Wednesday, June 24, 2009

Solve the Simple Problems First

Cactus has a Mind which I enjoy, and asks the Question I have long asked myself: What exactly generates Inflation? No one knows for sure. Cactus presents a serious hypothesis which under Study possesses much Charm (totally having nothing to do with his posis, an Instructor once told me Charm was Harm with clutter). I enjoyed such a similar ideation, until I once wrote a Work on Inflation on which I got blasted (Ancients may even remember the Incident). I finally arrived at the place where I connected Inflation with Production. The Later always expands under the Growth formula, but Growth always increases the magnitude of Maintenance Costs for the Capital used. Production drops come through the Bust cycle, but also through saturation of the original market of Product Supply. The essential Problems comes that Maintenance Costs invariably increase under Production reduction, as Capital must be consistently utilized to be adequately maintained. The associated Cost of Capital degeneration, or the curative Maintenance of it without Production, constitutes the real element of Inflation. Easing of the Money Supply allows for easy payment of such Maintenance, but removes Market controls on these Costs; allowing for rapid assimilation of Inflation after Consumer Demand picks up for the Product. This means that Inflation comes automatically with renewed Expansion.

Greg Mankiw also has a Piece which should be considered. Greg has his own ideas about How health care Costs should be understood. He has genuinely pertinent Thoughts on the Issue, but does not comment on the under-supply of Doctors, the under-supply of medical training facilities, their artificially limited enrollment, and the fact that other health care professionals set their Wage Demands off the Wages granted to Doctors. The one area I know of no economists’ exploration is the Question of health care Standards, and the degree in which they could be lowered and yet maintain a consistency of health care outcomes. There is far too many Conditions of Excellence for Doctors’ degrees; Most of which could be easily abandoned without major medical failure. We need a adequately trained medical force, not super-Soldiers in an Apocalypse battle with Death.

Oliver Morton comes out with an Opinion which must be evaluated. Most environmental options cannot make a real difference to the general ecological trend, and would cost far more than any extracted value from such activity. An adequate means of Carbon Sequestration must be found before any real advance in environment improvement can be achieved, and this system must be low-Cost, functioning in the range of sequestration necessary to clear the Air. People must understand a fundamental axiom: An insignificant percentage of the human population can produce a magnitude of pollution which the majority cannot contain. Conservation naturally entail universal compliance, something which is almost impossible to attain. lgl

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