Re: OT: Deficits no concern?


"F. George McDuffee" <gmcduffee@xxxxxxxxxxxxxxxxxxxxxx> wrote in message
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On Tue, 16 Dec 2008 12:06:04 -0800, "John R. Carroll"
<jcarroll@ubu,machiningsolution.com> wrote:


"Ed Huntress" <huntres23@xxxxxxxxxxxxx> wrote in message
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"F. George McDuffee" <gmcduffee@xxxxxxxxxxxxxxxxxxxxxx> wrote in message
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<snip>

What I get is that what ever happens the taxpayers and average
consumers take it in the shorts.


Unka' George [George McDuffee]


Stagflation on steroids Ed.
Mushi Mushi Anonay.

JC

==========
Yes, but this ignores the disappearance of many trillion of
"dollars" in home value, stocks, bonds, etc. While this "value"
was far more "spondulicks" than real money, its disappearance
still has a very significant effect on the economy and consumer
psychology.

It's pretty real George.
American's have seen a loss in net worth of nearly 15 trillion dollars over
all.


My hope is that the FRB and/or others will come up with some
other measures to control inflation than a 22% prime as this
kills the people at the bottom, who didn't cause the problem in
the first place, who took it in the shorts on the way down, and
are likely to [again] get it in the shorts on the way up.

Two thoughts are a small "Tobin" tax on all exchange
transactions. Minimal effect on "real trades," but makes day
trading and speculation unprofitable, reducing churning.

A large tax on all money/spondulicks "created" through fractional
banking and novel financial instruments [e.g. derivatives] to
discourage the virtual printing of private bank notes and
encourage the use of "real" dollars. This will limit the re
inflation of the bubbles and the creation of new ones in addition
to getting at least *SOME* control of the money supply. This in
large measure is how we got in this mess in the first place.

I was thinking a couple of things.

The first is transparency. Bush seems unwilling to let anyone have a look
under the hood. Paulson won't even report TARP disbursements.

I think the incoming administration will rectify that and it will only be
then that the actual problem and it's magnitude can be judged.
Things might not be, and probably aren't, as bad as imagined, but that's
just my gut feeling.
Second, why not force deleveraging with this money when it's monetized.
Doing so has the advantage of providing stability as well as putting the
costs where they belong - on the actual losers.

Just something to think about and I mentioned recently that how all of this
crap ended up being monetized would be as important as the magnitude of the
task, more even. All we really have to do is inch up veloctity. Forced
deleveraging would be a clever and effective way to throttle things.


JC


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