Re: priming the world pump

[Bruce McFarling <brmcf@xxxxxxxxxxxxxx>]

One point, noted while browsing a pkt post from BERNIETUCMN@xxxxxxxxxx:
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     The limits of Keynesian expansion within this country were reached in
the welfare/warfare state of Lyndon Johnson in the 1960s.  The productive
dominance that was the base of U.S. power coming out of World War II could
not be maintained.  Keynesian stimulation led increasingly to inflation and
trade deficits.  While inflation eventually kept real wages from rising, it
was no longer an acceptable instrument of control because U.S. manufacturing
had lost its monopolistic power at the global level and could no longer
simply pass along price increases without loss of sales.  Out of this crisis
of profits came a new resolve to root out inflation and lower real wages.
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	While this makes glancing contact with the cause of the late
1960's inflationary surge, it then goes on to make it look as if the
erosion of U.S. economic dominance was part of the cause of inflation.
But since Johnson pursued a shooting war without wartime finance, there
is no reason to look for more esoteric causes.
	I would also be interested in reading any information on the
extent to which European or Japanese firms traded opportunities to raise
price for increased market share (which is the only mechanism Ican see
for this 'could no longer pass along price increases' step in the
argument), as this is an interesting addition to the story.

Virtually,

Bruce McFarling, Knoxville
brmcf@xxxxxxxxxxxxxx