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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: GraceZ who wrote (25810)12/10/2004 7:03:29 PM
From: Mike JohnstonRead Replies (1) of 306849
 
Every day you and I go to work and add value to the economy (well at least I do), if there wasn't money added to the money supply to represent that value,.....

Grace,
Can you please explain, why do you think that money has to be added to the money supply if there is some service performed ?
For example if you have a contractor put in a new driveway in your house for 5,000 dol, he is performing a service. You are paying him for the service and in the end he has $5k more, you have $5k less but a new driveway. The money has been simply exchanged for the service. There is value added to the economy, because there exists a brand new driveway which has not existed before. But why would the Fed need to print another 5,000 dol. to represent that value ? It seems absurd.

In my opinion money should be added to the economy based on real gdp growth which comes from increase in population + gain in real productivity.
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