Sez you:
>Word was that back in '96, I think, Greenspan started getting
>seriously worried about deflation, and resisted calls from his
>colleagues and from Wall Street hawks to tighten. He turned out to be
>right; if he'd tightened in '96, the Asian crisis would probably have
>been a real hum-dinger. I wonder sometimes if the New Economy
>rhetoric isn't a cover for deflation anxiety - or if maybe one is
>just a version of the other. If he's right about productivity, then
>there's a great risk of either excess capacity (e.g. the late 19th
>century) or underconsumption (e.g. the late 1920s), either of which
>could have severe deflationary implications.
I detect some significant droppage in capital utilisation in the US from 1974, too. Is this not an indicator of excess capacity? If not, was it a shortage of the necessary oil at viable rates? Or underconsumption in light of the plunge in other Bretton Woods currencies when Nixon pulled the pin on pegging?
Cheers, Rob.