Hi All:
Since it is clear that there are a nuber of economists in this list, I
thought I'd share something from Wm Krehm's Economic Reform monthly
newsletter. 

"ER" is the newsletter of COMER, the Committee On Monetary and Economic
Reform that addresses Canadian and world wide monetary and economic issues. 

It has garnered respect for its authoritative critique of conventional
economic theory followed by national governments and International
organizations such as BIS, WTO, IMF and World Bank. 

The following is exerpted from an item that addresses the fallacy of using
only interest rates to modify abberant economic activity. I submit it as
relevant to the futurework list.

Mr Krehm says:.
"....That is clear from Tinbergen's Law - developed by Jan Tinbergen, a
Nobel Laureate who, providentially had earned his doctorate in physics
rather than economics.  I say providentially because physicists have a
better grasp than economists of something that one learns in first - year
high school algebra - that to solve an equation with two independent
variables you need at a minimum of two such independent equations.  

If you can identify n independent variables in the problem, then you must
have that many in your solutions.  As our society becomes more complex -
and even a controlled degree of globalisation is bound to make it so - the
very notion of "one blunt tool" to keep it stable is stupid to the point of
obscenity.  The Tinbergen principle on the contrary requires an ever
broader menu of contrasting and complementary policies to keep our society
functioning and in reasonable balance.

In a mixed economy such as ours, the price level will rise not only because
of possible excesses of market demand over supply, but for any of many
other possible reasons - the rapid increase in public infrastructures
needed by our exploding technologies and urban centres, and the increased
average span of human life.  Studying these needs within a context of
respect for the environment requires us to frame a highly varied menu of
policies and life styles to make that possible.  There is no room for
maximising trade or growth as a categorical imperative.

That is the inevitable verdict on the highest plane of abstraction, systems
theory or mathematical structure.  At a more earthly level, there is the
detail that the "one blunt tool" chosen by the philosophers of neo -
liberalism happens to be the revenue of the moneylenders and the battering
ram of financial predators.  That involves a conflict of interest that
cannot be covered up by even the greatest mind - bending campaign on record."
William Krehm.
End of excerpt

==========
The item underlines my contention that increasing interest rates to stem
the increase in the CPI is in fact counterproductive and instead actually
increases the CPI.

It does so by increasing the costs of maintaining economic stability in an
economy that is increasingly a rental economy (including money rental [Note
bank assets]) . That is, in view of the ever shorter term loans and lines
of credit extended by the chartered banks, increased interest rates
increase the underlying cost of maintaining the production/consumption
process and translates into an increased CPI. 
If increased interest rates were to affect only new production/consumption
it would be a valid inhibitor of economic activity. However, that affect is
only a miniscule element when compared to the interest cost burden in the
economy.

Regards
Edward G.

Peace and goodwill

Ed Goertzen,
Oshawa,
L1G 2S2,
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 
       SIGNATURE - "Subsidiarity", Defined in the Papal encyclical
"Quadragisemo Anno", as 
quoted in "The Age of Paradox" by Charles Handy". "It is an injustice, a
grave evil and a disturbance of right order for a large and higher
organization to arrogate to itself functions which can be performed
efficiently by smaller, lower bodies...". 
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

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