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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Don Lloyd who wrote (11242)11/30/2001 3:36:56 AM
From: Maurice Winn  Read Replies (2) of 74559
 
Thanks for the explanation Don.

<The demand for money is not directly related to the level of economic transactions, but rather follows the ebb and flow of changes in the level of actual cash balances desired.>

So, if it becomes fashionable to not hold cash, that would have a big impact on the number of dollars which could remain in circulation. If everyone treated a dollar like a hot potato, holding a much smaller cash balance, then I suppose other things would go up in relative value [= price]. There would be inflation. Uncle Al would have to cut the number of dollars and raise interest rates to maintain currency value stability.

Is that right?

I expect that to happen.

Mqurice
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