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To: Robert Douglas who wrote (676)	9/18/1998 2:54:00 PM
From: Lee	Read Replies (1) \| Respond to of 3536

Robert, Certainly Makin was glib, but I took his point to mean that in the current enviroment people need conifdence to spend and need cash to have confidence. Therefore, there is a greater than usual demand for cash, and lack of available free cash is sapping confidence. Satisfy the demand for cash, this will create confidence, and people will spend more. (Velocity must be falling as people spend less and avoid banks.) I'm still tasting this one. Its not logic I had considered. I find it hard to imagine a world where I can not find a ten dollar bill when I need one. I would think I might begin to value that ten dollar bill at more than ten dollars (and I'd be wanting to spend it in the US). Of course if I do value it at more than ten dollars and will only get ten for it, I will not spend. I took Makin to mean that is what he belives many in Japan are living. To the extent that you take issue with "cash provides confidence to spend (without policy change)", ceratinly I agree. Without banks I find it hard for Japan to recover. Stuff the Japanese homes with cash and I still see little increase in velocity. Cheers, Lee