Subj : ECONOMIC DOWNTURN IN
To   : JEFF BINKLEY
From : BOB KLAHN
Date : Fri Jan 29 1988 15:21:54


 ...

TR>>Wasn't it after we went off the gold standard that both the deficit
TR>>and national debt started going up to impossible proportions?

 JB> From a timing perspective yes, but the root cause was vote
 JB> buying, not the standard to which the dollar is pinned.

 Neither is right. The debt and deficit never went to impossible
 proportions. The highest debt in any of our lifetimes was 126% after WWII,
 and we not only survived that, but reduced it drastically over the next 35
 years. It wasn't until Reagan until it started back up again.

 Neither gold not vote buying have caused a major jump in the national
 debt, only depression and war ever did that, except under anti-tax
 republican presidents.

 ...

TR>>how nobody in government is talking about a `payoff' of the debt?
TR>>Only seeking `bragging rights' for how much they `cut'. Nobody is
TR>>talking `payoff'.

 And how much they cut is a stupid thing to brag about.

 This country has not been debt free since it was founded. We have not paid
 off the debt in 233 years. There is no good reason to worry about that.
 Every time they try to cut all they do is run the country back into debt
 by hitting the country with a major recession.

 ...

TR>>We are heading for default and bankruptcy.

 JB> The only ways to pay it off is either inflate it away with
 JB> cheap dollars or growth our way out of this to pay it off.
 JB> The Fed is heading down

 Inflation may become necessary as the republican policies of cuts and free
 trade do so much damage there is no other alternative.

 JB> the road of the first option. The Administration thinks we
 JB> can do #2 but that isn't possible with the anti-growth
 JB> policies they have in place.

 The anti-growth policies are the austerity policies of the republicans.

 JB> buying power diminish.  The left will call on wage
 JB> inflation to combat this.  And thus the viscous cycle
 JB> begins.

 That old wage push inflation was popular over half a century ago. It was a
 big sell until the numbers proved wages followed inflation, not led it.
 Though wages have been so suppressed since the '70s it may take wage
 inflation to pull us out of this.



BOB KLAHN bob.klahn@sev.org   http://home.toltbbs.com/bobklahn

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