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Gold/Mining/Energy : Gold Price Monitor
GDXJ 121.93+0.8%Jan 9 4:00 PM EST
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To: Hawkmoon who wrote (55193)6/27/2000 3:11:00 PM
From: Freedom Fighter  Read Replies (1) of 116845
 
Ron,

>>Finally, money supply is dictated primarily by the demand for US currency. If you stifle supply by restricting money
supply, we will increase the strength of that currency beyond the level that is economically healthy. Thus, to maintain price stability within the currency, supply must increase to meet demand.<<

I'm not saying I'm correct here, but your assumption is that price stability is always the correct course of action. That is the generally accepted view, but not necessarily the correct one. There are many economists that would argue that if demand for the currency is high then the currency should be allowed to appreciate and the deflationary forces to take hold. (slow the economy etc...) That would keep the economy in balance even if prices weren't stable over the short term. By printing money to keep the currency stable, you are potentially creating the credit excesses we see right now.

Wayne
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