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O.K ...
Posted by J (more from J) on Sat, 14 Dec 2002 21:13:56
In Reply to: Deflation worries>> VERY long, K-9, Sat, 14 Dec 2002 18:54:26
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Hi,
Please agree with me that there is a difference between trade deficit
and budget deficit.
U.S. economy is very tolerant of TRADE deficit (much more so than
other countries) because U.S. dollar is de-facto world currency.
So, when dollar supply in the U.S. decreases, it has effect of moderating
inflation. So, the next time someone worries about TRADE deficit, you're
free to greet him with a big yawn.
U.S. dollar is de-facto world currency. Only U.S. has right to create
U.S. dollars. This is an advantage which is over-looked.
Alright, so money cannot be printed because it is largely electronic.
So, what happens if the government gives us a tax break (more money in
our pockets) and pays for whatever it needs to pay for with a new supply
of money? Will that not counteract deflation?
As for the comparison to Germany in the 1920s, that actually proves my
point. Creating money caused inflation. So, if the problem is deflation,
creating money creates inflation which counter-acts deflation. Printing
of money in Germany in the 20s was done in uncontrolled fashion so the
policy makers got what they deserved and made an entire country suffer.
So, comparing Germany of the 20s to current U.S. situation is glib and
really misses the point. We KNOW how to cause inflation. So, why can't
we increase money supply if deflation is the worry.
I still do not get the big concern. Why can't we counteract deflation
by increasing money supply in a controlled manner.
As for consumer indebtedness, that's a whole new topic. Also, please
do not go off on a tangent about taxes, and please do not confuse
trade deficit with budget deficit. The U.S. dollar is what I meant by
world currency.
thanks
Jae
posted by 172.190.236...
Posts in this Thread:
- OT: Economics ... Deflation worries, J, Sat, 14 Dec 2002 11:43:15
- The supply of 'new' money does not necessarily..., Jon in Chicago, Tue, 17 Dec 2002 13:34:53
- Some Misunderstandings....., Alex C, Sat, 14 Dec 2002 23:43:42
- Nixon took dollar off of gold standard years ago., J, Sun, 15 Dec 2002 00:56:28
- Re:J, you original q was about deflation?, Jon906, Sun, 15 Dec 2002 00:32:02
- Alright ... there isn't a simple answer, but I did ..., J, Sun, 15 Dec 2002 01:33:20
- Do you live in Ithaca, NY? Lovely part of country ..., J, Sun, 15 Dec 2002 01:05:48
- thanks. it makes more sense now. n/m, J, Sun, 15 Dec 2002 00:52:16
- Deflation worries>> VERY long, K-9, Sat, 14 Dec 2002 18:54:26
- Re: OT: Economics ... Deflation worries, Ed MA, Sat, 14 Dec 2002 15:32:56
- Re: OT: Economics ... Deflation worries, bRAD, Sat, 14 Dec 2002 12:25:59
- It's certainly hurt the used vehicle market..., b.flippo, Sat, 14 Dec 2002 12:23:49
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