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