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To: Eric Wells who wrote (87097)	12/12/1999 9:19:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

However, my understanding is that as the money supply increases, real interest rates decline. Let's think about it from a real-world situation. Let's say I have 1 credit card, no cash in my wallet and $1000 in the bank. And let's say I want to spend $1000. I have two options. I can use my credit card or I can withdraw the money from the bank. If I use my credit card, I have to pay interest to the credit card company for the money - if I withdraw, the money is free. Eric, There are two errors in this argument. Firstly, no matter how much additional cash has been printed, one could have withdrawn their savings account prior to the printing. It is not fee in that the interest payed on the savings account stops. Secondly, this has no affect on loan demand. Glenn