CNBC "The Call" Guest Economist Disagrees with Supply-siders Predicting Higher Inflation

Dr. Kay Plantes, business model innovation expert, sees commoditization driving prices down, not up. She observes, "Leadership teams must innovate ... to escape ruthless price competition."

Madison, WI (PRWEB) June 22, 2009 -- "Horse racing is a good analogy for CPI inflation predictions. A lot of people are betting that the Federal Reserve's monetary stimulus will create higher inflation rates. They're incorrectly assuming that the monetary stimulus will come on top of a traditional economic upturn. What they're forgetting is that the only thing holding up the economy and prices today is stimulative spending and monetary policies of our government."

Dr. Kay Plantes, co-author of Beyond Price: Differentiate Your Company in Ways that Really Matter (Greenleaf Book Group, 2009) and a blogger on business model strategy, has spent the last 25 years helping companies both large and small across multiple industries unearth more profitable growth strategies. Beyond Price provides leadership teams with a guide to business model innovation, the best solution to escape growing price competition.

"Deflationary pressures are strong," Plantes continued, "owing to an increasingly commodity-like economy and the huge excess capacity caused by the recession. And we haven't even seen the full effects of state and local government deficits, record-high office vacancies that will cause bankruptcies and further bank capital problems and a growing corporate bankruptcy rate."

Kudlow and other supply-side economists follow Milton Friedman in assuming that the inflation rate is driven solely by monetary policy. Reflecting after the show, Plantes commented, "In the end, most of the prices in our economy are set by individual business people and not by some mysterious mechanism. What will these business people do? We have record high unemployment and excess industrial capacity. Furthermore, customers increasingly see few if any differences between the products of the companies they'd consider buying from, making price the key driver of customers' choices. The bottom line is that the forces for higher prices just aren't strong enough in the near to mid-term to cause inflationary concerns."

"Leadership teams must innovate their business models to escape ruthless price competition," Plantes advises.

More comments on business models are available on her business model innovation blog, http://www.plantescompany.com/blog/

Beyond Price information is available at http://beyondpricebook.com Kay Plantes can be reached at 608-233-8519

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