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To: long-gone who wrote (67678)	4/16/2001 9:10:26 AM
From: Rarebird	Respond to of 116761

The ECB is NOT playing the "growth" game. In fact, as the ECB itself has calmly stated, the EU's M-3 money measure has actually contracted. Even more heresy, the ECB said that this M-3 contraction actually lowered the risks of climbing prices. How can the EU have a "growing" economy when credit issuance is not expanding? "Growth", according to the ECB, does apparently not come from any form of credit expansion. If that is the case, then it can then only come from - savings. Has Greenspan ever heard of such a thing? It clearly implies that if the general public, or business, or any of the EU governments want to make their economies grow, there are specific means to accomplish this. Individuals and businesses must increase their savings. The government cannot tax these savings and spend them, because if a government did that, all these savings would no longer be there. As long as the savings ARE there, and are used to make private investments, the economy will "grow". Who ever heard of private individuals and businesses "saving"? What's needed for growth is SPENDING - isn't it? Businesses can also save in their own right and use all these business savings for additional investments. But that means that the businesses which earn the most, and have the lowest costs, can save the most. These will be the businesses that expand the most. Again, that's ridiculous. Businesses grow by borrowing money and selling shares - right? Even governments can save. Governments not only can but must make sure that their taxing and spending policies do not exhaust or squander the private savings of either individuals or businesses. If they don't, then there will be no the savings with which to make the economy grow! So here it is, right out in the open, the great Transatlantic economic divide. The U.S. acts on the principle that investments can precede savings. The Europeans say that savings have to precede investments. Both Central Banks are acting accordingly. Something serious has to give! What has given way is clear to see. The U.S. trade and current account deficits are running enormous rivers of red ink and the U.S. debts to the rest of the world are climbing at fantastic rates. The EU stands with a trade and current account surplus (both small relative to the size of the EU economies). Now, it only remains to be seen which outlook is correct. It remains to be seen whether it is the borrower or the saver/investor - whether it is the U.S. or the EU - which comes out as the winner. Got Gold? Got Guns? Got Guts?