Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.2 9/18/84; site tilt.FUN
Path: utzoo!watmath!clyde!burl!ulysses!allegra!princeton!tilt!chenr
From: chenr@tilt.FUN (The 1200 baud hacker)
Newsgroups: net.flame,net.politics
Subject: Re: Fuzzy headed liberal
Message-ID: <198@tilt.FUN>
Date: Mon, 5-Nov-84 21:20:43 EST
Article-I.D.: tilt.198
Posted: Mon Nov  5 21:20:43 1984
Date-Received: Tue, 6-Nov-84 05:37:01 EST
References: <570@loral.UUCP> <924@opus.UUCP> <610@loral.UUCP>
Organization: Princeton University EECS Dept
Lines: 40
Xref: princeton net.flame:1385 net.politics:1370

> 	1.	Who were the worst victims of inflation?  The elderly
> 		poor on fixed incomes.  Reagan's is the first administration
> 		to implement policies that helped reduce inflation by
> 		nearly two-thirds in decades.  That's a win.

HAH!  That's the line that Reagan has been feeding you.  I'm sure he'd be very
happy to find out that you (and others) believe him.

Let's rephrase the above quote.  Reagan had the good fortune to be in
office in a time when there were no major supply- side shocks.  There
were no major problems with the food supply (happened in 1979, I
believe), nor were there any oil shortages (happened more times than I
can count).  People, there are TWO ways to cause inflation.  The first
is to increase the amount of money in circulation without having the
economy expand along with it, thus decreasing the value of the money.
That's "demand-fueled" inflation.  The other way is to have the
effective value of the money in circulation go down due to a shortage
of some important good, causing a rise in the price of the good.  This
has the same net effect, the purchasing power of the money goes down.

Reagan also had the fortune to be in office when Volker's anti-inflation
policies finally began having some effect.  The only thing that Reagan
has done is to apply the traditional Keynesian/"demand-management"
economic method of stimulating an economy out of a recession.
It worked in WWII, it worked after WWII, it worked in 1963, and it
worked in 1983.  Stimulate consumption by increasing government spending
and holding government taxes down.

There's only one problem with that method.  Unless used very carefully,
it can lead to run-away inflation.  Sorry, gents.  The deficit won't
magically go away and if government spending stays at the current level,
the recovery we're having now is going to get wiped out by a very nasty
bout with inflation.  (And you don't want to know what the cure to that
is.  Volker and Carter put us through it in the mid-to-late '70s and it
isn't pleasant.)

	Cheerio,

		Ray Chen
		princeton!tilt!chenr