Re: [OPE] Early Notes on the Present Crisis

resources should probably continue an upward trend in price, after the speculative
sell off stops. Manufacturing should continue downward, except for resource input
prices where they are strong and except for intellectual property & monopolistic
forces prevent a fall. Financial assets are likely to fall for a while. What the
aggregate means is anyone's guess.

On Tue, Sep 16, 2008 at 12:46:26PM +0100, GERALD LEVY wrote:
>
> > Doubts about the U.S.'s ability to make good on its debts could set off > a serious deflation, making debt burdens become unbearable.
>
>
> Hi Michael P:
>
> So far, though, we've seen stagflation in the current crisis in the
> US economy rather than deflation.
>
> The latest round of current and possible collapses will trigger -
> what? For instance, if AIG (the nation's and world's largest
> insurance company) goes belly up, couldn't the consequence
> be inflationary (stagflationary) rather than deflationary? I
> certainly don't think that insurance rates will go down as a
> consequence or that people will purchase significantly less
> insurance policies (since the demand for insurance is
> relatively price inelastic). It could mean additional bankruptcies -
> especially if firms are unable to maintain and secure insurance.
> What the effect of all this will be on average market prices (and
> hence whether there will be continued inflation or deflation) is not
> at all clear to me. Is it to you?
>
> In solidarity, Jerry
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-- 
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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