Reply To: Some questions


(1) A government has three sources of monetary revenue: taxes, debt, and monetary inflation. Without monetary inflation, or a decline in the demand for money, there can be no price inflation, i.e., no decline the in the purchasing power of money.

Bond holders are anticipating monetary inflation or a decline in money demand or both. They know full well that the Fed will accommodate larger debt-financed government expenditures with monetary inflation.

(2) If a person is not demonstrating action to the satisfaction of an observer, it does not follow that the person is no longer human. He may be, in fact, successfully acting. Passivity can be a means to an end. He may be, as you suggest, unsuccessfully acting. He may be temporarily unable to perform demonstrable action (he is rendered unconscious by a blow to the head) but not permanently incapable of demonstrable action. He is able to demonstrably act, potentially, and will demonstrably act once the temporary condition is removed.