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To: GraceZ who wrote (25887)	12/12/2004 5:52:59 PM
From: Elroy Jetson	Respond to of 306849

Your answer raises the curious question of why you have always been such an ardent supporter of socialism? Let's use an example where a government ignores your urgent pleas to run a deficit, but instead fully funds their operations through taxes. Where does the hidden Monetarist Tax get paid to? The answer, of course, is in the banking system. You recommend that the hidden Monetarist Tax should be equal to the nation's annual growth rate. One of Milton Friedman's many self-contradictory suggestions is that this hidden tax be limited to 2% for modesty's sake. This hidden tax, incidentally, is roughly equal to one half of the funds raised by the Federal Income Tax. A very heavy-handed socialist tax indeed for your ostensible purpose of price stability. When you cannot convince the government to run in deficit, the hidden Monetarist Tax becomes a subsidy to the banking system. Yet, when we subtract this hidden subsidy from the banking sector, banks have lost money almost every year. Which raises an obvious question. In a normal capitalist market economy how much lending would there be? The socialist Monetarist scheme, you strongly support, supplies as much money as the market demands - without regard to supply. By contrast, in a capitalist economy where the interest rate on loans is set by both supply and demand, the interest rate on loans would be higher and the amount of lending would be less. While the heavy Monetarist Tax is a huge economic dislocation, worse still is the instability introduced by the Monetarism. Economist and central banker Charles Rist, author of "History of Monetary and Credit Theory from John Law to the Present Day" pointed out this critical flaw in Monetarism, "A policy aimed at monetary stability will secure a relative stability of prices, but the economic history of the 1920s teaches us that a policy whose goal is stabilization of prices may result in inflation of money and credit, and very unsound speculation." As lending increases at a pace which far outstrips a capitalist society, the level of credit increases until an economic depression restores the normal state of affairs. This is why I believe Monetarist Socialism will eventually be rejected once again in favor of Capitalism. Total Debt (Government, Business, Consumer) home.pacbell.net .

To: GraceZ who wrote (25887)	12/12/2004 9:53:01 PM
From: Elroy Jetson	Respond to of 306849

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To: GraceZ who wrote (25887)	12/12/2004 9:53:06 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

We have finally arrived at the truth. You believe Socialist Monetarism is a superior economic system to a market based Capitalism. One reason you cite is that Socialist Monetarism provides more loans at a cheaper rate than the market would. Without a hidden Monetarist Tax to provide excessive loans at a subsidized price: "The very rich who hold the bulk of wealth have little reason to venture out of the safety of their low yield savings accounts in a deflation (or high yield money market accounts in an inflation) to make a return in either environment, therefore what occurs is a lower level of investment activity in productive assets, those which generate new industry and new jobs. -- Grace Zaccardi The rich would not be driven to put their money to work in productive assets (with higher risk and higher returns)." -- Grace Zaccardi Message 20850814 In short the reason you are such a vocal supporter of Socialist Monetarism is because you believe it provides more opportunity to a person like yourself than capitalism provides. Like any self-interested zealot, you sneer at other styles of Socialism and other economic systems like Capitalism which do not favor your interests. Yet this may also result from your lack of familiarity with any economic system other than Socialist Monetarism. Capitalism would not exclude you from the opportunity to work and advance. People like yourself who have limited natural access to capital, other than marrying well, have many opportunities under a capitalist system: a.) You can save capital from your wages, not so difficult if persons with capital find your work as useful as you imagine it to be; b.) You can bring in a person with capital as a partner or investor; c.) You can obtain loans from banks, although these would be more costly and the lending requirements more strict than under Socialist Monetarism. In Capitalist systems banks normally operate as Merchant Banks where they insist on being given an equity stake in your investment in addition to interest. I think the verdict of history is clear - Socialist Monetarism imposes heavy burdens on the economy and, contrary to your beliefs, is less efficient at increasing wealth and introduces dangerous instabilities which have traumatic consequences for both the rich and the poor. .

To: GraceZ who wrote (25887)	12/12/2004 9:53:18 PM
From: Elroy Jetson	Respond to of 306849

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To: GraceZ who wrote (25887)	12/12/2004 9:53:23 PM
From: Elroy Jetson	Respond to of 306849

_ . Silicon Investor system problems with the Edit Function.

To: GraceZ who wrote (25887)	12/12/2004 10:17:51 PM
From: Mike Johnston	Read Replies (1) \| Respond to of 306849

One reason governments tend to choose mild inflation over mild deflation is to favor those who are trying to accumulate wealth as opposed to those who already hold it. both deflation and inflation have one common property and that is they are both difficult environments to make progress in regards to accumulating wealth. Those two sentences are contradictory. I agree with the second one. Inflation is a difficult environment to accumulate wealth. As a matter of fact, if one would have majority of wealth tied up in cash and bonds it would be very difficult to hold on to that wealth as well. If you agree with the first sentence, it means that you are confusing inflation with wealth. Inflation transfers wealth , but in itself inflation does not generate any wealth.

To: GraceZ who wrote (25887)	12/12/2004 10:48:29 PM
From: Mike Johnston	Read Replies (1) \| Respond to of 306849

Why does inflation make it more difficult to accumulate wealth ? First of all, why should i sweat and labor starting or running a business if i am not able to determine how much profits from that business will eventually be worth, what my costs and revenues will be. Why should i sweat to earn something that is printed in excess and is worth less with each subsequent run of the printing press. Will the dollar i work hard to earn today be worth anything tomorrow ? Inflation robs the lower classes of possibilities to move up. Rising costs of education prevent the poor from realizing their full potential, rising living costs take up a growing part of every paycheck making it more difficult to save, rising house prices make it impossible or very difficult for many to own their own home. Inflation is destructive to society as a whole, economically and socially. It destroys the work ethic, increases corruption, increases crime, lowers savings and productive investment, impoverishes the elderly (due to loss of value of their savings +inadequate cost of living adjustments to pensions), lowers living standards, leads to a moral decline, changes mentality from hard work to get-rich-quick. Inflation is a stealth tax, it is a theft of wealth and theft of opportunity. It is very unfortunate that many people ( including greenspan ) confuse inflation with wealth. Inflation does not create wealth. At best, the wealth is transferred ( in real estate assets ). Often it is destroyed ( cash and bonds). If your house triples in price due to inflation, no new wealth has been created because you cannot sell that house and purchase three similar ones. Only if you own several properties that you can unload, you are richer. But in this case you are richer because wealth has been transferred to you from the buyer, but still no net new wealth has been created.