Re: causes of the depression

On Tue, 06 May 2008 14:59:02 -0700, Su**** Fish wrote:

> 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.

Yep.

> 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.

All of this is true and you have made no error in your analysis.  But
there was a better way to do what Volcker did.

> 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.

Oh how I wish others could admit that they are no expert.  That wish
applies mostly to those who, according to the American media, and the
Republican administration, _ARE_ the "experts".

-- 
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org/extend