Replies to post #680212 on Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

I think the Japanese Economy experienced DEFLATION for over 10 YEARS! True when you raise employees salaries it is almost impossible for you to lower them, the problem is THAT BUSINESS CAN'T RAISE PRICES OF THE GOODS OR SERVICES THEY OFFER WITHOUT LOSING SALES! The Federal Reserve DESPERATELY wants to avoid Deflation, Vietnam, Mexico, China, et. al offer CHEAP LABOR (and less regulations) for manufacturing for the 10% to 20% of GDP that goes to buying Goods in this country, and technology tends to lower input costs of goods and services sold.

Listen to Jerome, "We want inflation to run on AVERAGE around 2%", "We expect temporary inflation above 2% during reopening"

https://www.cnbc.com/2021/05/28/job-searches-jumped-5percent-in-states-cutting-unemployment-benefits-indeed.html

https://www.cnbc.com/2021/05/28/pce-price-index.html

https://www.cnbc.com/2021/05/26/kelly-evans-the-housing-market-is-insane.html?recirc=taboolainternal

[Donotunderstand]

long term prices never go anywhere but up

?

true for most goods in one country with static technology (productivty)

not true

if its global - lower wages - massively lower - outside the USA together with free markets allow for lower prices. A suit today cost less in today dollars (i.e. no adjustment) then when I worked in an office and bought suits around 1980. Cheaper today !!! 40 years later - prices went down and then slowly rose to equity with 1980

not true as machines allow workers to be more productive (per dollar)
strange but some of the best examples of this are in farming

One way to show - from 30,000 feet - that prices have gone down (the gain from global markets that is not deniable) --- for manufactured goods

In 1950 or around then - the average American spending an average dollar - spent about 80 cents of that on manufactured goods (mostly by far made in the USA)

By 2000 - or around then - the average American spending an average dollar - spent about 55 cents of that on manufacture goods (mostly made outside the USA or say 50-50)

So yes - workers in the millions lost jobs !! - but 300 million people had the ability to buy their old basket of goods and have 45 cents left for services and savings v 50 years earlier the 250 million people had only 20 cents to spend after they bought the same basic basket of goods

Politics wise - its ugly as one can hammer on the 10MM that lost jobs and show that misery . Yet the gain - far larger in dollars --- is spread across the rest of the people ---- and that is hard to win elections on

That is the positive effect of global competition --- if (a HUGE if) we then spend TAX money on more education and more jobs for the 10MM - then it is a win win and win for those who have jobs in Indonesia

At some point - see Japan - the low cost producer in 1950-1960 - without a dictator or massive corruption -- the wages go up there too !!! and the production moves say to South Korea. This is not opinion - this is reality ---- the cars we bought made in Japan in 1965 say ---- were by 1990 or whatever made in South Korea and by 2005 were again - often - being made in the South - (lower wages then MI or WI) - when machines and robots became 75% of the "cost of labor and where equal here and in Japan etc." and making them here eliminated the massive shipping costs when oil prices were high

nothing is simple