Re: In Bush, Loyalists See A Good & Steadfast Man Who Has Gotten

William Black wrote:
> "Surreyman" <a.spencer3@[EMAIL PROTECTED]
> wrote in message 
>
news:e4a8665c-2f11-468b-8c90-643c164c11b2@[EMAIL PROTECTED]
> On 17 Nov, 02:12, Renia <re...@[EMAIL PROTECTED]
> wrote:
>> Paul J Gans wrote:
>>
>>> It is too late now for most measures. The US does not have
>>> enough money to have the government bail out everybody who is
>>> in trouble. There is going to be a lot of pain. A lot of pain.
>> Same in the UK.
> 
> I can't believe the UK currently - or the Group 20.
> Cutting taxes when the fiscal chest is already emptying, heavy
> borrowing to encourage greater spending when that was the very cause
> of much of the problem.
> We should be tightening belts and paying more tax.
> Otherwise the future problems are going to magnify even more.
> But not a single major government dares to propose that.
> Lunacy.
> 
> -------------------------------
> 
> No.
> 
> That's what was tried in 1929,  the result was 'The great Depression', 
> something that was ended only by WWII.
> 
> Prices will start falling soon due to deflation.
> 
> Inflation will stay very low.
> 
> To get the economy moving they've got to get more cash into the system.
> 
> So it's 'Spend Spend Spend' time.
> 
> It can't do any more harm,  it may just do some good...

But there isn't any cash to put into the system. It's borrowed cash, and 
that is already part of the cause of the problem.

Deflation sounds attractive because of lower prices. But what it means, 
in the long-term, is that wages will fall. It also means that if you 
bought a new car today, then you will have overpaid for it if deflation 
happens, and you will have a form of negative equity on that car, on all 
your recent purchases and on your credit card. Your debts will be worth 
more than the value of purchasing new stuff. As people get wind of 
deflation, they'll stop buying, waiting for ever for prices to drop, 
while they lose their jobs because their business sells something no one 
wants to buy, because they are waiting for prices to drop. So the 
company goes out of business and the staff lose their jobs. And round 
and round it goes.

Prolonged deflation caused the Great Depression of the 30s.