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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Taro who wrote (316645)	12/20/2006 11:33:06 AM
From: combjelly	Read Replies (1) \| Respond to of 1586030

"All good old Milton Friedmann stuff." It goes back further than uncle Miltie. I am sure Adam Smith knew it. There are many historical examples of a ruler deciding to add base metals to the fine metals used in coining, thus increasing the money supply. If they kept it up, they sooner are later experienced both inflation and the people using coins from other realms instead of the debased specie of their own realm.

To: Taro who wrote (316645)	12/20/2006 12:17:16 PM
From: RetiredNow	Read Replies (1) \| Respond to of 1586030

I understand what you are saying, but the US gov't and people do not benefit when we issue debt to spend more money. If we issued debt to buy an asset during a period of time when the dollar was depreciating, then I'd say it would be a very good deal for our gov't and for the American people. Thought experiment. We issue $100 debt to buy land. We now have $100 worth of land and $100 worth of debt and networth equals $0. The dollar depreciates by 25%. We now have $100 worth of land and $75 worth of debt, and $25 net worth. The bondholder just lost out due to the depreciating dollar, but we win. That's your scenario and I understand it. Now here's reality. We issued $100 of bonds to spend money into the ether. We have a negative networth of -$100. The dollar depreciates by 25%. The bond holders lose because now their bonds are worth $75, but we still have a negative networth of -$75. Issuing long term debt to spend the money on current expenses almost always a bad idea and that is what this country is doing. $9 trillion and counting.