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To: Frodo Baxter who wrote (871)	10/10/1998 12:14:00 AM
From: N	Read Replies (1) \| Respond to of 3536

Interesting, Lawrence, that you find this monetary growth the right course. Thank you for your comments. Earlier in the year, before this all became such a hot issue for the chattering classes (not my phrase, wish it were!) Norton Walker of Deutsch Bank research before Japan Society in nyc said what you are saying...that increasing consumer demand in a society with an aging population that needs to save is an absurd idea that he felt none of the policy types really were taking seriously, that the call to boost domestic demand was a murmur directed more towards US domestic political consumption. Felt that since top priority for the globe was to prevent a blow up in Japanese banking industry, there was no way out of a strategy that would have Japan to continue gdp growth through exports. Lose export revenues, gdp, lose banks, world goes kaboom. I remember being impressed by his argument and very sober demeanor! And now look how handy his argument is!![##@%] Have also heard US top folks do take seriously a plea for Japan to boost demand. Well, maybe Krugman is a trendy version of KM...much like the new art edition of the Manifesto? By the way, your Amazon production possibility teaching image is terrific! Ha! Gotta remember that one! And to associate monetisation with rock and roll...well you are hot tonight!! Keep on keeping on... Nancy

To: Frodo Baxter who wrote (871)	10/10/1998 11:01:00 AM
From: Robert Douglas	Read Replies (2) \| Respond to of 3536

There are still fools out there talking about Japan's need to stimulate demand, as though this fixes something. Amazon loses $4 per transaction. Would the company be financially stronger if they sold more books? This is Japan's problem. Count me among the fools. The Amazon analogy is a straw man. Many companies spend years operating at losses until they reach the necessary size. Your assumption that Amazon will forever lose $4 per transaction is specious. I know you are no fan of Japanese industry, but it would be a reach to suggest that all Japanese enterprise is non-productive. I also fail to catch your distinction between the nirvana of printing money and the fools paradise of stimulating demand. The only way this can be accomplished is by printing more money: recapitalization, seignorage, monetization, let the good times roll! Isn't the goal of "printing money" to stimulate demand after all? I believe it was the monetarists guru himself (Uncle Milton) who said the best way to increase the money supply was to drop $100 bills from a helicopter. Isn't he acknowledging by this that the ultimate goal of money creation is to stimulate demand? Creating a banking system flush with reserves does nothing to stimulate growth unless there is some reason to borrow that money. -Robert