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

To: Freedom Fighter who wrote (60435)	5/24/1999 11:14:00 AM
From: Mike M2	Read Replies (1) \| Respond to of 132070

Wayne, there may be inflationary forces -falling dollar and rising rates due to inadequate domestic savings counteracting the deflationary forces . I expect deflation to overpower. In the past, financial asset bubbles have ended in deflation. Governments can print all the money they want but when you are a debt junkie you don't want to hurt the bond market. Once the bond market became convinced that the gov't was going all out to print money there would be massive selling and rates would rise negating any benefit derived from printing money. as Jim Davidson said is his book " The Great Reckoning" -governments can stop deflation but the cure is worse than the disease. The monetarists assert that the Fed did not print enough money to stop deflation but the banking system was not fully loaned during the depression due to insufficient demand. They also overlook the role of nonbank financing. Credit from the securities markets and call money market was almost four times the volume of bank financing in the 20s and as I have noted this credit is not part of the monetary aggregates because it comes from outside the banking system. If memory serves in 1998 more credit came from nonbank sources than banks. More later. MB says he is often wrong but never in doubt-g. I say der will be tough love fer all. Mike