Re: James A. Baker III

["Gunnar Tomasson" <tomasson@xxxxxxxx>]

In response to Geoffrey's point:

>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.

Harry writes:

As a matter of fact it happens routinely and is known as "interest".
A borrower may spend credit and a lender may spend interest.

Comment:

Given

(a) outstanding credit (money supply) of 100, and

(b) loan interest rate of 10% per loan period, then

(c) end-period repayment of principal and interest will total 100 + 10 =
110.

Absent NEW credit to the original debtor(s) in the amount of 10, accrued
interest CANNOT be paid.

Gunnar


----- Original Message -----
From: "Harry Veeder" <eo200@xxxxxxxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Wednesday, December 20, 2000 5:08 PM
Subject: Re: James A. Baker III


>
> ----------
> >From: GGard97342@xxxxxx
> >To: pkt@xxxxxxxxxxxxxxxx
> >Subject: Re: James A. Baker III
> >Date: Wed, Dec 20, 2000, 10:18 pm
> >
>
> >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.
>
> As a matter of fact it happens routinely and is known as "interest".
> A borrower may spend credit and a lender may spend interest.
>
> Harry Veeder
>
>
>