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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (59324)	5/14/1999 9:59:00 AM
From: Mike M2	Read Replies (2) \| Respond to of 132070

Chris, there is a strong case for inflation and a strong case for deflation. I am in the deflation camp. Government debts can be inflated away but private debts must be paid or liquidated. Whatever the outcome there will be tough love fer all. Many economists seem to ignore that the US did try to inflate in the 30's but it did not work more recently Japan has not been successful in its attempts to reflate. The monetarists seem to ignore the role of non bank financing and the fact that the money supply did not contract in the 30s until after the economy had turned down. It is worth remembering that the Fed can influence the banking systems ability to make loans but the banks must be willing and able to loan money to customers who are willing and able to borrow. In addition, we have non bank financing playing an unprecedented role in providing credit - once they lose access or face increased difficulty tapping into the debt markets You can lead a horse to water but you can't make him drink. Jim Davidson's " The Great Reckoning" ch. 11 -13 makes the case for deflation -check it out. He notes that the damage done to the bond market by inflation exceeds the benefit of inflation. The US has certainly abused its world reserve currency status but it is tough to say when the game is over but it cannot go on indefinitely. more later. I'm still waking up. To summarize I see economic violence and financial tough love. HO HO HO mike

To: valueminded who wrote (59324)	5/14/1999 10:32:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

Chris, I don't think we have any rate cuts in the face of this CPI and the huge PPI number that was schmoozed away by the fact none of drive cars any more. <g> Even Alan Da Printer looks at these numbers, though he ignores more useful figures. T-Bond rates will eventually be at 2%, but that is only after the Dow hits 750.