[alexamenos]

Originally Posted by mcsluggo

...In fact the fed does not persue a zero inflation monetary policy, because defaltion is a bigger economic pain in the heiney than inflation, and since the feds policy lever are incapable of directly steering the level of inflation (than can only "nudge" it), they maintain a core, non-zero, level of infaltion as a buffer (to avoid deflation).

price deflation is a royal pain in the hiney????

like falling computer prices, that's a travesty. Or hdtvs....can't have prices of those dropping, can we? Or health care costs....oh, wait, those costs are going the other way.

Certainly price deflation is a pain in the ass if you're borrowing, but it's not so bad if you're saving....I guess we can't have a monetary environment that encourages savings and investment and discourages borrowing. Not here in the good ole USA where people are notoriously inclined to save and invest rather than borrow and spend.

Sorry for the sarcasm, but it's not at all self-evident to me that a little deflation here and there is a bad thing. anyhoo....

Originally Posted by mcsluggo

....since the feds policy lever are incapable of directly steering the level of inflation (than can only "nudge" it), they maintain a core, non-zero, level of infaltion as a buffer (to avoid deflation).

and how is it again that the Feds maintain a "non-zero" level of inflation???? Is it by increasing or decreasing the money supply? Increasing, decreasing???

bueller?
bueller?

It's by increasing the money supply. What were we arguing about, again?

Oh yeah....

Originally Posted by mcsluggo

Q: will a continuously expanding MS lead to inflation?
A: No, not at low levels of expansion, for a growing economy.

regardless of whether an increase in the money supply is "inherently" inflationary, at least we agree that the Fed deliberately increases the monetary supply at a rate sufficient to cause inflation.

Fair Enough????

Originally Posted by mcsluggo

greater uncontrollable volatility of the MS is a strength?

Actually it's not the uncontrollable volatility, but instead it's the lack of a "monetary authority" that I cite as a strength--in large part because "monetary authorities" are a greater source of volatility than the vagaries of the market place.

and it may comfort you to know that I finished my tour some time ago, and I did use both hands at all times while typing this post.

cheers