Sunday, November 7, 2010

Thinking Inside the Big Box

The dismal consensus among the dismal scientists is that we have nothing to deflate but deflation itself; deflation being the great evil that must be avoided at all costs!

Riddle me this: In this deflation hypothetical, the input costs of manufacturers would continually drop (thanks to forces like plunging commodity prices...a force we aren't seeing), allowing volume-driven juggernauts like Wal-Mart--the same juggernauts heralded by many of these anti-deflation hawks--to increase volume/potentially improve profits. So if the big box, "make it up on volume" approach is indeed the wisest business discovery of the last 30 years, why wouldn't an environment favorable to this approach be just what the doctor ordered?

For all the deflationist panic about falling prices sparking a "globalized Japan," where no one shops because constantly falling prices induce them to await the next price drop, we might consider that as of 2010, the world's most expensive city is Tokyo.

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