Why is it that laws, like misfortunes, always seem to come in threes? Kepler devised three laws of planetary motion. In classical physics, there are three laws of thermodynamics (though that's sort of cheating, given that there's a 'zeroeth law' and a tentative fourth law.) As he was cutting the grass over a wonderfully warm and sunny weekend, Macro Man got to thinking about an issue near and dear to his heart: globalization. And what he thought about was drilling down to devise some fundamental principles, or axioms, of globalization, from which all other conclusions can be deduced. The following is what he came up with.

1) There are more new entrants to the global economy than there are residents of rich industrialized nations. This is hardly controversial, as the populations of both China and India exceed a billion people: more than the European Union, United States, and Japan combined. The scale of where these people are coming from is staggering: one analyst that Macro Man spoke to last week noted that 400 million people in India still don't have access to full electrification.

2) That which the new entrants buy will tend to rise relative to that which the new entrants sell. For much of this decade, this axiom was misinterpreted as "the price of manufactured goods will be flat to lower forever," thanks to the apparently limitless supply of labour in places like China. However, the sheer size of the new entrants means that when they start buying something (oil, rice, copper, Treasury bonds, EUR/USD) with intent, the price goes up. Ultimately, this means that the wedge between headline and core measures of inflation will not only remain in place, but probably intensify.

However, this does not mean that there will be no inflation in goods and services that the new entrants sell- merely that it will be lower than amongst those things that they buy.