In two years IBM went from being the world s most profitable company to the biggest money loser. At least it survived, and is successful again after reorganizing. Digital Equipment and many other firms hit by the impact of the personal computer are no longer around. Humans have discovered how to operate successful capitalist economies in the midst of modest inflation, but not how to operate them in the midst of even mild deflation. Given a choice, take the inflation every time.
Deflation is the big overlooked danger to our stock market and economy.
We have learned how to control panics and deflations on a national basis, but now we live and work in a global economy. There is no world equivalent of the Federal Reserve, and there is not likely to be, given conflicting national interests. Knowledge-based capitalism isn t going to work without a new system for determining who owns or controls intellectual property rights. There are two problems. The old copyright and patent laws are obsolete at a time when books and music can be freely broadcast over the Internet and when biotech companies are probing the very basis of life.