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To: yard_man who wrote (112768)	3/26/1999 6:00:00 PM
From: BGR	Respond to of 176387

tippet, My point is that inflation has been trending lower for a while, before, during and after the SE Asian boom and bust. And productivity has been rising at the same time due to technology and got a major ramp up due to eCommerce in recent past. Many studies indicate a correlation and even Greenspan seem to believe that to be true to some extent. As for lower rates the general investing public has little understanding of how rates affect investments, the inverse relation between bond yields and prices are clearly foreign to most. My personal impression is that greater popularity that investing has been enjoying recently is due to for four main reasons: 1. Social Security fears 2. Greater popularity via employer sponsorship of retirement plans and ESPPs which demystifies investments 3. Media hype 4. Rapid information flow and improved ease of use when it comes to investments due to better technology I do agree that the greater liquidity has contributed to an equities market boom. But that hardly means that the money was diverted from consumption, which is at it's peak for a while. So, that again is not the cause for disinflation. Besides, it is hard to comprehend how greater liquidity coupled with higher trade deficits can cause disinflation, unless there is something to back the dollar - the US technological prowess and better productivity in this case, I posit. (Unless of course all foreign currency traders are dumb, which I doubt.) As for compensation via options, that is a very valid point. But what most forget is that options get exercises too (else they lapse). Smart companies simultaneously sell puts to Lucretious Taurus to cover their rear end. In that sense, LT is the ultimate cause for disinflation in USA, I posit. -BGR.