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Missed one other key piece, velocity of circulation. The difference
between inflation and deflation is how fast the public is willing to
part with their hard earned cash.
Remember to 70s were also the period you could borrow money, put it in
the bank and make money on the difference in the interest charged and
paided.
It was also the time when there was no end to pay raises and "why should
I keep it, it will be worth less tommorrow".
What will be interesting to see is if this "monetary generation" is
smarter than previous ones.
A great little book, written for those of us without a PhD in "how to
muck it up", is Age Of Inflation. By Hans Sennholz. About 9 bucks.
Will give you a much better picture than those CNNFN, MSNBC, NBN yada
yada yada freaks.
As to helping you trade better, I got a gallon of "cheapo vino" to prime
the discussion.
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Date: Fri, 5 Dec 1997 17:10:08 -0800
Subject: Re: low unemployment,bear market,correlation???
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Tom,
The pundits of economics worry that low unemployment leads to higher
inflation. With more people at work there is a higher demand for goods and
services. With the higher demand you get higher prices, thus inflation. In
order to curb inflation the Federal Reserve raises interest rates. High
interest rates drive the stock market down. Until we see higher interest
rates, I wouldn't worry too much about bear markets.
David Radtke
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To: 55crownvictoria @ WORLDNET.ATT.NET, metastock-list @ metastock.com
cc: (bcc: David Radtke)
Subject: Re: low unemployment,bear market,correlation???
Tom....
It's a little bit more involved than that. I suggest you read up on those
times....speculation was high, you had the OPEC problem, as well as
interest
rate and inflation problems. I really don't think you can draw a
correlation
between then and now. That bear market was a slow and painful one....it
brutalized all!
Jerry
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