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

To: Don Lloyd who wrote (71407)	12/3/1999 2:59:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Don, Here's a very simplified version of my thinking. Again, it may be seriously flawed. Let's say I have 1 million invested in a business, with half being debt. If I wanted to stay in the same position in a no inflation environment I would hold a constant 500K debt load and replace assets from depreciation. In a high inflation environment, the 1 million of capital will have to get replaced over time with 2 million because of inflation. I'd be running sideways in real terms. That will probably require me to borrow substantially more than the 500K. My guess is that means higher interest rates. If savings were readily available, we probably wouldn't be expanding credit to begin with and causing inflation. Wayne