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To: Jon Koplik who wrote (125045)	11/6/2002 2:23:59 AM
From: Maurice Winn	Respond to of 152472

Re deflation. I was wading through that thinking; Huh? What's the problem? Not being an economist, I thought my simple solution must have something wrong with it, such as interest rates might rise dramatically as lenders and $$ holders take fright at my plan. Which is to print $$$billions and give them to King George II to spend [and thereby not even have a budget deficit]. Then, I got to this and conclude that the very simply and very obvious solution is actually correct. <"There's a much exaggerated concern about deflation. It's not a serious prospect," asserts Nobel Laureate Milton Friedman, now at the Hoover Institution. Mr. Friedman, the best-known proponent of the view that prices rise and fall with the quantity of money in circulation, says, "The cure for deflation is very simple. Print money." At the moment, with the money supply growing briskly, he argues, "Inflation is still a much more serious problem than deflation." Scholars blame the deflation in the 1930s on the Fed's refusal to accept responsibility for maintaining stable prices. The Fed instead was focused on keeping the dollar's value in gold fixed, says Mr. Friedman, who adds, "Today's Federal Reserve is not going to repeat the mistakes of the Federal Reserve of the 1930s."...contd... > Before the stock market crunch came, I worried that there might be an implosion when the inevitable share market crunch came and prices might go crashing down through margin limits forcing a cascading bottomless sell-off of stocks into a totally panicked collapsing market and economy. Thanks to the Amazing Uncle Al KBE, that grotesquely fearful situation was avoided, as I'd guessed it would be. It was avoided because Uncle Al pixelated umpty billion new $$$ and slashed interest rates to ribbons. So, no deflation. It's all fallen far too far now for deflation to get going in any cascading collapse. Maybe just a few price falls here and there. No big deal. Inflation is more likely and I guess Uncle Al will let inflation run a bit, but not too far. He'll be quick to raise interest rates again and cut back on the printing presses at the hint of speculative mania and as the economy revs up again. Mqurice