RE: Keynesian Macroeconomics/Hyperinflation

[Adam.Stokes@xxxxxxxxxxx]

After all, isn't inflation really only an outcome of what people can get
away with?

-----Original Message-----
From: Harry Veeder [mailto:eo200@xxxxxxxxxxxxxxxxxxx]
Sent: Tuesday, 5 December 2000 3:49
To: pkt@xxxxxxxxxxxxxxxx
Subject: Re: Keynesian Macroeconomics/Hyperinflation



James Cumes

>Harry,
>
> "For example I believe Keynesian macroeconomics is
>most applicable to hyper-inflationary economies."
>
>
>Can you please spell this out a little?
>

When, for various sociopolitical reasons, the people of a nation
loose a sense of national sovereignty over their
supply of liquidity they begin to believe that their liquidity comes
from outside themselves (in the form of income) instead from within
themselves (in the form of credit and interest).

In a stable economy, liquidity is stored within people and assets,
not in money. In an hyperinflationary economy money becomes the prime
storage device but being a 'cold form' of storage,
it is prone to leak. (In psychological terms people lack confidence
in their own current net worth). Money hoarding and price increases
occur as attempts to retain liquidity, and the behaviours amplify
each other.

Harry Veeder