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To: Mark Adams who wrote (246787)	6/23/2003 11:38:15 AM
From: Perspective	Respond to of 436258

< a stealth wealth transfer from creditors to debtors takes place anytime real interest rates go negative, and quite likely anytime real interest rates are 'unnaturally' depressed. > Makes you wonder why there isn't a bigger furor by creditors every time this scenario appears. Ignorance? Would be nice to have a better educated economic populace. My major realization was just that our system is displaying a supply/demand imbalance that has been evident in every year that debt growth was required to move the economy forward. The "real" level of economic activity is whatever would be present without the debt increases, and we are rapidly approaching the point where debt can no longer be expected to increase. You can either wait to you hit that wall and cause a violent, sudden correction when the two are brought into line quickly, or you can stretch the correction out over a longer time period by ramping down the debt dependency. However, if you wait until rates are already at zero to begin any real closing of the supply/demand gap, you've made your choice: the correction will be sudden and therefore sharp. Our Fed's actions to continually delay the rebalancing are cowardly, foolish, even outright dangerous, and more people should be calling for responsible action from them. Regarding system stability, I have recently come to embrace the concept of moderate monetary inflation as a positive. I came around to this view when I realized that it amounts to a gradual "loss of memory" for the system. If you have no inflation, a mistake is held in the system forever. If you borrow $1M to start a business and struggle to turn a profit, that $1M debt retains its real burden forever, until it is paid off. However, if there is a moderate inflation, the real burden on the system gradually decays away. Inflation makes prior mistakes gradually decay, much like a memory fades with time. BC

To: Mark Adams who wrote (246787)	6/23/2003 11:44:05 AM
From: Seeker	Respond to of 436258

Nice effort on both parts. Problem is we live in an age where people no longer want to be bothered with deciphering "complicated" wordsmithing. As an avid Home Schooler and Autodidact let me share with you what one of my mentors taught me: always communicate on an eighth grade level and you will always have an audience. Your points were very good and well thought out but... You both have given Economics a great deal of thought and if you will I wish you would wordsmith your points for me to fit the eighth grade level as I would love to share them with my Home School group. Not asking you to dumb down; just stay current, and in this day and age you gotta be alittle "street" to get an audience of any consequence. JMO and TIA for the info I can share with my Jr High Homeschoolers. S