Jim;

Too many give great emphasis to the Fed. Greenspan has been in charge of the Fed since the days of Reagan. Many things have been said about and by Greenspan as to economic policy and reality. So far Greenspan has been wrong. Regardless of what he has put into effect reality has proven otherwise. Greenspan is like a small boy in a rowboat in the middle of the Pacific Ocean. He rows and thinks he controls the world’s tides. There is more to the economy than the Fed has to offer.

Memories: Jimmy Carter was President, along with 15% inflation and 22.5% interest rates. Clinton was President and inflation was 1.7%. The Union Boss was trying to get the membership to go on strike by saying, “What we need is a double digit wage increase – like we got when Carter was President”! Ah such brilliance! Definitely a candidate for the Chairman of the Federal Reserve!

A fun read:

http://www.cameron.edu/academic/business/brc/truman.pdf

Tom


>Watching the NBC Evening News with Tom Brokaw last night when this subject came up.
>Apparently Alan Greenspan, in his latest meeting with the Congress, warned that it is a looming problem that can have a dire effect on the ecomony.
>The news show then did an item about what it is and the impact it has.
>
>They showed a shirt manufacturer in Florida and the management there noted that, as prices fall he has to cut production which means laying workers off. They went on to describe how this affects fabric manufacturers, truckers, etc all the way down to the cotton grower.
>
>Mr. Brokaw did NOT relate the "antidote" so I guess that Mr. Greenspan hadn't offered one. Neither did Mr. Brokaw tell us (so I presume Mr. Greenspan didn't either) what was causing lower prices.
>
>Now I think it is quite clear as to the cause of falling prices - "GLOBALIZATION"!
>Shirts made in China or Bangladesh or Mexico or (name one) are much cheaper than U.S.-produced counterparts (let's disregard any quality issues because apparently we, as consumers, do and buy the cheaper ones regardless). To "compete" the Florida manufacturer has to lower prices, which likely starts by buying lower-quality raw materials but moves to driving workers harder and finally by laying workers off. Ultimately the company folds or it is moved off-shore.
>
>I find it curious that Mr. Greenspan didn't offer a "solution" to the problem. Could he have been using "code" to tell IMPORTERS to RAISE THEIR PRICES in order to allow the U.S.-based manufacturers to remain "competitive"???? That's the best guess I can come up with.
>
>I wonder why NO SOLUTION WAS OFFERED? I wonder why the solution of stopping the movement of manufacturing operations to off-shore locations wasn't suggested?
>
>Does anyone reading know what the "solution" is for "deflation"? I'd sure like to learn it.