From: PaulM	Read Replies (1) \| Respond to of 116759

Hi Lucky Lady. That's been the $64000 question for some time now. Day after day we're led to believe the choice is (1) slow growth/no growth and deflation or (2) the "overheated" inflationary economy. IMO America is likely to experience the worst of both at the same time (slow or no growth and higher prices). As I see it, when lots of bad debt is liquidated losses are naturally spread among creditors and debtors as paper assets are wiped out (deflation). But govt bailouts financed by money creation will spread some of those losses to currency holders (inflation).

To: Lucky Lady who wrote (14998)	7/29/1998 1:31:00 AM
From: Investor-ex!	Read Replies (1) \| Respond to of 116759

Lucky Lady, Under your deflation scenario, you theorized a devalued dollar. This would actually be inflationary, as world commodities would rise in dollar terms if the dollar devalues. I agree with PaulM. The system will always choose some form of inflation over deflation, if a choice is to be made and can be made (sometimes these things cannot be controlled). The "just right" inflationary backdrop of late is an unsustainable anomaly. Remember stagflation of the 70's? and early 80's?

To: Lucky Lady who wrote (14998)	7/29/1998 8:47:00 AM
From: Oak Tree	Read Replies (1) \| Respond to of 116759

Lucky Lady, I don't really see deflation. You note that DC area prices are down for years now. DC is also a war zone. The better areas of DC are so expensive that humans can't hope to buy there - and they are small and probably have roaches. In Bethesda townhouses start at 400. 50 houses recently went up in Bethesda off Conn. Ave starting at the low 600's, and having 1/4 acre lots. The washington area is recession proof in many ways. I wouldn't use DC prices as a standard example of america. The rest of the US has seen some increases, though modest, but at a few % per year. Washington has seen better than that in some areas and worse in others. Cheaper foreign goods can lead to layoffs, but they haven't lead to increased unemployment. For example, in Rochester NY Kodak lay offs were almost 20% - to be competitive with fuji. That was 2% of the population. Rochester unemployment went from about 3% to about 3.2%. Skilled workers were hired immediately, white collar lay offs started new companies. Inflation is low now because of lots of things. In particular as you suggested, cheap energy. If oil prices go up than the economy will be in trouble and we will see inflation. Paul