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saving. The interest rates will either rise at some point to promote saving, or they will continue to increase liquidity causing decreasing value. Since one of the effects of continued inflation is rising prices, the home, which will have the same value, will be worth more dollars.

HOW THIS AFFECTS THE STOCK MARKET

As we watched the recent stock market decline, we truly watched the portfolio values of retirement plans decline almost ten percent. The market rebounded somewhat on the news that the Fed had cut the rate. If the market rises to 13,000 again, but there was an increase in liquidity of ten percent, then 13,000 is really the same as 11,700 with no increase in liquidity.

People who began saving forty years ago hoping to have a million dollars have watched the value of that million dollars drop from being able to buy fifty homes to being able to buy four or five. Forty years ago, a million dollars bought three million gallons of gas. Today is buys three hundred thousand. Houses and gas have stayed pretty much relative in value to one another. It is through inflation that the government has confiscated most of the value of that million dollars over the past forty years.

If the rate of inflation were to remain static, it would be a straight line on a scale using percentages. However, if the scale were converted from percentages to dollars, the line would be replaced with an upward arc. Trends in motion tend to stay in motion until acted upon by an outside force. So far, the outside force has been a catalyst to keep the arc in its current motion, almost like volleying a balloon while climbing stairs. Certainly the balloon keeps rising from the viewpoint of someone standing on the floor, but it is illusionary in that it is actually being volleyed the same height from the level of the higher stair. However, if not lofted, gravity becomes the outside force, and the balloon will fall to the floor.

Banks make money through a combination of loans, fees, and investments. If rates were to rise, theoretically it would increase savings and decrease loan demand. Decreased loan demand in today's economy, however, translates to loss of investment in the stock market, which means loss of jobs. It is an ironic situation in that as people lose their jobs, they are less qualified for loans. There will be great opportunity for some, but not the average consumer.

Calvin Coolidge said, "The chief business of the American people is business. They are profoundly concerned with producing,

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