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To: Michael Bidder who wrote (1258)	9/1/1998 11:06:00 AM
From: tom shelby	Respond to of 1706

Balanced Budgets-Governments compete with private industry to borrow money. If governments were to borrow less money then (in theory) interest rates would decrease and/or industry would be able to borrow more money to fund projects. In either event private industry would be expanding while governments were shrinking. Overall this would be positive since private industry is more efficient than government.

To: Michael Bidder who wrote (1258)	9/1/1998 11:59:00 AM
From: MikeyB	Read Replies (1) \| Respond to of 1706

Re: If all the industrialized nations strive for a Balanced budget at once could this push the world into a depression by such a tight monetary policy. IE no new paper. That would depend on the extent that the nations' economies depend on government deficit spending. If the tightening of the government budgets was accompanied by a LOOSENING of monetary policy (ie. lowering interest rates and lowering required reserves), the banks (and other lending institutions) could easily create enough new paper to cover the loss of government spending. Of course there would be a period of adjustment as the economy switches from servicing government to servicing the private sector. MikeyB btw, yes I am an American.