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To: Don Lloyd who wrote (53155)	5/23/2000 8:43:00 AM
From: Hawkmoon	Respond to of 116762

David, The worst thing one can do is to start relying upon the quotes of economists. For every example you can provide, I can probably provide 10 opposing views. What increasing money supply involves meeting the demand for money to the extent that a moral hazard is created in non-performing or shaky loans outpacing well collateralized loans. Sure you can take Hume's opinion, but it would tend to violate supply and demand principles. If the Fed is increasing the cost of funds and increasing reserve requirements amongst member banks, that loan that may have made economic sense before, no longer makes sense on a cost/benefit analysis. Increasing money supply is, IMO, synonymous with decreasing the cost of funds, through rate cuts or Fed action in the repo market, easing member bank's ability to make loans that facilitate business transactions. In reality, most money is merely a decimal place in a computer account. Certainly increasing the amount of cash money makes little difference as it is merely a instrument of conveyance between buyer and seller (except if the bank is anticipating a surge in depositor withdrawals, converting electronic entries into paper specie). Regards, Ron