If GM raises the prices on its cars they will just lose market share and in turn lose money. However, if they outsource more, they will cut their manufacturing costs and in turn make more money without losing market share. Foreign competition is everywhere forcing American companies to keep prices down. And just like GM other American companies are outsourcing for parts and labor. Another issue regarding inflation is technology.
Manufacturing costs associated with technology become cheaper and cheaper with time.
With technology becoming more and more of the GDP, inflation will be restrained. Greenspan also talked about the irrational exuberance of the stock market. The financial news media immediately followed with statements about the stock market being overvalued. These are completely misleading statements. Many individual stocks have not performed well for the past 16 months.