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Politics : Ask Michael Burke
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To: Freedom Fighter who wrote (63130)6/24/1999 9:46:00 AM
From: valueminded  Read Replies (2) of 132070
 
Wayne:

No doubt a real yield above inflation would be attractive at 5% but I do not believe that inflation is 2% nor do I believe it will stay at 2%. Our historic bias is inflationary, and I do not see that changing in a democratic society.

Now I am not predicting failure of our democracy nor our fiat money system, but someone famous (and I forget who) said that the biggest problem facing democractic societies is fiscal. Once people realize they can vote themselves more money, their is no stopping it. (I would add for democratic societies which are decoupled from a reserve based system) This is why a dollar today is worth more than a dollar tomorrow, it is also one of the biggest difficulties most value investors face.

Maybe it is simply put this way, giving the history of this FED, when faced with todays potential inflationary or deflationary environment which way will they err ? My opinion is that they will err on the side of loose money.
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