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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MSI who wrote (7783)	1/4/2003 3:04:50 AM
From: JF Quinnelly	Read Replies (2) \| Respond to of 306849

Two different things: debt, money supply. Nope. Same thing. Especially so in a non-specie monetary regime. Look up the meaning of M3 in Barron's, or some other financial paper. simply x dollars spent, y dollars revenue, y-z=inflationary dollars, and z/total dollars=inflation. And you found this equation where, exactly? Did you mean for z=x-y? If so, this is simply borrowing, which isn't necessarily inflationary at all, that would depend upon whether or not the economy was near capacity or near recession. And inflation is really a monetary phenomenon, not a fiscal one. As for debt, advanced economies since the time of the Venetian States, where banking developed, have used them. Primitive economies didn't and don't. Hamilton knew that a debt can actually become a source of capital for a struggling nation, if it is properly funded. The idea that direct issuance of gov't payment has "always ended in disaster" might be interesting, but the examples cited refer to disasters already made, not caused by such payments, and it's hard to see how such disasters could have been avoided by the use of a Fed-type system. Name any example from history where a goverment didn't wreck its finances when it could simply issue money whenever it wished. But don't spend too much time on it, because there isn't one. A "Fed system", or an independent central bank, is what is required in order to keep politicians from issuing money at will, which always happens if they are given the chance. Debasing the currency by issuing all you want beats asking for taxes, but sadly it wrecks the economy. Gresham's Law, and all that.