Serge, that only works in the short run. When companies cut their margins to the bone, sooner or later they end up cutting bone too. They won't stay in business long if they ain't making the money. When the guys willing to work for nothing run out of space, the higher prices come in.
More importantly, the price of raw goods from all over the world goes up. The wood used to build houses, a good part of which comes form Canada, basically just went up by 35-50% in the last year. That translates to higher home costs. Just as we head into the "switch to HDTV" christmas, the costs of electronics in US dollars in up for the first time in years. Increased expenses like that move money OUT of the US economy, and move it to other countries. That leads to inflation. it isn't as instant or as direct as , say, popping a balloon, but it is more like the slow and constant loss of heluim in a balloon.
Apparently China dumped about 60% of it's US dollar holdings in the last 24 hours, which could lead to ANOTHER big drop in the US dollar on the short trading day Friday. I think that Bush is going to be faced with having to take some serious action on this in the next few weeks, otherwise this coudl go from decline to pure free fall.
If nothing else, this might be the once and for all proof that "voodoo economics", the old trickle down theory, ain't worth shit.
Alex
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Let's go to the edge of disaster Push the pedal and go a little faster Let's slam into a wall at ramming speed Let's go to the edge of a mountain Jump off and lets start countin' Hit the ground and tell me if it bleeds
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