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To: Maurice Winn who wrote (55393)	11/2/2004 2:03:06 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 74559

I don't have any worries that bank computers are not capable of handling debt payments of 10,000 fold the current level. That is not the problem at all. You wonder why there can't be more debt. Here's why. The problem is that a given level of income only support a maximum amount of debt. Once the maximum level is reached , to increase debt load you either need to increase incomes or lower interest rates - or simply lower your lending standards in a way that recognizes you have no expectation of repayment. This problem is never reflected in average figures, at least in America, as some 40% of the population have no desire to borrow money no matter how cheap or favorable the terms. The increased leverage can only be forced into the economy via those companies and individuals inclined to borrow. In a normal economy, as the demand for loans increase, the interest rate will rise. This is a simple market function, but this has not occurred. Instead, the money is created out of thin air through the Federal Reserve System. With each additional loan made, the supply of money increases, and interest rates decline further. The Great Depression and modern day Japan demonstrate that banks do not make mortgage loans at rates below about 3.5%, even when their cost of funds is essentially zero. To go lower, the government has to lend directly to the borrower. Japan has done this by creating the "Home Lending Corporation". This arm of the Ministry of Finance, creates money to lend directly to home owners at rates as low as 2%. Japan has already plumbed that depth, and no additional new levels of debt can be applied to their economic system. They really have very few options apart from a de-leveraging. The American economy is close to that level as well. We have exceeded the level of debt relative to income which coincided with the Great Depression. home.pacbell.net You might think the Fed would be able to convince people like myself to take on debt for the good of the economy - since most of those in debt qualify for no more. But I have no debt, I'm not interested in borrowing money for any purpose. If the interest rate were free and the savings rate were positive, then yes I would borrow money just to earn the risk-free spread. But if that's all the Fed is trying to achieve, they might as well just send me a bonus cheque each month representing the risk-free spread on the maximum amount of money they are willing to lend on those terms.

To: Maurice Winn who wrote (55393)	11/2/2004 2:33:04 AM
From: rayok	Read Replies (1) \| Respond to of 74559

It takes two,to make an economy grow, could you lend me some cash? <g> You seem to have the attitude of a person spoiled by parents, too thoughtless to have left you with enough debt.<g> "To me, debt is excellent. It's a way of creating the future today. It's a way of rewarding those who have produced national wealth, rather than simply leaving it to their deadbeat children and grandchildren. Leaving the descendants debt rather than debt-free assets is an excellent idea. I built roads, water supplies, electricity supplies and a lot more besides. I should enjoy the benefit of that effort, not just be a human sacrifice to those who come after. I want to put my feet up and enjoy life, while the youngsters work to pay of the debt! Hooray for debt. But why isn't there more of it?" Mqurice