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To: Don Lloyd who wrote (11723)	12/9/2001 12:58:30 AM
From: Jacob Snyder	Read Replies (1) \| Respond to of 74559

Deflation: Dictionary definitions I found: a contraction in the volume of available money or credit that results in a general decline in prices reduced economic activity: the reduction of general economic activity, including lower prices and a reduced supply of money and credit de·fla·tion·ar·y mon·e·tar·y pol·i·cy noun monetary policy for demand reduction: a macroeconomic policy to reduce aggregate demand in an economy by adjusting interest rates and other monetary policies 2 : a contraction in the volume of available money or credit that results in a general decline in prices ---------------------------- I see what Reisman is saying: that if only prices fall, (while wages don't fall, profits don't fall, and companies can produce and sell more goods and services through higher productivity) then it's not deflation. But, under a gold standard, how does a government smooth out the economic cycle? I suppose they still could do deficit spending during recessions (and surplusses in good times, if they are responsible).

To: Don Lloyd who wrote (11723)	12/9/2001 3:38:20 AM
From: smolejv@gmx.net	Respond to of 74559

Jacob - cont - I'm in the camp that increases in the money supply eventually have to translate into inflation. And that fixing deflation is within every government's power: just print more money. Deflation can only happen if your currency is tied to gold, or you are using another country's currency, or you try other methods for a decade (Japan). re Japan - the other method? I see an aging nation sitting on a) a retirement savings plan of 500B$ (starving itself rich) and b) a giga pile of debt created (multiple answers allowed) just for fun \| to buy sq feet of Tokyo real estate at 6digit $ prices (80s&90s)´\| to pump up domestic demand (starving itself poor on the way - it's all a question of perception...) So I'll just quote Don The fact is that deflation is not a matter of falling prices, but of a contraction in the volume of spending in the economy. This is what produces the essential symptoms of deflation: the general inability to repay debts and the wiping out of business profitability dj

To: Don Lloyd who wrote (11723)	12/9/2001 8:20:02 AM
From: Ilaine	Read Replies (2) \| Respond to of 74559

Under a 100-percent-reserve standard, how do banks and other lenders create credit? If I deposit my money in a bank for safekeeping, and I can take it out at any time, then the bank can't loan it out without my permission. Edit: BTW, we both know that the world is never going to go back to using coins for every transaction, nor is it ever going to go to 100% reserve. It's interesting to talk about, but it's like advocating going back to the stone age. That's not what people do. I mean REALLY do. People use money as a marker, not as a store of value. If you actually study the history of money, the use of money by real human beings, I think you'll come out with better theories. Advocating 100% reserve money is like advocating that if everyone in the world spoke the same created language, Esperanto, there would be fewer misunderstandings and more peace. Nice idea, never gonna happen. The gold stays in vaults because nobody wants to carry it around, and business people trade notes. If you need to do business with someone a long way away, that you don't know, then the notes get discounted. Discounted or not, people treat the notes as if they were money. And if they can't use notes, then they use scrip. That's what people really do. They create promises to pay and put them on paper and pass them around and that's money.

To: Don Lloyd who wrote (11723)	12/10/2001 1:48:34 AM
From: smolejv@gmx.net	Respond to of 74559

I understand now, the money system, based on gold, is the best, the least prone to political hanky-panky, no wrong reactions possible to ups and downs in the economical food chain... Here's a monkey wrench (a young promising trainee at the local SnL office): because a) the amount of money is limited by the amount of gold and b) Joe the gold producer wants to expand his gold mine, then c) I'll have his next year's production for the loan collateral and d) sell the forwards, taking (oh well, it's gold-based after all) the paper lodar currency in. And so on... Ten years later:"there's rumors, that lately there was no gold production at all. Fact is, the worst slanders were to the effect, Gold is all lies. I can just say, that the blooming "Long-and-Short-in-Gold" financial sector is proof enough to the contrary (DEF president at the Thanksgiving 'give-it-to-the-turkeys' dinner)". dj