Re: causes of the depression

On May 5, 6:52 pm, The Trucker <mik...@[EMAIL PROTECTED]
> wrote:

> True inflation is caused by declining value of the currency itself.

inflation caused by excess money supply and credit availability in
closed loop system for a limited supply of good.

for this reason Paul Volcker tightened hard the money supply and
credit availability in Carter era (late 70 - 1982) by raising FED
interest rate very high (around 17%) so consumers couldn't borrow
money to spend and raised US treasury bill and bond return rate high
(9% if I recall correctly) to draw money out of the bank saving
accounts into gov control. With limited monetary quidity,  he tamed
inflation in a few years, only then he released the money supply to
help growth.

I am in line with Mr Volcker, that Fed shouldn't pour money more into
the system to save sub-prime institution because they have to raise
the interest rate much higher in future to tame inflation. But I am no
expert, and I didn't take a single economic course in college.