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To: GraceZ who wrote (25976)	12/14/2004 9:34:48 PM
From: Elroy Jetson	Respond to of 306849

One problem I encounter in communicating with you is this: what little you know about economics has come from reading Milton Friedman, the leading proponent of Monetarist Socialism. Because of this you are not well acquainted with Capitalism and have little idea of what Capitalism might look like in in daily life. In America, we have long lost the distinction between Depository Banks and Merchant Banks. Switzerland still has some Depository Banks. You deposit your money and they keep it in the vault - they do not lend your money out, as there might be a loss. They are frequently bonded to protect depositors against robbery or embezzlement. They charge you a fee of perhaps 0.2% annually to keep your money safe. They charge additional fees to write checks or provide other money related services. As society becomes wealthier, your money grows in value which more than offsets the percentage charged by the Depository Bank. When assets or other investment are priced cheaply enough to be attractive, you may wish to withdraw some money to invest. By contrast in your preferred system of Monetarist Socialism the government should prevent the owners of money (ie the Capitalists) from gaining an appreciation on their money as society gets wealthier. The government should also force people with capital into into a position of lending their capital to people like Grace Zaccardi where, in her opinion, it's better employed. As you have previously stated, The rich would not be driven to put their money to work in productive assets (with higher risk and higher returns)." -- Grace Zaccardi The fact that you are unable to recognize your own comments as being Socialist is revealing, to everyone but yourself, of how blinded you are by your total immersion in Monetarist Socialism. In a Capitalist economy, people with money can employ their capital as they choose, even if self-appointed dictators like Grace Z or Milton F find this deficient. They can keep their money in a Depository Bank and let it appreciate in value as the society become wealthier, without ever investing or lending. They can also choose to deposit it at a Merchant Bank - but this comes with the risk of loss. Merchant Banks take equity positions in businesses and investments in addition to lending. Depositors to Merchant Banks knew they were well advised to review the banks audit carefully before making a deposit or becoming a shareholder in the Merchant Bank. In America, Merchant Banks are most similar to what we call Venture Capitalists or Investment Bankers. .

To: GraceZ who wrote (25976)	12/14/2004 10:20:49 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

Another comment you made reflects a lack of familiarity with other economic systems, such as Capitalism, which differ from our own. Gains attributed to deflation would occur simply by holding cash assets and would not be taxable. 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 This is one reason why the tax most frequently found in traditional Capitalist societies was the Asset Tax or some approximation of Assets. Taxes in may European nations were frequently based on the number of windows in the buildings you owned or the footage of street frontage. The wealthy who wished an ostentatious display of a grand entrance paid dearly for the privilege. The homes of the poor, by contrast, usually contained only doors and a chimney. As the demand for borrowed money grows tremendously, as it has over the past 25 years since Ronald Reagan, the interest rate should be rising as a function of simple Supply and Demand. But under Monetarist Socialism, the Fed "merely" creates as much money as the market demands (without any limitation on Supply!). The growth in this demand for loans is far faster than the growth of the economy, as can be seen on these charts. home.pacbell.net home.pacbell.net home.pacbell.net As more and more money is created, the market interest rate declines lower and lower, as can be seen on this chart. home.pacbell.net You have falsely accused me of voting for fools like Ronald Reagan, but nothing could be further from the truth. Having met Reagan as a young teenager, I knew first hand how vacant and soulless he was. No normal person could possibly have met Ronald Reagan without noticing how strange he was. Even his own family has commented on this. Perhaps those who were far more strange than he would have been oblivious. .