And the inflation really started going once capacity utilization got into the 80 range.

So what happens if I raise my price a little bit?

She earns on average ten pounds a week.

The average skilled workers now earn over 10,000 a year.

It isn't so much the money supply, although the money supply will have an effect, it's really capacity utilization.

Is he joking?

Well if you played this game many, many, many, many times

The next question that everyone has is, OK fine, Sal.

And then we told them the average likelihood of someone like them to suffer these misfortunes.

And going back to where we started this video, in terms of capacity utilization and what that might do to prices, this tells us that labor utilization is

We average 8 hour's work a day.

They just can't get another credit card loan or a home equity loan.

So if anything, you could say that demand was maybe right around here.

And then Vikram is selling 400.

More money's coming to the bottom line.

These are our two major bouts of inflation, in the early 70's and in the early 80's, and those were when we had extremely high capacity utilization.

So the orange line is utilization. Up here we had like 90 utilization.

And the orange and I know you can't see it that well on YouTube , so I'll try to make it clear in my drawing,

And just when this Imran comes in, and he enters into the space, all of a sudden, what is the return?

Work...

W

That's still way more expensive than most companies.

It comes down to here. But notice once again, although here it's pretty close, but utilization dropped off a couple of quarters before inflation dropped off.

Actually, we touched on the chart where we showed that every major inflationary bout was actually stimulated, or was actually preceded, by a pretty big upturn in capacity utilization.

And the traditional notion of capacity utilization, and this is what my brain does when someone mentions it, is I think of industrial capacity utilization.

And that's the real big take away I wanted you to get at, is that high utilization of anything, of our aggregate capacity, prices will increase.

Average

I've done a bunch of videos now on inflation and deflation and how they can be impacted by capacity utilization.

And let's say it just keeps happening and I realize that I can raise my prices all the way to 3 without affecting my utilization, without any impact on demand.

The average score when I'd done it with the computers and the groups was 76 percent.

The school dropout rate is up to 70 percent.

Z scores, then we know what percentage of scores fall in certain ranges.

And we're online.

So, as long as we have a pretty high utilization and people debate on what is the level of utilization in lot of industries where it makes sense to raise prices.

No reference checks. None of the usual background stuff, no.

How long is it going to take you? Quite a long time.

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