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To: Ilaine who wrote (7506)	10/2/1998 7:39:00 PM
From: Joseph G.	Read Replies (1) \| Respond to of 86076

<<OK, Joe, but you've fallen into my trap. <g>>> OK, I will have to ask tippet to keep reminding me every day that you're a lawyer -g- <<If you are right, and I am not saying that you are wrong, then the recent crash (or correction) [let's just call it "begining of a bear market"] did not "destroy" any "actual" wealth, as you define it, just changed the "perceived" valuation of wealth. The news quote you posted to me stated that as a result of the recent decline in the market, trillions of wealth were "destroyed." Now you tell me, nothing was lost, because it was all paper gains. Either the article was wrong, or you're wrong, right?>> Wrong! We're both right. I'm right cause no money was destroyed, and Reuters' writer is right cause people perceive that they lost some of what they think as "money", and thus will most likely be less inclined to spend actual money. The reverse of the "wealth effect". BTW, I did not post the Reuters opinion piece to you, I posted it to the "thread". At least that was my intention and no lawyer can possibly prove otherwise. -g- <<Buy the way, if I bought Lucent at 95 (and I did, oh rue the day!) and I want to sell it now, and can only sell it at 70, it sure feels like $25 a share was "destroyed." But, the guy I bought it from got to keep his $25, so - - >> Three comments: (i) it is not obvious that you can sell it for $70, it may never trade at $70 again - just a possibility; (ii) the aforementioned tippet has been a proud owner of some LU puts for a while - you can find solace in the thought that your purchase at $95 contributed, however little, to his well being and prosperity ... (iii) the main effect of the "wealth destruction" was on the valuation of the LU market cap, held by shareholders, of which only a small fraction changed hands as it went from $105 to $63. When you bot LU stock at $95 you exchanged money for a variable asset. You most likely hoped and anticipated that the perceived ("market") value of the asset will increase rapidly over time, but, as of today ... (you know the story). The person who sold LU to you is now owner of a fixed asset of $95 times number of shares (asuming for simplicity that (s)he did not buy any other asset with that money). Money changed hands, but neither increased nor was destroyed. The market value of the variable asset (stock) apparently declined in the time period under consideration. <<But my original post was about how the upside of deflation is that our cash is rapidly appreciating.>> There is no real CPI deflation yet, and may not be in the future, if Easy Al keeps printing new money at the current rate ... Boxes get cheaper, but taxes ("government services") and services are more expensive.