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

To: Bilow who wrote (79743)	4/17/2000 9:20:00 AM
From: Mike M2	Respond to of 132070

Carl, what the Monetarists overlook is the fact that in the 20s the majority of credit was created outside the banking system. In the current credit bubble a slight majority of the credit comes from outside the banking system. Government debts tend to be monetized but private debt must be paid or defaulted upon. To maintain its stimulative effect credit must expand at an ever increasing rate but at some point balance sheets become so strained that a retrenchment is necessary. This is when we get deflation -a contraction of credit. mike