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To: anachronist who wrote (31300)	6/2/2005 7:50:26 PM
From: Elroy Jetson	Respond to of 116555

Inflation of asset prices is not savings simply because it isn't, not because of a technicality. I should think it is obvious, if the Fed mailed everyone a check for $50,000 - this does not increase savings by $50,000 per capita. Likewise when the government mails everyone a $300 "tax reduction check" with money borrowed from the Fed, this also does not increase savings. The confused theories of Monetarism have confused many on this score. If the Fed issues enough new Margin Debt to double the price of all shares on the stock market - this clearly does not increase savings. Likewise if the Fed creates enough new debt to inflate home prices and also stocks with cash-out financing - this does not increase savings. Inflation of asset prices is easy to achieve with lots of new debt, but anyone's individual "new savings" is exactly offset by someone else's "new debt". A lack of understanding of this point is one of the things which has driven the United States into its current precarious position. .