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To: Maurice Winn who wrote (11240)	11/23/2001 3:49:37 AM
From: Raymond Duray	Respond to of 74559

Hi maurice, You're right. There's a lot at stake in the central banks getting things right. As far as earnings are concerned, the whole concept has become so debased and corrupted by the "pro forma" games that they are almost completely suspect. I saw Michael Bloomberg, the new mayor of New York, in a TV interview a couple of months ago. The interviewer asked him about earnings, since it is a key statistic available on his proprietary "Bloomberg" information appliance. His response was telling. He said earnings were meaningless, because they were so easily manipulated. His advice on stock picking was to just find a company one likes that appears to have honest management. IMO, that cuts the field down considerably. <g> -R.

To: Maurice Winn who wrote (11240)	11/23/2001 4:32:46 AM
From: Don Lloyd	Read Replies (2) \| Respond to of 74559

Maurice - ...In a deflationary environment, I can imagine the E could be successfully doubled without causing inflation by the simple expedient of doubling the number of dollars [which wouldn't really be needed because what's really needed is a doubling of money velocity rather than the actual dollars - one dollar moving at the speed of light would be enough to handle the world's transactions - hmm, actually, it wouldn't, but maybe a couple of million dollars would do it. Maybe a 20% increase in money would cause a doubling of the E]. I'm making up this economic stuff as I go, so maybe a real economist can tell me if this is right. Inflation IS the increase in the money supply, including money substitutes and credit, and does not necessarily immediately result in an increase in prices, or more precisely, a decrease in the objective exchange value of the monetary unit. The velocity of money may have had some significance early in the evolution of money, but has long since become obsolete in the face of the widespread use of credit and the virtually unlimited supply of costless and weightless paper money. The demand for money is not directly related to the level of economic transactions, but rather follows the ebb and flow of changes in the level of actual cash balances desired. If you double your earnings next month, and spend all of the increase as well, your cash balance will not necessarily change in response. The need to hold cash balances is primarily the result of an uncertain future in which unscheduled emergencies or opportunistic bargains may appear. The availability of credit reduces this need. Regards, Don

To: Maurice Winn who wrote (11240)	11/23/2001 8:30:39 PM
From: LLCF	Read Replies (1) \| Respond to of 74559

<I think for the past couple of years we have been teetering on the edge of deflationary precipice and Uncle Al is well aware of that. He would prefer a nice stable earnings rate and none of this mayhem, but he has to deal with what's real. > What's real is the second law of thermodynamics.... the longer a system is altered {yellowstone's natural fires being 'managed'} the bigger the adjustment later as things return to their normal state {ie. a bigass wild fire later on}... the same things applies to all imaginable systems including the economy. I'd add anecdotally that it sure looks to me right now as if there's a lot of "dead wood" out there! <If the world's economy goes beyond a deflationary event horizon, the consequences of a deflationary implosion could be unimaginably bad.> Someone said deflation changes the party in power... inflation topples the system of government. <The world is a huge realtime experiment and we are now in a situation unparalleled in biological history.> Don't let this get out... there are tens of millions who think we're living under a bell curve and stocks are like flipping coins... I agree, they're in for a surprise. <6 billion people [many times more than were alive in 1929], living in huge cities, dependent on technological marvels which didn't exist supported by dodgy financial systems. > Yep, lots more dead wood and much bigger surprises are now possible. DAK