Re: James A. Baker III

[GGard97342@xxxxxx]

In a message dated 19/12/00 15:44:31 GMT Standard Time, hliu@xxxxxxxxxxxxxx
writes:

> Every economist agrees that when money growth slows, interest rates go
>  up.

Not sure about that, Henry. Surely a slow growth of money reflects a low
demand for loans. Loans create money growth, not the other way round. No
power on earth can create money which is not already lent.

"Money" is assignable debt.

And of course when interest rates are low, borrowers prefer to borrow long
from the bond market. When they are high, they prefer to borrow short from
banks and the broad money supply explodes. Bags of empirical evidence for
that.

Geoffrey Gardiner