US Economic Predictions Dependent on China, India

PanAsianBiz ^ | June 5, 2006 | Dr. Bill Belew

[G. Stolyarov II]

Will prices go up - inflation? Or will they go down - deflation?

Is there some way to predict trends? How?

Someone once said that if all the economists in the world were laid end to end they would never reach a conclusion.

Well, it just got harder for them do so.

Prices in the US and economic trends are now dependent on what is happening in India.

Monetary policy is affected by trends in China.

Problem is - the Fed still makes their predictions based on domestic factors alone. Something is missing in this picture, no?

What happens if India or China can suddenly produce more, or less? How can predictions be made when the calculations for these countries are known for statistics that are not, shall we say, reliable.

The world is becoming more and more connected - what happens in Bangalore now affects how much I pay for Comcast and what happens in Guangdong changes the price tag on a weekly trip to Wal-Mart.

How can the flow of information between everyone concerned become more solid?

Lots of questions - what do you think?

[G. Stolyarov II]

The greater difficulty of economic prediction due to a global economy also implies more unforeseeable consequences for government regulation; US government restrictions on free enterprise might have far-reaching negative effects abroad that the regulators could not have predicted. Perhaps it is time to recognize the futility of government controls in a globalizing world. See Dr. Belew's blog at PanAsianBiz

[misterrob]

Oh, now you have done it. Be prepared to be flamed by the liberals if FR clothing who want government interference in the marketplace.

[The Lion Roars]

not sure about this. i think it is the other way round.