Brett Robson wrote:
> On Mon, 02 Jun 2003 12:23:30 +0900, Declan  ...

>>Even if a fiscal deficit is monetarily financed ("printing money" 
>>- which is not literal), there are conditions in which it can indirectly 
>>support gross purchasing power.
> 
> Which creates inflation.

It doesn't *necessarily* create inflation either, though it can under 
certain circumstances create inflationary expectations (also not always 
a bad thing). Liquidationists will decry the possibility of both, but if 
you think back to your readings of the Great Depression, such views are 
as Ralph Hawtrey said, the equivalent of "Crying, 'Fire! Fire!' in 
Noah's flood." I don't know when Kevin will explain how departing from 
the (then) orthodoxy in 1933 undid "the value of the dollar", but then 
again I did write "Take your time".

> I wasn't refering to the forex.

I wasn't referring specifically to forex rates BTW, though in the 
handful of OECD countries in which trade comprises more than a minor 
fraction of GNI, a small forex appreciation can support purchasing power 
in the short term. I was more referring to how sustained capital inflows 
will (all other factors being equal) indirectly lead to a general 
increase in aggregate demand.






-- 
"All FDR undid was the value of the dollar"

                        Kevin Gowen (really)