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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (64496)	7/13/1999 3:02:00 PM
From: Don Lloyd	Respond to of 132070

Mike - (I believe we are talking debt not lines of credit...) That was my assumption. I raised the question because it seems to me that the actual debt doesn't have to be undertaken for an inflationary effect to occur. People hold cash and equivalents for future consumption, to take advantage of opportunities and to deal with misfortunes. If a person receives an increased line of credit, this serves part of the purposes of cash and should logically result in less actual cash and equivalents being held. This is equivalent to an increased willingness to exchange cash for goods, in effect valuing money less than would otherwise be the case. Furthermore, the actual line of credit need not exist, as the consumer need just judge that his credit worthiness has increased for the same effects to occur. Regards, Don