Re: Human Success in a Free Market

John Gelles wrote:
...
>         Some "good" investments may be required to
>         ensure supply of necessities -- but these, too, can
>         be made with DFM [debt free money].
> 

Dear John,

Please think of it this way.  As everyone asks for
interest on any funds, your concept of DFM is
elusive.

If the DFM comes from government (whether federal,
state or local), the money (over time) has a true
economic cost -- called interest.  And, if debt
free money is provided via government, the carrying
charge must be charged back to the taxpayer.

If we simply mint money, the carrying charge comes
as the loss of value of every hard-won dollar out
there, and results in inflation, such that the
hard-won dollars are deprecitated in proportion to
the "debt free" printed money.  And, in the extreme,
this becomes hyperinflation.

When we have had similar exchanges, you point to
the growth that followed WWII.  I replied that this
only resulted by a massive level of savings, in the
form of "war bonds."

So, before you offer, again, DFM as a solution to
our ills, you must also convince me that you can
stop the spending mania, and that you can convince
U.S. households to provide the funds you wish to
spend.

In that the "discount rate" for money is very low,
it would make sense that now is the time to encourage
such savings, as the forgone costs (interest) are so
very low.

But, I witness no such savings -- but rather, an
increased mania to buy even more on credit (aka debt).

So, beyond the rhetoric, please tell me how we convert
a country of over-spending, debt-increasing Americans
to the America you have in your mind.

Should you again mention DFM, without such a plan, I
will remind you of these matters.

Kindly share this note with any lists to which I am
not subscribed.

Sincerely,

Curtiss

-- 


           W. Curtiss Priest, Director, CITS
   Research Affiliate, Comparative Media Studies, MIT
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
   781-662-4044  BMSLIB@MIT.EDU http://Cybertrails.org