ppi - slightly positive

["Gregoire de Nowell (ci-devant)" <GN842@xxxxxxxxxxxxxxxxx>]

Friday's PPI ended the long sequence of fractional % decline in
PPI.

Apparently, however, the major factor was an increase in oil prices.
Oil prices are carelistic at three levels (at least).  First,
high entry costs; second, OPEC, which in spite of its flaws
keeps prices in the $15-20 range rather than down at the $5-10
range; third, zone pricing in the U.S. and elsewhere, which
limits competitived pressure at the retail level.

An increase in a cartelized price could exert the same effect
as an increase in interest rates in the economy generally,
as discussed ont his list before.  It could have the effect
of lowering demand for and hence the prices of competitively
produced goods.  Hence much of the whole CPI-PPI issue
and deflation may still reflect the macro effects of
oligopolistic pricing rather than simply what Greenspan does
or does not do with interest rates.  Indeed, interest rate
policy, which uses the monopolistic power of the Fed to
push prices higher when the price indices (which do
not discriminate between cartelized and non-cartelized
price movements) might, ironically, be pro-cyclical, even
though the Fed likes to think of itself as working
anti-cyclically.

greg nowell