Re: 1970's redux and where do we go from here?

[Jim Devine <jdevine03@xxxxxxxxx>]

On 4/22/06, Perelman, Michael <MPerelman@xxxxxxxxxxxx> wrote:
> I am not sure that I buy Loren's inflationary interpretations.  I see 4
> conflicting forces.

> 1. Speculation, as in housing, which is probably cyclical, not a long
> term trend.

it doesn't matter if it's secular or cyclical (or seclical, for that
matte) if the speculation is accompanied by unsustainable accumulation
of consumer debt. A cyclical housing-price boom followed by a
housing-price slump creates a stagnationary trend if house-owners
accumulated too much debt while prices were up.

> 2. Manufacturing, which has a long run deflationary trend.
> 3. Raw materials, which have a long run inflationary trend.

how far are real raw material costs up relative to the trend since the
end of WW2?

> 4. Intellectual property, which has a long run inflationary trend.

isn't the "inflation" or intellectual property only relative to the
cost of production (rather than being absolute inflation)?

> I am not sure about how effective governments are in reflating if the
> economy begins
> to sink.



--
Jim Devine / "There can be no real individual freedom in the presence
of economic insecurity." -- Chester Bowles