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I reconsidered for a few moments and decided that my personal inflation had
not disappeared. This is because I seem to purchase as much (if not more)
from the service economy as from the manufacturing economy. All medical
costs from insurance to dental are rising rapidly again. All travel related
costs have risen significantly and costs are expected to rise 10%-20% this
summer alone. The price increases I'm seeing in local real estate are
amazing. Meals out cost more and the cost of a bucket of balls is up 33%.
State and local taxes are up quite a bit. (Just a few examples.) I don't
think inflation is gone at all, in fact the cost of services are rising at
phenomenal rates, in large measure I believe to the vast amount of stock
market profits which are chasing modest to high end goods and services.
There is a lot of danger here! The US has allowed its manufacturing economy
to be exported while it has developed a robust service economy. However,
much of the service economy is subject to discretionary spending and it will
go into recession when stock market fueled spending slows. Should the stock
market tank, the service economy will too.
Earl
----- Original Message -----
From: <BOTTrader@xxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Sent: Tuesday, May 11, 1999 6:12 PM
Subject: Re: Sv: FUT Gold, game up? Inflation reconsidered
> "Inflation" as it is classically defined has to a great extent become
> history due to: a) post-Friedman central bank monetary growth controls
> Worldwide b) Greater levels of fiscal controls, especially the ERM
standards
> which the entire world now effectively has to shadow c) the "New
Paradigm"
> of the business cycle which is that, instead of "boom bust", we now have
slow
> growth & soft landings, meaning that as a cycle ages, interest rates have
to
> FALL to continue to stimulate demand (exact opposite of having to rise to
> choke off an inflation boom in the pre-Friedman era ). BOTTOM LINE: The
> likelihood of any sort of threatening "run-away" inflation is practically
> zilch.
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