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Politics : Politics for Pros- moderated

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To: LindyBill who wrote (283186)	12/6/2008 4:57:38 AM
From: Maurice Winn	1 Recommendation of 793937

Lindy, what that means is that contrary to popular thinking, there has NOT been easy money. If $1 trillion or $2 trillion produced out of thin air is expected to do little more than avoid deflation, then the money supply was not in fact excessive over the last decade or two. What was excessive was the borrowing attached to the money which had already been produced out of thin air. The huge globalized economic growth means there really was demand for increased supply of US$. It was really that China and India maths resulting from 2 billion people leaving poverty and heading into economic activity worked for low pay which enabled vast production of goods at lower prices than they cost when produced by the over paid Europeans, Japanese and Americans. That meant the US$ printers could capture the profits from that vast productivity boom, which came along with the vast productivity boom due to cyberspace and electronics in general. Not to mention the bonus productivity boom resulting from huge economies of scale as a piece of software or other designs could be shared among billions instead of millions, making unit costs of design near zero. Maybe they really can produce another $2 trillion freshly minted notes as the great credit unwinding proceeds, without causing inflation [defined by rising prices of things people buy]. Borrowers and lenders might be a bit more circumspect next time around. But then again, they might not. It might be a race to the trough for the next round of money for nothing based on puffed up debt and over valued assets. Mqurice

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