Re: Wonderin' how y'all are doin' commerce-wise


"Steve Ackman" <steve@xxxxxxxxxxxxxxxxxxxxxxxxxxxx> wrote in message news:slrngej10i.vp9.steve@xxxxxxxxxxxxxxxxxxxxxxxxxxxxx
In <3c46fd81-6909-449d-9ca8-724efa4ba082@xxxxxxxxxxxxxxxxxxxxxxxxxxx>,
on Sun, 5 Oct 2008 13:48:26 -0700 (PDT), bernie, bdigman@xxxxxxxxxx wrote:

Actually, even if you are not in the
business I hope the economic downturn hasn't hurt too much.
peace.

Remember the late 70's/early 80's? The definition
of inflation is the creation of currency for which no
wealth actually exists.

There haven't been bars of gold and silver backing the currency for a long time. Your definition is circular because "wealth" is denominated in the same currency that it supports - a dollar is worth a dollar. The amount of "wealth" that the bailout will add to the economy is nothing compared to the amount of "wealth" that disappeared when the housing and stock markets declined 20%.


The Fed has had the the
printing presses cranked up like crazy already, and
with this $860 billion (to start) bailout, it's just
the beginning. We probably won't hit Reichsmark or
Zimbabwe dollar inflation rates (in the near future
anyway), but we can certainly look forward to
"unprecedented" devaluation of the dollar.


Deflation in economy is a very dangerous thing, associated with depressions and widespread unemployment. Inflation is a tax on wealth that is denominated in fixed obligations like bonds (you get to pay back those obligations in cheaper currency) but if it keeps the rest of us from losing our jobs, then it's not all bad (within limits - it's one thing to reduce the value of savings a bit, it's another to destroy them entirely). Neither one is good,but given the choice I'd say a little inflation is better. One way or another we need to stop the decline in asset values (especially housing) or the credit crisis will only get worse. Of all the stupid plans to fix the economy, inflating the currency is not the worst. Especially since a lot of the suckers holding the fixed paper are foreign - Chinese, Saudi, etc. Even for them a worldwide recession that reduces the future demand for their goods and oil (have you looked at the price of oil lately - back under $90/bbl) is worse than taking a little hit on their savings.

.

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